The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Timothy Plan High Dividend Stock ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy’s management team earns a Below Average People Pillar rating. The People Pillar rating is indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following the pillar section for more details. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a substantial underweight position in liquidity exposure and volatility exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And low volatility exposure is rooted in stocks that have a lower standard deviation of returns. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by a lack of inside investments from portfolio managers and a pricey fund lineup. As a result, the firm obtains a Low Parent Pillar rating.

Analyst Rating

Waste Management

General Dynamics

Garmin

Vistra Energy

Sysco

Service Corp

Juniper Networks

Hormel Foods

TE Connectivity

DTE Energy

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Timothy Plan High Dividend Stock ETF earns an Average Process Pillar rating. 

The most important driver of the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. A low expense ratio, with fees ranking in its category's least costly quintile, also contributes to the process. Expenses reduce net returns and are one of the most reliable predictors of future performance. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 30%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

 This strategy tends to hold larger, deeper value companies compared with its average peer in the Mid-Cap Value Morningstar Category. Examining additional factor exposure, this strategy consistently held some companies with relatively lower trading volume compared with Morningstar Category peers in the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. The managers have also shown an underweight risk tilt, demonstrated by lower volatility exposure over peers in recent years. Such holdings can limit a strategy's downside, but cause it to lag in bull markets. Similarly, in recent months, the strategy also had less exposure to the Volatility factor than peers. Additionally, the strategy has constantly maintained a defensive tilt, with exposure to high-quality stocks. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. In this month, the strategy also had more exposure to the Quality factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in utilities and energy relative to the category average by 15.3 and 7.4 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 8.2 and 7.9 percentage points of assets, respectively. The portfolio is composed of 102 holdings and its assets are more dispersed than peers in the category. In particular, 14.2% of the strategy's assets are concentrated in the top 10 fund holdings, as opposed to the category’s 17.3% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 41% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Timothy Plan’s team could be improved and displays a disappointing track record, resulting in a Below Average People Pillar rating. There are two managers listed on the fund: Mannik Dhillon, Free Foutz. Together, they manage a total of 10 strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate.  

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Below Average

People

Timothy Plan fails to meet industry-standard stewardship qualities, culminating in a Low Parent Pillar rating. Timothy Plan fails to live up to one of the hallmarks of stewardship, manager investment, to help align portfolio manager and shareholder interests. None of the firm’s assets are covered by an invested manager. Open-end and exchange-traded fund fees are a weakness at the firm, contributing negatively to the rating. On average, the firm charges fees on its funds that are in the second most-expensive quintile of category peers. With the current market environment of fee compression, this is cause for concern, as investors may flock to alternate asset managers over time to get a better deal. A sign of strength at Timothy Plan is its longest-tenured management, which boasts an average tenure of 10 years at the firm. This accumulation of experience builds confidence that the group can navigate a variety of market environments adeptly.

Parent

Timothy Plan High Dividend Stock ETF

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