Weakness in Timothy Plan Market Neutral ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy earns a Low Process Pillar rating. The strategy’s management team earns a Below Average People Pillar rating. The People Pillar rating is indirectly assigned by an analyst rather than algorithmically derived. Please see the notes following pillar section for more details. 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 unattractive fees. As a result, the firm obtains a Low Parent Pillar rating.

Analyst Rating

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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 Market Neutral ETF earns a Low Process Pillar rating. 

The main driver of the rating is the parent firm's five-year risk-adjusted success ratio of 33%. 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 relatively low success ratio suggests that the firm could do better across its fund lineup. The parent firm's inferior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 1.9 stars, also weakens the process. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The parent firm's five-year retention rate of 52% detracts from the rating further.

 The investment strategy as stated in the fund's prospectus is as follows:

The investment seeks high current income and low correlation to stocks and bonds.  The adviser pursues the fund's investment objective by implementing a proprietary, “market neutral” investment strategy designed to seek income from the fund's investments while maintaining a low correlation to the foreign and domestic equity and bond markets. The adviser uses a multi-strategy approach. The fund will be actively managed, and meaning that the sub-advisor may make changes to the fund's portfolio at any time. 

 The strategy owns 274 securities, and is in a category where the typical fund has 49.5% of assets within the top 10 holdings. And finally, in terms of portfolio turnover, this portfolio's holdings turn over more often than comparable products in its peer group, possibly resulting in higher costs for investors and a drag on performance.

Process

Timothy Plan Market Neutral ETF earns a Below Average People Pillar rating. The team is backed by Scott R. Kefer, the longest-tenured manager on the strategy, who provides over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 4.0 stars, demonstrating excellent risk-adjusted performance versus category peers. Scott R. Kefer is supported by an experienced team, being able to draw on three additional listed managers, who average 12 years of listed portfolio management experience. As a team, they manage two investment vehicles together, with disappointing prospects. Across the strategies they manage, there is an asset-weighted average Morningstar Medalist Rating of Negative. This indicates the team is projected to generate negative alpha in aggregate. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

 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 lags peer asset managers in a number of stewardship qualities, resulting in a Low Parent Pillar rating. Portfolio managers at Timothy Plan tend not to invest alongside their shareholders, detracting from the overall stewardship assessment. 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. The longest-tenured managers’ average tenure within the firm is 10 years, bringing a wealth of knowledge through multiple market cycles to the table and contributing positively to the rating.

Parent

Timothy Plan Market Neutral Etf

TPMN seeks to provide high current income by holding dividend-producing equities screened for biblically responsible investing (BRI) criteria. The actively managed fund utilizes a market neutral strategy on its equity portfolio by holding long and short positions in broad equity index futures.

Timothy Plan High Dividend Stock ETF

Timothy Plan High Dividend Stock Enhanced ETF

Timothy Plan US Large/Mid Cap Core ETF

Timothy Plan US Large/Mid Cap Core Enhanced ETF

Timothy Partners Ltd. has launched the seventh “biblically responsible” exchange-traded fund within its Timothy Plan family of mutual funds and ETFs.

News for Timothy Plan Market Neutral Etf ETF (TPMN)