Defiance Treasury Alternative Yield ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-costliest quintile among peers.  

 The strategy benefits from its experienced portfolio management team. This is a positive driver for the strategy's Average People Pillar rating.  The strategy's parent organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including overall low fees but is held back by above-average turnover among its portfolio managers.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Defiance Treasury Alternative Yield ETF earns an Average Process Pillar rating.    The main contributor to the rating is the size of its portfolio management team. With four portfolio managers at the helm, the fund is reasonably well-resourced. The parent firm's five-year risk-adjusted success ratio of 50% also influences the rating. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their noteworthy success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by the instability of talent across its parent firm. The firm's asset-weighted manager tenure of three years suggests it could do more to retain portfolio managers.

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


The investment seeks current income.  The fund is an actively-managed exchange-traded fund that seeks to generate current income by: (i) investing in U.S. government securities, including U.S. Treasury bills, U.S. Treasury notes, and U.S. Treasury bonds with a targeted portfolio duration of one year or less; and (ii) employing defined risk option strategies. These strategies include credit spreads, debit spreads, long calls, and long puts. To implement these risk strategies, and the fund will purchase and sell option contracts on selected exchange-traded Treasury funds. The fund will not invest directly in Treasury ETFs. The fund is non-diversified.

Average

Process

Defiance Treasury Alternative Yield ETF earns an Average People Pillar rating. The most significant contributor to the rating is the firm's five-year retention rate of 75%. The size of the portfolio management team also influences the rating. With four portfolio managers, the fund is reasonably well-resourced. Lastly, the rating is limited by the managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns.


Jay Pestrichelli, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 16 years of listed portfolio management experience.  None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

People

Defiance's track record as a steward is mixed, leading to an Average Parent Pillar rating. A strength of Defiance is that its product shelf of open-end and exchange-traded funds is, on average, offered at a minimal cost, suggesting that it considers what's best for its investor base. On average, fees for funds are in the lowest quintile of respective category peers. Defiance has undergone a bout of turnover in the past five years, as seen in its lower-than-average portfolio manager retention. This is a concern, as long-term stability tends to support positive results. The longest-tenured managers’ average tenure is slim, two years, compared with peer firms. This contributes negatively to the rating as the current managers have limited experience running strategies at the firm.

Parent

Defiance Treasury Alternative Yield Etf

TRES is an actively managed fund that aims for current income primarily driven through various option strategies targeting short-duration US Treasury exposure.

Global X Health & Wellness Thematic ETF

Global X China Biotech Innovation ETF

Global X MSCI China Communication Services ETF

Global X China Energy ETF

Global X MSCI China Health Care ETF

Global X China Industrials

Global X MSCI China Information Technology ETF

Global X China Materials ETF

Global X MSCI China Real Estate ETF

Global X MSCI China Consumer Staples ETF

Global X MSCI China Utilities ETF

Global X China Financials ETF

Global X Next Emerging & Frontier ETF

iShares U.S. Fixed Income Balanced Risk Factor ETF

Strategy Shares Gold-Hedged Bond ETF

Global X Funds-Global X Green Building Etf

iShares High Yield Bond Factor ETF

iShares Investment Grade Bond Factor ETF

Tema Neuroscience and Mental Health ETF

Global X Carbon Credits Strategy ETF

Global X MSCI Pakistan ETF

Global X MSCI Portugal ETF

Global X Cannabis ETF

iShares USD Bond Factor ETF

Global X Metaverse ETF

Mohr Industry Nav Etf

Although 14 new ETFs debuted in the U.S. this past week, closure announcements came in even stronger, largely due to Global X pruning its lineup. Launches during the week included funds from BondBloxx, WisdomTree, Innovator, JPMorgan, and Range ETFs.

This Week in ETFs: Closures Outnumber New ETFs

News for Defiance Treasury Alternative Yield Etf ETF (TRES)