The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  FCF International Quality ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy's inexperienced portfolio management team drives the strategy's Below Average People Pillar. The strategy earns an Average Process Pillar rating.  A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent firm has some investor-friendly attributes, like a favorable lineup success ratio and a successful risk-adjusted track record. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Capital Senior Living

BHP Billiton

Novan

Accenture Plc

Rogers

WisdomTree International LargeCap Dividend Fund

Check Point Software Technologies

Imperial Oil

InterContinental Hotels Group

Ferrari

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. FCF International Quality ETF earns an Average Process Pillar rating. 

The main driver of the rating is the parent firm's five-year risk-adjusted success ratio of 100%. 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. The process is limited by the experience of the management team, which averages three years at this fund.

 This strategy leans toward smaller, more growth-oriented companies compared with its average peer in the Foreign Large Blend Morningstar Category. Examining additional factor exposure, this strategy has consistently favored high-quality stocks, including those with low financial leverage and solid returns on equity, compared with Morningstar Category peers during recent years. This means the fund holds consistently profitable, growing companies with solid balance sheets that may help it endure downturns better than Morningstar Category peers. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. Additionally, this strategy has demonstrated a preference for high-momentum stocks in these years. Momentum approaches bet that rising stocks will continue to rise and that lagging stocks will continue to lag. In this month, the strategy also had more exposure to the Momentum 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 technology and energy relative to the category average by 4.9 and 4.8 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and industrials, with financial services underweighting the average portfolio by 12.1 percentage points of assets and industrials similar to the average. The portfolio is positioned across 166 holdings and is relatively concentrated. In particular, 25.2% of the fund’s assets are housed within the top 10 holdings, compared with the typical peer's 15.4%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 62% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

FCF International Quality ETF earns a Below Average People Pillar rating. The team is strengthened by its parent firm's five-year success ratio of 100%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. However, the rating is weakened 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. Management team experience, which averages three years at this fund, also limits the team.

Below Average

People

FCF Funds has some investor-friendly attributes, but other attributes warrant caution, leading to an Average Parent Pillar rating. Longevity at the firm has been impressive. Its five-year risk-adjusted success ratio is 100%, meaning that 100% of the products have both survived and beaten their respective category median on a risk-adjusted basis. A high success ratio indicates good performance and provides insight into a firm’s discipline around investment strategy and product development. FCF Funds's risk-adjusted performance compares similarly to competitors. Across its open-end and exchange-traded funds, the firm’s average five-year Morningstar Rating is 3.5 stars, which is about standard. A notable weakness of FCF Funds is the inexperience of its longest-tenured managers compared with other asset managers. Managing capital through a full market cycle is a challenging prospect for seasoned managers, but with only three years of average tenure across their management team, there is cause for concern.

Parent

FCF International Quality ETF

TTAI aims to outperform a broad global ex-US equity index. The actively managed fund selects stocks based on free cash flow.

Leveraging a FCF-centered quality strategy, TTAI offers exposure to grossly profitable yet mostly expensive international stocks. Exposures include principally developed markets like the UK, Switzerland, and Australia, but emerging markets like India, Brazil, China, and South Africa are also present. Despite the concept being clearly promising upon initial inspection, past performance hardly justifies a bullish case.

TTAI: Sometimes Smart Strategies Deliver Subpar Returns

RELX Plc, a global provider of information-based analytics and decision tools and a holding in the FCF International Quality ETF (TTAI), reported that free cash flow of nearly £2 billion ($2.5 billion) for 2022, up 18% from the previous year.

TTAI Holding RELX Uses Free Cash Flow to Acquire 9 Companies, Buy Back Shares

FCF US Quality ETF

Many analysts believed that the Federal Reserve was nearing the end of its rate hike cycle, as inflation was coming down and the U.S. central bank's latest interest rate increase of 25 basis points was far less aggressive than previous rate hikes.

Target Free Cash Flow as Fed Signals More Rate Hikes

Novo Nordisk nearly doubled its free cash flow in 2022 from 2021. The Danish pharmaceutical company announced at the beginning of the month that its free cash flow last year was 57.4 billion Danish kroner ($8.37 billion), compared to 29.3 billion Danish kroner in 2021.

Top TTAI Holding Novo Nordisk Nearly Doubles Free Cash Flow in 2022

2022 was a tough year to navigate for investors. Sky-high inflation in the U.S. and a land war in Europe led to a bear market both domestically and overseas.

FCF Advisors Sees Deeper Reason for Current Bear Market

While the Federal Reserve just raised interest rates by 50 basis points following an upbeat inflation report, many still believe that a recession is nigh — if not already upon us. Economists polled by Reuters expect the U.S. economy to head into a “short and shallow recession” over the next year.

Target Firms With Strong Free Cash Flow Before a Recession Hits

A number of large-cap companies have posted lackluster earnings after dealing with inflation, supply-chain issues, and broad economic uncertainty. Added to that, “the strong U.S. dollar emerged as a significant negative earnings factor that weighed on the profitability of all companies with big international operations,” wrote Sheraz Mian for Zacks.

Target Free Cash Flow as Companies Report Lackluster Earnings

Investors this year can't be blamed for being concerned about investing abroad. From the Russian invasion of Ukraine and the energy crisis it has sparked to global inflation spiking after the pandemic's heights, foreign equities are caught in quite a bit of uncertainty.

Go Abroad For Active Returns With Cash Flow Fundamentals ETF TTAI

Net income for Wall Street's largest banks – JPMorgan Chase, Morgan Stanley, Citigroup, and Wells Fargo – tumbled in the third quarter as volatile markets stymied investment activity. The Federal Reserve has been raising interest rates at an aggressive clip to tamp down record-high inflation.

Bracing for a Slowdown, Banks Up Their Cash Reserves

With earnings season set to kick off this week – and analysts being bearish in their forecasts – now may be a good time to consider that quarterly reports may not always properly represent a company's profitability.

Why Free Cash Flow Could Be “More Reliable” Than Earnings to Gauge Profitability

One of the three newest members of the Federal Reserve board of governors said that high inflation was his biggest concern and that the Federal Open Market Committee is determined to bring inflation back down to 2%.

As the Fed Continues to Fight Inflation Through Rate Hikes, Invest in Free Cash Flow

2022 has been a wild year for the markets. The global economy is contending with widespread high inflation, rate hikes, and a challenging geopolitical landscape with Russia's invasion of Ukraine and the rise of fascism.

To Survive Flailing Global Markets, Seek Free Cash Flow

While earnings have long been the yardstick for determining a company's profitability, they can also be misleading. After all, the bankruptcies of Enron and WorldCom in the early 2000s demonstrated that strong GAAP earnings don't necessarily mean a company is sustainably profitable.

Why Free Cash Flow Better Determines Profitability Than Earnings

Accounting practices can present a distorted picture of a publicly traded company's profitability. Plus, earnings reports tend to be historically backward-looking.

Redefine What It Means to Be a Quality Company Through Free Cash Flow

While several economists had hoped that falling gas prices would curb inflation, the latest figures from the Consumer Price Index revealed that record-high inflation hadn't gone away. The CPI showed that prices were up 8.3% in August compared to 12 months earlier, as price increases on food and housing persist.

Seek Free Cash Flow While Inflation Persists

The market rally that began in the summer came to an end after Federal Reserve Chairman Jerome Powell confirmed that the Fed was to continue aggressively raising rates to combat inflation.

With Fed Tightening Likely to Continue, Consider Investing in Free Cash Flow

While investors and analysts pay a lot of attention to company earnings, these earnings reports don't tell the whole story. Investors who are more risk-averse may want to focus on companies that generate free cash flow.

Risk-Averse Investors May Want to Check Out These Free Cash Flow ETFs

The Federal Reserve's aggressive plan to fight inflation has many investors worried that a recession is nigh. As a result, undervalued stocks with high free cash flows have been gaining in popularity with investors.

Mitigate Recession Concerns With Free Cash Flow

As companies prepare for a recession that we may very well already be in, it is important to understand what free cash flow (FCF) is and how it protects companies in challenging times. Free cash flow is simply the cash a company generates after its cash outflows, such as maintenance of capital assets.

An Advisors Guide to Free Cash Flow

Pacer US Cash Cows 100 ETF

KLA-Tencor

Phillips 66

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It was a busy week, especially for expense ratio changes.

ETF Odds & Ends: Regents Park Adds Hedged Fund

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The week included mutual fund-to-ETF conversions, multiple launches from newcomers.

ETF Odds & Ends: Strong Launch Week

As we break down how certain sectors of the economy will react to the election, investors can consider an exchange traded fund strategy that could benefit in the environment ahead. In the recent webcast, The Fundamental ​​​You're Probably Overlooking: Free Cash Flow, Bob Shea, CEO and Chief Investment Officer, TrimTabs Asset Management, explained that the [.

An ETF Strategy Focusing on Companies with Strong Free Cash Flow

Free Cash Flow Is King: The TrimTabs ETF Approach (Podcast Transcript)

News for FCF International Quality ETF ETF (TTAI)