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

 The strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy merits an Average Process Pillar rating.  The strategy's parent organization is industry standard, albeit with some strong attributes like continuity among portfolio managers and overall attractive fees. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Microsoft

Apple

NVIDIA

Amazon

Broadcom

Alphabet

Costco

Tesla

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, clearly defined, repeatable execution. STF Tactical Growth ETF earns an Average Process Pillar rating. The most significant contributor to the rating is the firm's five-year retention rate of 100% over the period. The fund's concentrated portfolio, with its top 10 holdings accounting for 47% of assets, bolsters the process. High-conviction picks court the risk of blowing up, but can also drive outperformance. Lastly, the process is limited by the experience of the management team, which averages seven years at this fund.

This strategy invests more in equities than the typical peer with a 100% weighting, as opposed to the Moderate Allocation category’s average of 55%. Its equity sleeve has demonstrated a consistent bias to both larger market-cap and growth-oriented companies versus the category average. The strategy has three region or sector biases compared to category peers. The most notable is its consistent underexposure to the Developed Europe region. It also maintains an underweight bias to the basic materials sector. And finally, in the fund's most recent portfolio, more assets were allocated to developed markets regions. Although, this bias has not existed over time. 

 The portfolio is overweight in technology and communication services relative to the category average by 26.9 and 8.0 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 14.0 and 7.1 percentage points of assets, respectively. The portfolio is overweight in North America by 12.7 percentage points compared with the category average, and Latin America's allocation is similar to its peers. The regions with low exposure compared to their category peers are Developed Europe and Japan, with Developed Europe underweight the average by 5.8 percentage points and Japan similar to the average.

Average

Process

STF Tactical Growth ETF earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is limited by fees that rank in its category's middle quintile. That could be worse, but investors would get better net results if fees were even lower. Management team experience, which averages seven years at this fund, also detracts from the team.

Below Average

People

Since its inception only one year ago, STFM has demonstrated that it can be trusted as much as the next asset manager. As a result, it has an Average Parent Pillar rating. STFM currently manages two vehicles, with a total of $227.4 million under management and a roster of two portfolio managers.   

 The STFM open-end and exchange-traded fund lineup is moderately priced, with its average net expense ratio falling in the middle quintile of asset managers.  

 To maintain an Average rating, STFM needs to uphold a consistent track record of positive investor experience.

Parent

STF Tactical Growth ETF

TUG seeks long-term capital growth by allocating its exposure to US equity and fixed income securities based on proprietary signals. The fund is actively managed. 

TUG is an actively managed fund that aims for long-term capital growth with downside protection. The fund's strategy involves investing in equities during bullish markets and reducing exposure during bearish markets. TUG primarily holds stocks from the Nasdaq-100 Index and offers diversification across various sectors.

TUG: A Tactical Fund That's Worth Looking At

STF Management's Tactical Growth ETF is an actively managed ETF that aims to stay invested in the market while providing downside protection. TUG has shown strong returns in 2023, but its performance is heavily influenced by market conditions and the effectiveness of its proprietary algorithm. The fund's strategy involves assessing trend following, volatility, and momentum metrics to determine its equity exposure, with a focus on the Nasdaq-100 index.

TUG: An Active ETF That Aims To Be A Hedged Version Of QQQ

STF Tactical Growth ETF is an actively managed multi-asset fund with a proprietary market-timing model. The model looks better than random, and it beats several other tactical multi-asset funds. Data history is too short to assess a timing strategy.

TUG: Market Timing ETF Beating Peers In 2023

The TUG ETF uses proprietary models and signals to time the markets. Its goal is to stay fully invested during bullish environments and reduce exposure during bearish market conditions. So far in its limited history, the TUG ETF has underperformed in both bullish and bearish phases. I recommend investors avoid this ETF until there is more evidence of it delivering on its promise.

News for STF Tactical Growth ETF ETF (TUG)