The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  STF Tactical Growth & Income ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest 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 earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in the Europe-Developed region and has a considerable underweight in the basic materials sector compared with category peers. 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 modest portfolio manager turnover and overall reasonable fees.

Analyst Rating

Microsoft

Apple

NVIDIA

Amazon

Broadcom

Alphabet

Tesla

Costco

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. STF Tactical Growth & Income ETF earns an Average Process Pillar rating. The predominant contributor to the rating is the firm's five-year retention rate of 100% over the period. A reasonable level of diversification across individual securities also contributes to the process. The fund's top 10 holdings account for 39% of assets. Lastly, the process is limited by the experience of the management team, which averages seven years at this fund.

This strategy is overweight in stocks compared with its peers with a 97% weighting, as opposed to the Moderate Allocation category’s average of 55%. Its equity sleeve has a meaningful tilt toward both larger market-cap and growth-oriented companies versus category peers. The strategy has three region or sector biases compared to category peers. The most meaningful is its consistent underweight in the Developed Europe region. It also sustains an underweight position in 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 25.8 and 8.0 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 13.9 and 7.0 percentage points of assets, respectively. The portfolio is overweight in North America by 12.6 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 & Income ETF earns a Below Average People Pillar rating. The team is bolstered by the firm's five-year retention rate of 100%. However, the rating is held back 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 holds the team back.

Below Average

People

Since its inception one year ago, STFM has demonstrated that it will hold its own as a steward of capital, warranting an Average Parent Pillar rating. STFM currently runs two vehicles, with a total of $230.3 million under management and a roster of two portfolio managers.   

 STFM does not differentiate itself on costs. Across the open-end and exchange-traded product lineup, its average net expense ratio places it in the middle quintile of firms.  

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

Parent

STF Tactical Growth & Income ETF

TUGN is an actively managed fund that allocates among equities, fixed income, and money markets, depending on signals derived from a proprietary algo that tracks the price action across asset classes. The fund employs an option spread strategy to potentially increase the funds returns. 

The STF Tactical Growth & Income ETF uses a proprietary Tactical Unconstrained Growth Model to allocate between growth equities, treasuries, and money markets. The ETF incorporates an option spread strategy to further generate income. Like the TUG ETF, the TUGN ETF underperforms the QQQ in both bearish and bullish markets. It further underperforms the TUG due to its spread-writing strategy that trades away upside.

News for STF Tactical Growth & Income ETF ETF (TUGN)