Strength in Touchstone Ultra Short Income ETF's Process Pillar is partially offset by an Average People Pillar rating, leading 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 management team earns an Average People Pillar rating. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

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. Touchstone Ultra Short Income ETF earns an Above Average Process Pillar rating.    The main contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 63%. 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 size of the portfolio management team also supports the process. With four portfolio managers, the fund is reasonably well-resourced. Lastly, the process is limited by the parent firm's five-year retention rate of 60%, which suggests it could do more to retain its portfolio managers.

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


The investment seeks maximum total return consistent with the preservation of capital.  The fund invests, under normal market conditions, at least 80% of its assets in fixed-income securities. The fund invests primarily in investment-grade debt securities. Investment-grade debt securities are those having a rating of BBB-/Baa3 or higher from NRSRO or, if a rating is not available, deemed to be of comparable quality by the sub-advisor, and Fort Washington.

 This strategy's 12-month yield is 5.4%, higher than its average peer's 4.8%. In addition, it has a 4.7% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). Higher yields tend to indicate higher credit risk.

Above Average

Process

Touchstone Ultra Short Income ETF earns an Average People Pillar rating. Scott D. Weston, the longest-tenured manager on the strategy, boasts over 25 years of listed portfolio management experience.  The team boasts an experienced corps of listed portfolio managers, with three others supporting Scott D. Weston. Together, they average 14 years of listed portfolio management experience. As a team, they manage three investment vehicles together, with a Neutral asset-weighted average Morningstar Medalist Rating, indicating the team will struggle to deliver positive alpha in aggregate. 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.

 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.

Average

People

Touchstone Investments' recent moves and other characteristics support an Average Parent rating, up from Below Average.
Touchstone has made a few recent moves. As part of a portfolio manager retirement, it made a subadvisor and style change on one of its international funds, hiring value-oriented LSV in place of Fort Washington Investment Advisors, which remains its largest subadvisory partner. (Touchstone and Fort Washington are both subsidiaries of parent company Western & Southern Financial Group.) This change also includes a reduction in the fund's expense ratio. Touchstone is also merging another international fund into one run by Sands Capital and lowering expenses on the R6 share class of the acquiring fund. While manager changes and fund mergers can be disruptive to investors, they are also often a response to poor long-term performance or small asset bases. Lower fees, though, are always a positive.
These moves acknowledge the competitive nature of the fund industry. To grow in this environment, Touchstone has firmly staked its ground on providing funds and exchange-traded funds that are "distinctively active." The firm deserves credit for a consistent and well-codified approach to manager research. A small investment team evaluates new managers and existing ones along five areas it thinks lead to outperformance: organizational stability, personnel, investment discipline, firm infrastructure, and results. Although Touchstone often makes investment-style and portfolio-manager changes to funds it has acquired—it has made two substantive acquisitions in the past five years—overall a patient mindset has resulted in long-term relationships with many subadvisors even when short-term performance is weak.

Parent

Touchstone Ultra Short Income ETF

TUSI is actively managed to select a broad portfolio of attractively priced fixed income securities of ultra-short term maturities and varied credit ratings.

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News for Touchstone Ultra Short Income ETF ETF (TUSI)