The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  VictoryShares Core Plus Intmdt Bond ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy earns a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in BBB rated bonds and debt with 10- to 15-year maturities compared with category peers. The strategy’s management team earns an Average People 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. VictoryShares Core Plus Intmdt Bond ETF earns a Below Average Process Pillar rating.    The process is strengthened by the size of its portfolio management team. With four portfolio managers at the helm, the fund is reasonably well-resourced. However, the rating is limited by the parent firm's five-year risk-adjusted success ratio of 46%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. Management team experience, which averages seven years at this fund, also weakens the process.

 Compared with other funds in the Intermediate Core-Plus Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Compared with the category average, the managers have been overweight BBB rated bonds in recent years. In the latest month, the strategy has relatively overweighted BBB rated bonds compared with its peers as well. Additionally, there's been a notable overweight position in debt with 10- to 15-year maturities over the past few years. Compared with category peers, the strategy had more exposure to debt with 10- to 15-year maturities in the most recent month. Finally, during the past few years, the fund leaned away from government bonds. In this month, however, the strategy leaned more towards  than its peers.

 This strategy's 12-month yield is 4.6%, higher than its average peer's 3.9%. While a higher yield may deliver more income, it also tends to indicate higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BBB.

Below Average

Process

VictoryShares Core Plus Intmdt Bond ETF earns an Average People Pillar rating. The team is backed by R.Neal Graves, the longest-tenured manager on the strategy, who provides 10 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 3.3 stars, demonstrating above-average risk-adjusted performance versus category peers. R.Neal Graves has an adequate backdrop of support, drawing on three additional listed managers, averaging seven years of listed portfolio management experience. As a team, they manage two investment vehicles together, with disappointing prospects. Across the strategies they manage, there is an asset-weighted average Morningstar Medalist Rating of Negative. This indicates the team is projected to generate negative alpha in aggregate. The team's personal investments in the fund are insignificant, with the maximum investment by any one manager being between $10,000 and $50,000. That amount is too small to help align managers' interests with the fund'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

As Victory Capital Management expands a roster of investment teams that runs the gamut,  it retains an Average Parent rating.

Victory operates a multiaffiliate model. It centralizes operations, compliance, and distribution while giving its 12 franchises investment autonomy. The franchise lineup had long been composed of those primarily focused on small/mid-cap equities. But the 2019 acquisition of fixed-income shop USAA Investments (which was rebranded as Victory Income Investors in April 2023) represented a significant change to that model. The firm has continued to broaden from there, acquiring three new franchises since the start of 2021: THB Asset Management (an environmental, social, and governance specialist), New Energy Capital (an alternatives manager), and WestEnd Advisors (a third-party model strategist). Overall, Victory is as big and diverse as ever: Its assets under management as of March 2023 was $157.6 billion, much higher than the $52.8 billion level as of December 2018.

Victory’s bright spots include Sycamore Capital and Trivalent Investments, which boast strong investment cultures, good levels of manager ownership, and solid capacity management processes. But there are questions elsewhere. Victory Capital Solutions has made some questionable subadvisor changes and dubious exchange-traded fund launches in recent years; Victory Income Investors has seen several departures since the 2019 acquisition and will absorb another franchise, Incore, in September 2023.

Parent

Victoryshares ESG Core Plus Bond ETF

UBND is an actively managed fund that holds intermediate-term bonds of any type and rating that exhibit positive ESG characteristics.

Victoryshares THB Mid Cap ESG ETF

Victoryshares ESG Corporate Bond ETF

SAN ANTONIO--(BUSINESS WIRE)--The Nasdaq Stock Market LLC (the “Exchange”) has advised Victory Portfolios II that it has determined there were less than 50 beneficial holders in the following ETFs: VictoryShares THB Mid Cap ESG ETF, VictoryShares ESG Corporate Bond ETF, and VictoryShares ESG Core Plus Bond ETF (collectively “the Funds”). Therefore, the Funds did not meet the beneficial holders standard set forth in the Exchange Rule 5704(b)(2)(B)(the “Rule”).

News for Victoryshares ESG Core Plus Bond ETF ETF (UBND)