The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  VictoryShares Corporate Bond 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 receives a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in AAA rated bonds and government bonds 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 style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. VictoryShares Corporate Bond ETF earns a Below Average Process Pillar rating.    The process benefits from the size of its portfolio management team. With five portfolio managers at the helm, the fund is well-staffed. However, the rating is limited by the parent firm's five-year risk-adjusted success ratio of 48%. 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 parent's modest success ratio suggests that the firm could do better across its fund lineup. Management team experience, which averages six years at this fund, also limits the process.

 Compared with other funds in the Corporate 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. Relative to the average strategy in the category, the managers have been underweight AAA rated bonds in recent years. In the latest month, the strategy has also relatively underweighted AAA rated bonds compared with Morningstar Category peers. Additionally, the fund has exhibited a sector bias away from government bonds over the past few years. In the most recent month, however, the fund's exposure to government bonds was in line with the Morningstar Category average. Finally, during the past few years, the fund leaned meaningfully away from debt with 10- to 15-year maturities. In recent months, the strategy also had less exposure to debt with 10- to 15-year maturities compared to its peers.

 This strategy's 12-month yield is 3.8%, lower than its average peers' 4.2%. While a lower yield may deliver less income, it also tends to indicate lower credit risk. The portfolio has a higher average surveyed credit quality of BBB, compared with the typical peers' BB, and its non-investment-grade stake is 1% of assets, compared with its average peers' 33%. Strategies with lower credit risk can typically withstand market turmoil more effectively.

Below Average

Process

VictoryShares Corporate 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 currently manage is 3.4 stars, demonstrating encouraging risk-adjusted performance. R.Neal Graves draws on a supporting cast of four additional listed managers. Together they average six years of listed portfolio management experience.  The highest personal investment by any of the strategy's managers is less than $10,000. That is too low to promote alignment of their 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 Corporate Bond ETF

UCRD is an actively managed fund that employs a proprietary ESG and credit rating methodology to select investment-grade corporate bonds.

Victoryshares THB Mid Cap ESG ETF

Victoryshares ESG Core Plus 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 Corporate Bond ETF ETF (UCRD)