The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Sprott Uranium Miners ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The team managing the passive 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 a substantial underweight position in yield exposure and has a significant overweight in volatility exposure compared with category peers. Low yield exposure is attributed to holding fewer stocks with high dividend or buyback yields -- instead, typically holding companies with a stronger focus on growth opposed to returning capital. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Cameco

KCAP Financial Inc 7 3/8 % Notes 2012-30.9.19 Sr

Denison Mines

Uranium Energy

NexGen Energy

BlackRock Enhanced Global Dividend Trust

Energy Fuels

Encore Energy Corp

IsoPlexis Corp

Lotus Resources Limited

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Sprott Uranium Miners ETF earns an Average Process Pillar rating. The primary contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also support the rating. The pattern of low costs at the firm indicates that it is focused on delivering strong results for investors. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 43%. 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 subpar success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the North Shore Global Uranium Mining Index.  The fund will normally invest at least 80% of its total assets in securities of the index. The index is designed to track the performance of companies that devote at least 50% of their assets to (i) mining, exploration, development, and production of uranium; and/or (ii) holding physical uranium, owning uranium royalties, or engaging in other, and non-mining activities that support the uranium mining industry. It is non-diversified. 

 The portfolio is overweight in energy by 63.2 percentage points in terms of assets compared with the category average, and its financial services allocation is similar to the category. The sectors with low exposure compared to category peers are basic materials and industrials, underweight the average by 38.5 and 10.6 percentage points of assets, respectively. The portfolio is composed of 39 holdings and is quite concentrated. More concretely, 76.3% of the strategy's assets are housed within the top 10 holdings, compared to the typical peer's 23.9%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 10% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Sprott’s team earns a Below Average People Pillar rating. The team is strengthened by the portfolio managers' outperformance of peers at the funds they run, as measured by their combined three-year manager excess returns. However, the rating is held back by the parent firm's five-year success ratio of 30%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 50% also limits the team.

Below Average

People

Sprott's focus on a niche area of the market and some mixed characteristics lead to an Average Parent rating.
This firm has undergone several changes in the past five years. In 2017, the firm spun off the non-precious-metals vehicles it had launched over the prior decade, and founder Eric Sprott retired. Getting back to its roots, the firm has since consolidated one of Canada's gold exchange-traded funds into its own and acquired a gold ETF, a silver ETF, and a U.S.-based, actively managed open-end mutual fund focused on gold-mining stocks. Sprott has recently expanded its lineup to include critical minerals, namely a uranium ETF and a physical platinum and palladium trust, but the firm remains largely focused on precious metals.
A relatively deep investment team manages this niche lineup. In 2022, 25-year industry veteran John Ciampaglia took over as Sprott Asset Management's CEO from Whitney George after George became Sprott Inc.'s CEO. That said, George remains involved in investment management, and an experienced 12-person team remains, including John Hathaway and Doug Groh, who came aboard as part of the firm's 2020 acquisition of Tocqueville's gold strategies. These resources could give the firm an edge, but key-person risk remains given the long tenures of Hathaway and George. Further, the firm's niche focus creates potential for large swings in both assets and performance.

Parent

Sprott Uranium Miners ETF

URNM tracks a market-cap-weighted index of global companies in the uranium industry.

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