Weakness in Vesper US Large Cap S-T Rvrsl Stgy ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The team managing the passive strategy earns a Low People Pillar. The strategy gets a Below Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. To be considered a quality steward, this strategy's parent organization needs to improve factors like a lack of inside investments from portfolio managers and a cohort of unseasoned portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Eversource Energy

Verisk Analytics

Johnson & Johnson

Sysco

Linde

Alliant Energy

Verizon

Altria

CMS Energy

Everest Group Ltd

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. Vesper US Large Cap S-T Rvrsl Stgy ETF earns a Below Average Process Pillar rating. 

The process is bolstered by tracking 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. However, the rating is held back by the fund's unremarkable long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year retention rate of 64% also holds the rating back.

 This strategy leans toward smaller, deeper value companies than its average peer in the Large Blend Morningstar Category. Looking at additional factor exposure, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over peers in recent years. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the strategy has demonstrated a contrarian approach with relatively low exposure to momentum stocks during these years. Momentum strategies typically bet that stocks that have recently outperformed will continue to do so, and those that have recently underperformed will keep lagging. Avoiding the former and buying the latter could indicate that managers are averse to chasing momentum. In recent months, the strategy also had less Momentum factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in real estate and communication services relative to the category average by 13.9 and 3.9 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and technology, underweight the average by 5.3 and 3.9 percentage points of assets, respectively. The strategy owns 26 securities and is less top-heavy than peers. Specifically, 40.3% of the portfolio's assets are concentrated within the top 10 fund holdings, compared to the category’s 48.8% average. And finally, in terms of portfolio turnover, on a year-over-year basis, more than 400% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Below Average

Process

Exchange Traded Concepts’s team earns a Low People Pillar rating. The primary factor influencing the rating is the experience of the management team, which averages four years at this fund. Turnover at its parent firm also holds the team back. The firm's asset-weighted manager tenure of four years suggests it could do more to hold onto portfolio managers. The parent firm's five-year success ratio of 0% further holds the rating back. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

People

Exchange Traded Concepts lags peer asset managers in a number of stewardship qualities, resulting in a Below Average Parent Pillar rating. Portfolio managers at Exchange Traded Concepts tend not to invest alongside their shareholders, detracting from the overall stewardship assessment. None of the firm’s assets are covered by an invested manager. A notable weakness of Exchange Traded Concepts is the inexperience of its longest-tenured managers compared with other asset managers. Managing capital through a full market cycle is a challenging prospect for seasoned managers, but with only four years of average asset-weighted tenure, there's cause for concern. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

Vesper U.S. Large Cap Short-Term Reversal Strategy ETF

UTRN tracks an equal-weighted index of large-cap US stocks believed to benefit from a short-term reversal.

The Vesper U.S. Large Cap Short-Term Reversal Strategy ETF invests in 25 S&P 500 stocks it believes will most likely benefit from the "short-term reversal" effect. The index was developed by Vesper Capital Management and comprises stocks that have the best chance to experience the reversal effect based on the Chow ratio, a proprietary calculation.

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