Weakness in WBI BullBear Quality 3000 ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the highest 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 an overweight in liquidity exposure and momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. The strategy's managers invest in the strategy, but other weaknesses lead to the strategy's Below Average People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like continuity among portfolio managers, but is held back by an unfavorable lineup success ratio. This earns the firm an Average Parent Pillar rating, the result of a recent upgrade from Below Average.

Analyst Rating

SPDR Bloomberg 1-3 Month T-Bill ETF

Progressive

W. R. Berkley

Cigna

American Express

Target

Automatic Data Processing

Otis Worldwide

Service Corp

Apollo Global Management

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. WBI BullBear Quality 3000 ETF earns a Below Average Process Pillar rating. 

The process benefits from the stability of talent across its parent firm. The firm's asset-weighted manager tenure of 18 years demonstrates its ability to retain portfolio managers. However, the rating is weakened by the fund's weak 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 risk-adjusted success ratio of 0% also limits the process. 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.

 This strategy prefers smaller market-cap firms compared with the average fund in its peer group, the Large Blend Morningstar Category.  But in terms of style (value/growth) exposure, it does not have much of a bias and resembles the category's typical portfolio. Analyzing additional factors, this strategy has consistently tilted toward companies with relatively higher trading volumes in the last few years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also had more exposure to high-momentum stocks in recent years. Momentum approaches bet that rising stocks will continue to rise and that lagging stocks will continue to lag. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. Additionally, this strategy's portfolio has held more stocks with high dividend or buyback yields than peers over recent years. Higher-yield stocks can provide steady income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. In recent months, however, the strategy had less Yield factor exposure over 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 technology and industrials relative to the category average by 13.7 and 12.7 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and consumer cyclical, underweight the average by 13.3 and 6.8 percentage points of assets, respectively. The portfolio is composed of 32 holdings and is quite concentrated. Specifically, 51.5% of the portfolio's assets are housed within the top 10 holdings, versus the category average of 48.8%. And in closing, in terms of portfolio turnover, on a year-over-year basis, more than 400% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Below Average

Process

WBI BullBear Quality 3000 ETF earns a Below Average People Pillar rating. The team benefits from the stability of the management team. Specifically, the fund has not seen a manager change in the last five years. However, the rating is weakened by the parent firm's five-year success ratio of 0%. 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 managers' failure to consistently outperform peers at the funds they run, as measured by their combined three-year manager excess returns, also detracts from the team.


The team is backed by Donald R. Schreiber, the longest-tenured manager on the strategy, who brings over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 1.5 stars, indicating that their risk-adjusted returns have fallen below the category average. Despite having a small team, the two listed managers boast 18 years of listed portfolio management experience.

People

In a competitive industry, WBI doesn't differentiate itself enough, leading to an Average Parent Pillar rating. The firm has proven successful at holding onto portfolio management talent, providing continuity for strategies, as displayed by low turnover in the past five years compared with asset management peers. WBI fails to showcase longevity across its product shelf, as evidenced by its three-year risk-adjusted success ratio. Over this time period, only 25% of its roster has been able to both survive and beat its respective category median on a risk-adjusted basis. A low success ratio indicates poor performance and raises questions about a firm’s discipline around investment strategy and product development. The WBI roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as evidenced by its average three-year Morningstar Rating of 2.0 stars.

Average

Parent

WBI BullBear Quality 3000 ETF

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