The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  The Acquirers ETF to a Morningstar Medalist Rating of Negative.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The management team doesn't personally invest much alongside shareholders. This is a large contributor to the strategy's 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 overweight position in quality exposure and yield exposure compared with category peers. High quality exposure is attributed to stocks with low financial leverage and strong returns on equity. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy's parent organization is industry standard, albeit with some strong attributes like a favorable lineup success ratio and overall low fees. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Encore Wire

Warrior Met Coal

CNX Resources

Virtu Financial

SM Energy

Commercial Metals

Axos Financial Inc.

Nucor

Cal-Maine Foods

Arch Resources

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. The Acquirers Fund ETF earns an Average Process Pillar rating. 

The most notable contributor to the rating is the firm's five-year retention rate of 100% over the period. The parent firm's excellent risk-adjusted performance, as shown by its average overall Morningstar Rating of 5.0 stars, also influences the rating. 

 This strategy skews toward larger, more value-oriented companies than its average peer in the Mid-Cap Value Morningstar Category. Examining additional factor exposure, this strategy has consistently favored high-quality stocks, including those with low financial leverage and solid returns on equity, compared with Morningstar Category peers during recent years. Such holdings could cause it to trail peers during economic booms, but help it better withstand busts. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. In addition, the strategy had more exposure to high-liquidity stocks compared with Morningstar Category peers in recent months. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to experience a significant loss.  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 basic materials and energy relative to the category average by 22.1 and 11.3 percentage points, respectively. The sectors with low exposure compared to category peers are technology and utilities, underweight the average by 10.4 and 6.6 percentage points of assets, respectively. The portfolio is composed of 34 holdings and is relatively top-heavy. Of the strategy's assets, 36.4% are concentrated within the top 10 holdings, compared to the category’s 17.3% average. And finally, in terms of portfolio turnover, looking at year-over-year movements, 105% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

The Acquirers Fund ETF earns a Below Average People Pillar rating. The team is supported by the firm's five-year retention rate of 100%. However, the rating is held back by the combined average five-year excess return of each manager, which shows that the funds they manage have trailed their respective category average. The number of months that the management team has been running this vehicle together also holds the rating back.


The team is backed by Charles A. Ragauss, the longest-tenured manager on the strategy, who brings 11 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.6 stars, reflecting below-average risk-adjusted performance relative to category peers. Despite having a small team, the two listed managers boast 11 years of listed portfolio management experience.

Below Average

People

Acquirers's track record as a steward is mixed, leading to an Average Parent Pillar rating.  The firm charges fees on open-end and exchange-traded funds that are on par with category peers. On average, fees are within the middle quintile, giving it neither an advantage nor disadvantage compared with the competition. An average tenure of only five years among the longest-tenured managers at Acquirers is concerning. In isolation, seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions.

Parent

The Acquirers Fund ETF

ZIG is an actively-managed portfolio of equity securities issued by US-listed companies that exhibit strong fundamentals and value characteristics.

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