Weakness in CastleArk Large Growth ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy gets a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in momentum exposure and quality exposure compared with category peers. Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And a high quality exposure is rooted in holding stocks with low financial leverage and strong returns on equity. The longest-tenured manager has a wealth of experience, but other weaknesses limit it to a Low People Pillar rating. The strategy's parent organization has room for improvement; it has, for instance, portfolio managers with limited tenures at the firm and above-average turnover among its portfolio managers. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Microsoft

NVIDIA

Apple

Amazon

Alphabet

Mastercard

Eli Lilly

DexCom

Lam Research

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. Castleark Large Growth ETF earns a Low Process Pillar rating. 

The most notable detractor from the rating is the parent firm's five-year retention rate of 50%, which suggests it could do more to hold onto its portfolio managers. Being an actively managed strategy also detracts from the process. Historical data, such as Morningstar's Active/Passive Barometer, shows that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons. The number of months that the management team has been running this vehicle together limits the rating further.

 This strategy leans toward larger, higher-growth companies than its average peer in the Large Growth Morningstar Category. Analyzing additional factors, this strategy has consistently had exposure to high-momentum stocks compared with Morningstar Category peers over the past few years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy also has had a defensive tilt, with exposure to higher-quality stocks compared with peers in recent years. This means that the fund holds companies that are profitable, growing, and have solid balance sheets. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. In addition, the portfolio has tended to underweight yield, as shown in its lower exposure to companies that pay dividends or buy back shares than peers over these years. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. In recent months, the strategy also had less Yield 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 technology and healthcare relative to the category average by 9.2 and 4.1 percentage points, respectively. The sectors with low exposure compared to category peers are consumer cyclical and industrials, underweight the average by 4.4 and 3.4 percentage points of assets, respectively. The portfolio is positioned across 27 holdings and is relatively concentrated. Specifically, 68.6% of the fund’s assets are housed within the top 10 holdings, as opposed to the typical peer's 53.2%.

Process

Castleark Large Growth ETF earns a Low People Pillar rating. The main factor behind the rating is the parent firm's five-year retention rate of 50%, which suggests it could do more to keep its portfolio managers. The number of months that the management team has been running this vehicle together also holds the rating back. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy. Additionally, none of the managers have invested $1 million or more in the fund, which would align their interests with fundholders.


The team is backed by Daniel P. Becker, the longest-tenured manager on the strategy, who brings over 25 years of listed portfolio management experience.  Although the team is small, it is a solid supporting cast. Together, the three listed managers boast more than an average of 13 years of listed portfolio management experience.

People

In a competitive industry, CastleArk doesn't differentiate itself enough, leading to an Average Parent Pillar rating. Morningstar generates quantitatively driven content for managed investments covered by the Morningstar Quantitative Rating, collectively called MQR Analysis. This strategy's Parent Pillar MQR Analysis content was not generated because of insufficient data. To generate individualized content, MQR Analysis requires sufficient data to generate its framework of “mental models” designed to mimic content written by analysts. The Quantitative Parent Pillar uses an algorithm designed to predict the Parent Pillar rating analysts would assign the investment product if they covered it.

Average

Parent

CastleArk Large Growth ETF

CARK is an actively managed fund of large-cap growth companies around the world. Securities are selected using a mix of quantitative metrics and a bottom-up fundamental approach.

iShares MSCI USA Momentum Factor ETF

Harbor Long-Term Growers ETF

All aboard the momentum train! The U.S. stock market, led by top techs, continued its winning ways from 2023 at the start of this year.

The Megacap Song Remains The Same For Stocks And ETFs

CastleArk has entered the exchange-traded fund market with its debut ETF, the CastleArk Large Growth ETF (NYSE Arca: CARK). The actively managed ETF targets roughly 25-30 of the largest and most successful growth companies in the market.

News for CastleArk Large Growth ETF ETF (CARK)