Union Focused Fund Direct Growth INF582M01FS4

Union Focused Fund earns an Average Process Pillar rating.

The main driver of the rating is the firm's retention rate of the firm's portfolio managers, which is 83% over the timeframe for which data is available, up to five years. The size of the portfolio management team also reinforces the process. With two portfolio managers, the fund is reasonably well-resourced. However, the process is limited by the parent firm's five-year risk-adjusted success ratio of 29%. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

This strategy, over time, has preferred larger market-cap companies, compared with others in the Focused Fund Morningstar Category. But in terms of style (value/growth) exposure, it is similar. Looking at additional factor exposure, this strategy has continually had exposure to high-momentum stocks compared with Morningstar Category peers in the last few years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy has also leaned away from the stocks of companies with high dividend or buyback yields over these years. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. Additionally, the strategy had more exposure to high-quality stocks compared with Morningstar Category peers in recent months. This means the fund holds consistently profitable, growing companies with solid balance sheets that may help it weather downturns better than Morningstar Category 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 has allocations in its top two sectors, consumer defensive and technology, that are similar to the category. The sectors with low exposure compared with category peers are financial services and consumer cyclical, underweight the average by 3.5 and 3.4 percentage points of assets, respectively. The portfolio is positioned across 31 holdings and is relatively concentrated. In particular, 51.0% of the fund’s assets are housed within the top 10 holdings, compared with the category’s 33.6% average.