Union Value Fund Direct Growth INF582M01EK4

Union Value Fund earns an Average Process Pillar rating.

The main driver of the rating is the fund's impressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The firm's five-year retention rate of 83% also underpins the rating. However, the process is limited by being an actively managed strategy. Historical data, such as Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

This strategy is similar to its Value category peers in terms of market-cap and style exposure. Examining additional factor exposure, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, compared with Morningstar Category peers over the past few years. Such positions do not tend to provide much ballast for a portfolio. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. Given the high trading volume of holdings, this strategy has been exposed to liquid assets during these 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. Compared with category peers, the strategy also had more exposure to the Liquidity factor in the most recent month. Additionally, the strategy had more exposure to high-momentum stocks compared with Morningstar Category peers in recent months. 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. 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 industrials by 6.9 percentage points in terms of assets compared with the category average, and its consumer cyclical allocation is similar to the category. The sectors with low exposure compared with category peers are consumer defensive and energy, with consumer defensive underweighting the average portfolio by 2.8 percentage points of assets and energy similar to the average. The strategy owns 62 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 37.6% of the fund’s assets were concentrated in the top 10 fund holdings, compared to the category’s 40.4% average. And finally, in terms of portfolio turnover, looking at year-over-year movements, 139% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.