Weakness in Global X Emerging Mkts Great Cnsmr ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee 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 a significant underweight position in quality exposure and yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The strategy's manager investment level is lacking and is one of the reasons behind its Below Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

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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. Global X Emerging Mkts Great Cnsmr ETF earns a Below Average Process Pillar rating. 

The process is bolstered by the stability of the management team. Specifically, the fund has not seen a manager change in the last 14 years. However, the rating is limited by the instability of management across its parent firm. The firm's asset-weighted manager tenure of six years suggests it could do more to retain portfolio managers. The parent firm's five-year risk-adjusted success ratio of 28% 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 relatively low success ratio suggests that the firm could do better across its fund lineup.

 This strategy has more exposure to the Growth factor than the Diversified Emerging Mkts Morningstar Category average. But in terms of size exposure, it is similar to the average. Examining additional factor exposure, this strategy has consistently favored low-quality stocks compared with Morningstar Category peers over the past few years. Lacking this ballast, the fund's prospects could rest on its ability to surpass peers during economic booms. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy has also leaned away from the stocks of companies with high dividend or buyback yields 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. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. In addition, this strategy has taken on exposure to high-momentum stocks in these 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 this month, the strategy also had more exposure to the Momentum factor 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 consumer cyclical and communication services relative to the category average by 7.1 and 3.7 percentage points, respectively. The sectors with low exposure compared to category peers are basic materials and energy, underweight the average by 4.5 and 4.2 percentage points of assets, respectively. The strategy owns 83 securities and is relatively concentrated. In particular, 38.2% of the fund’s assets are housed within the top 10 holdings, compared with the typical peer's 25.4%. And finally, in terms of portfolio turnover, on a year-over-year basis, 64% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Below Average

Process

Global X Emerging Mkts Great Cnsmr ETF earns a Below Average People Pillar rating. The team is strengthened by the portfolio managers' outperformance of peers at the funds they run, as measured by their combined three-year manager excess returns. However, the rating is weakened by the turnover of talent across its parent firm. The firm's asset-weighted manager tenure of six years suggests it could do more to retain portfolio managers. The rating is also limited because no manager has invested more than $1 million the fund, which would show confidence in the strategy.


The team is backed by Joohee An, the longest-tenured manager on the strategy, who brings 14 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.1 stars, reflecting average risk-adjusted performance relative to category peers. Joohee An has an experienced backdrop of support. The three listed managers boast 14 years of average listed portfolio management experience.

People

Mirae Asset Global Investments is a Korean asset manager and a key player in the Asian financial market. It is a wholly owned subsidiary of Mirae Asset Financial Group, founded by Hyeon Joo Park. Park’s leadership and entrepreneurial spirit have been the driving force behind the global rise of Mirae, and he holds a majority stake in the business. 
Mirae Asset has grown significantly over the years (USD 198 billion as of December 2022) across a diversified platform, of which about 60% of assets are managed in South Korea. We believe that Mirae’s core mutual fund business in the Asia-Pac region is relatively strong. It has a collaborative structure, a strong and large investment team, low manager turnover, competitive fees, and a disciplined approach to product-development pointing toward better stewardship practices relative to peers in these markets. However, this is in stark contrast to its exchange-traded fund business, which accounts for 41% of the total assets. 
The firm’s ETF lineup focuses largely on high-risk thematic strategies that seem gimmicky, emphasizing short-term asset-gathering. The firm appears to leverage trending topics such as robotics and artificial intelligence, virtual reality and gaming, and cloud computing. There’s a notable concern regarding the potential liquidation of these funds since they seem to be designed around investment fads. Furthermore, these products are often expensive, especially compared with broadly diversified index funds and ETFs. Unsurprisingly, Mirae's reflexive product-development strategy has led to an increase in fund closures.
Our experience engaging with the MAGI team to gather critical information for the parent assessment has not been as positive. It hasn’t been as transparent in its disclosures, and unlike its peers, its responsiveness has been inadequate. We prefer firms with a more transparent corporate culture. Overall, these actions hold us back, and the firm retains its Parent Pillar rating of Average.

Average

Parent

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