Decreased confidence in ETFMG Travel Tech ETF's prospects relative to its Morningstar Category peers results in  a downgrade in this strategy's Morningstar Medalist Rating to Neutral from Bronze. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-costliest quintile among peers.  

 The team managing the passive strategy earns a Low People Pillar. The strategy earns an Average Process Pillar rating.  High volatility exposure is attributed to companies with a higher standard deviation of returns. 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. To be considered a quality steward, this strategy's parent organization needs to improve factors like unsubstantial personal investments from portfolio managers and a relatively inexperienced portfolio management team. As a result, the firm obtains a Low Parent Pillar rating.

Analyst Rating

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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. ETFMG Travel Tech ETF earns an Average Process Pillar rating. The most important driver of the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low expenses across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also influence the rating. The pattern of low fees at the firm indicates that it is focused on delivering strong results for investors. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 14%. 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 modest success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Prime Travel Technology Index NTR.  The fund invests at least 80% of its total assets, exclusive of collateral held from securities lending, in the component securities of the index and in ADRs and GDRs based on the component securities in the index. The index tracks the performance of globally exchange-listed equity securities of companies across the globe that are engaged in "Travel Technology Business" which is defined as providing technology, and via the internet and internet-connected devices. 

 The portfolio is overweight in technology by 19.2 percentage points in terms of assets compared with the category average, and its financial services allocation is similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and consumer defensive, underweight the average by 6.6 and 5.2 percentage points of assets, respectively. The portfolio is positioned across 40 holdings and is less top-heavy than peers. Specifically, 45.0% of the strategy's assets are concentrated within the top 10 fund holdings, as opposed to the category’s 50.8% average.

Average

Process

ETF Managers’s team receives a Low People Pillar rating. The largest detractor from the rating is the instability 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 combined average five-year excess return of each manager also detracts from the team. It indicates that the funds they manage have underperformed their respective category's average return. The instability of its management team detracts from the rating further. Specifically, the fund last had a manager change one year ago.

People

ETF Managers lags peer asset managers in a number of stewardship qualities, resulting in a Low Parent Pillar rating. A quality holding back ETF Managers from the top tier of stewards is its managers' limited personal investments in their respective products, which helps to align portfolio manager and shareholder interests. Currently, none of the firm’s assets are covered by invested managers. With an average asset-weighted tenure of six years among the longest-tenured managers at ETF Managers, the firm is on par with peers. Seasoned teams tend to have more experience to draw upon should they need to weather turbulent market conditions. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

ETFMG Travel Tech ETF

AWAY tracks an index of global travel technology companies that are fundamentally screened and are weighted based on market cap and liquidity.

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