The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Tema Oncology ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy earns an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. To be considered a quality steward, this strategy's parent organization needs to improve factors like a lack of inside investments from portfolio managers and relatively short-tenured portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Regeneron Pharmaceuticals

Merck

AstraZeneca

Amgen

Novan

Illumina

Blueprint Medicines

Revolution Medicines

Celldex Therapeutics

Incyte

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Tema Oncology ETF earns an Average Process Pillar rating. 

The main driver of the rating is the firm's five-year retention rate of 100% over the period. The depth of the portfolio management team also reinforces the process. With six portfolio managers, the fund is well-staffed. Lastly, the process is limited by the experience of the management team, which averages six years at this fund.

 This strategy tends to hold smaller, more growth-oriented companies compared with its average peer in the Health Morningstar Category. Looking at additional factor exposure, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. The strategy has also had a defensive tilt, demonstrated by lower exposure to the quality factor than peers in recent years. This means the fund has avoided holding companies that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. This orientation tends to pay off most prominently when markets are hot. In this month, the strategy also had more exposure to the Volatility 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 has allocations in its top two sectors, healthcare and energy, that are similar to the category. The sectors with low exposure compared to category peers are basic materials and technology; however, the allocations are similar to the category. The portfolio is composed of 50 holdings and its assets are more dispersed than peers in the category. In particular, 36.5% of the fund’s assets are concentrated in the top 10 fund holdings, as opposed to the typical peer's 41.0%.

Average

Process

Tema Oncology ETF earns a Below Average People Pillar rating. The team is supported by the firm's five-year retention rate of 100%. However, the rating is weakened by the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy. Management team experience, which averages six years at this fund, also limits the team.


None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

Below Average

People

Due to Tema Global's short track record as a firm, 10 months, there has not been time to demonstrate whether it has a unique value proposition over peer asset managers. This earns the firm a Below Average Parent Pillar rating. The firm currently manages 76 vehicles, with a total of $125.7 million under management across a bench of eight portfolio managers.  The firm's earliest portfolio manager hire, Christopher F. Semenuk, has more than 20 years of industry experience. 
 
   

 As Tema Global builds and continues to develop a track record, its rating will be adjusted accordingly.

Parent

Tema Oncology ETF

CANC is actively managed, investing in stocks of companies focused on cancer treatment and management from issuers all around the world. The fund uses a bottom-up approach to select pioneering companies at perceived attractive valuations.

Oncology treatment has witnessed remarkable progress due to the relentless efforts of pharmaceutical companies in recent times.

Inside Tema ETFs' New Oncology ETF (CANC)

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Asian Growth CUBS ETF

Grizzle Growth ETF

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The U.S. ETF industry saw a major slowdown in ETF launches during the week ending Aug. 18 as the summer slump continued. Only six new ETFs launched, while issuers announced only one new closure.

This Week in ETFs: 2 New Funds Launch From Tema

NEW YORK--(BUSINESS WIRE)--Tema ETFs (“Tema”) launches two innovative and actively managed thematic ETF offerings: the Oncology ETF (CANC) and the Global Royalties ETF (ROYA). These strategies are the first to address these specific themes in an actively managed ETF wrapper in the United States. The CANC portfolio will be managed by David K. Song, MD, PhD, CFA, who has led biotechnology and healthcare investment teams throughout his extensive 25-year career, including roles at Rockefeller Capit.

News for Tema Oncology ETF ETF (CANC)