The combination of a middling Process Pillar rating and a Low People Pillar rating limit  Global X MSCI EM Cov Call ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The team managing the passive strategy earns a Low People Pillar. The strategy earns an Average Process Pillar rating.  Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. 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.

Analyst Rating

iShares Core MSCI Emerging Markets ETF

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 MSCI EM Cov Call ETF earns an Average Process Pillar rating. The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The size of the portfolio management team also bolsters the process. With four portfolio managers, the fund is reasonably well-resourced. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 28%. 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 correspond generally to the price and yield performance, before fees and expenses, of the Cboe MSCI Emerging Markets IMI BuyWrite Index.  The fund invests at least 80% of its net assets, plus borrowings for investment purposes, in the securities of the index or in investments that are substantially identical to such component securities, and either individually or in the aggregate. Its 80% investment policy is non-fundamental and requires 60 days prior written notice to shareholders before it can be changed. The index measures the performance of a theoretical portfolio that employs a covered call strategy. 

 The portfolio has allocations in its top two sectors, basic materials and industrials, that are similar to the category. The sectors with low exposure compared to category peers are technology and consumer defensive; however, the allocations are similar to the category. The strategy has only reported a handful of holdings, and is in a category where 25.4% of assets are typically concentrated in the top 10 holdings.

Average

Process

Global X’s team receives a Low People Pillar rating. The most significant detractor from the rating is the parent firm's five-year success ratio of 28%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 58% also holds the rating back. The experience of the management team, which averages four years at this fund, limits the team as well.

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.

Parent

Global X MSCI Emerging Markets Covered Call ETF

EMCC tracks an index of emerging market stocks and sells one-month, at-the-money call options on the full amount of the underlying portfolio. The fund seeks to generate income and provide monthly distributions.

NEW YORK , Nov. 8, 2023 /PRNewswire/ -- Global X ETFs, the New York-based provider of exchange-traded funds (ETFs), today announced the launch of the Global X MSCI Emerging Markets Covered Call ETF (EMCC) on the New York Stock Exchange (NYSE), adding to Global X's growing selection of covered call and emerging markets investment strategies.  Emerging market economies have enjoyed growth at higher rates than their developed peers, balanced by higher levels of volatility in price relative to major domestic indices since 2011.i For investors seeking income, emerging markets can therefore potentially offer them both higher yields as well as a means to further diversify their portfolios.

News for Global X MSCI Emerging Markets Covered Call ETF ETF (EMCC)