Weakness in Global X Next Emerging & Frontier ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy earns a Low 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 an overweight in yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy has not disclosed the portfolio management team's names, reducing confidence and contributing to a Below Average People Pillar rating, recently upgraded from Low. 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

Aberdeen Standard Bloomberg All Commodity Strategy K-1 Free ETF

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. Global X Next Emerging & Frontier ETF earns a Low Process Pillar rating. The most significant detractor from the rating is the fund's weak long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year risk-adjusted success ratio of 28% also holds the process back. 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 subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's subpar risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.1 stars, detracts from the process as well. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

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 MSCI Select Emerging and Frontier Markets Access Index ("underlying index").  The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs") based on the securities in the underlying index. The underlying index is designed to reflect equity performance of select emerging markets and frontier markets companies while maintaining diversification across individual countries, and sectors and issuers. 

 The portfolio is overweight in financial services and consumer cyclical relative to the category average by 40.5 and 24.7 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, underweight the average by 24.3 and 8.0 percentage points of assets, respectively. The strategy owns 13 securities and is less top-heavy than peers. Specifically, 1.0% of the portfolio's assets are concentrated within the top 10 fund holdings, as opposed to the typical peer's 25.3%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 17% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Process

Global X Next Emerging & Frontier ETF's portfolio-management team has not disclosed any manager names, leaving behind limited data to form an analysis.

 Analyzing the remaining available data, the management team running the fund has fallen short compared with peers, leading to a Below Average People Pillar rating. The fund has been a top performer in its peer group category, Diversified Emerging Mkts. Over the past three-year period, it was within the top 20% of funds. But the fund's alpha tells a different story. Over the same period, the strategy was unable to prove its effectiveness and generate positive alpha.

Below Average

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

Global X Next Emerging & Frontier ETF

EMFM tracks an index of emerging and frontier markets, excluding BRIC, Taiwan and South Korea.

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Franklin FTSE Brazil ETF

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Although 14 new ETFs debuted in the U.S. this past week, closure announcements came in even stronger, largely due to Global X pruning its lineup. Launches during the week included funds from BondBloxx, WisdomTree, Innovator, JPMorgan, and Range ETFs.

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NEW YORK , Jan. 19, 2024 /PRNewswire/ -- Global X ETFs, the New York-based provider of exchange-traded funds, today announced the scheduled liquidation of the following ETFs (the "Funds"), based on an ongoing review process of its product lineup to ensure it meets the evolving needs of its clients. The Funds scheduled for liquidation include: Fund Ticker CUSIP Global X Cannabis ETF POTX 37954Y145 Global X Carbon Credits Strategy ETF NTRL 37960A586 Global X China Biotech Innovation ETF CHB 37954Y251 Global X Green Building ETF GRNR 37960A842 Global X Health & Wellness ETF BFIT 37954Y798 Global X Metaverse ETF VR 37960A834 Global X MSCI China Communication Services ETF CHIC 37950E804 Global X MSCI China Consumer Staples ETF CHIS 37954Y558 Global X MSCI China Energy ETF CHIE 37950E507 Global X MSCI China Financials ETF CHIX 37950E606 Global X MSCI China Health Care ETF CHIH 37954Y541 Global X MSCI China Industrials ETF CHII 37950E705 Global X MSCI China Information Technology ETF CHIK 37954Y533 Global X MSCI China Materials ETF CHIM 37950E242 Global X MSCI China Real Estate ETF CHIR 37960A685 Global X MSCI China Utilities ETF CHIU 37954Y517 Global X MSCI Next Emerging & Frontier ETF EMFM 37950E218 Global X MSCI Pakistan ETF PAK 37954Y335 Global X MSCI Portugal ETF PGAL 37950E192   Based upon the recommendation of Global X Management Company LLC, the Global X Funds' adviser, the Board of Trustees determined on January 19, 2024 that it was in the best interests of the Funds and their shareholders to liquidate each of the Funds.

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News for Global X Next Emerging & Frontier ETF ETF (EMFM)