FMQQ The Next Frontr Intrnt & Ecmmrc ETF earns a Morningstar Medalist Rating of Neutral with strength in areas such as Process offset by weaker spots such as People. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The team managing the passive strategy earns a Low People Pillar. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in liquidity exposure and has a substantial underweight in quality exposure compared with category peers. 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. The strategy's parent firm has some investor-friendly attributes, like modest portfolio manager turnover and overall attractive fees. As a result, the firm gets an Average 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. FMQQ The Next Frontr Intrnt & Ecmmrc ETF earns an Above 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 firm's five-year retention rate of 100% also supports the rating. Lastly, the process is limited by the experience of the management team, which averages four years at this fund.

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 price and yield performance of the FMQQ The Next Frontier Internet & Ecommerce IndexTM (the "index").  The fund invests in securities comprising the index or in depositary receipts representing securities of the index. The index was designed by EMQQ Global LLC to measure the performance of an investable universe of publicly traded emerging market and frontier market internet and ecommerce companies. Under normal circumstances, and the fund will invest at least 80% of its net assets in the securities of internet companies. The fund is non-diversified. 

 The portfolio is overweight in consumer cyclical and communication services relative to the category average by 19.5 and 10.4 percentage points, respectively. The sectors with low exposure compared to category peers are technology and consumer defensive, underweight the average by 11.4 and 7.0 percentage points of assets, respectively. The portfolio is positioned across 77 holdings and is quite concentrated. In particular, 61.0% of the fund’s assets are housed within the top 10 holdings, versus the category’s 25.3% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 24% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

FMQQ’s team earns a Low People Pillar rating. The largest detractor from the rating is the experience of the management team, which averages four years at this fund. Turnover at its parent firm also weakens the team. The firm's asset-weighted manager tenure of two years suggests it could do more to hold onto portfolio managers. The number of months that the management team has been running this vehicle together limits the rating further.

People

Even though FMQQ only has a two-year track record, it has shown to be an industry-standard steward, warranting an Average Parent Pillar rating. FMQQ currently oversees one vehicle, with a total of $22.6 million under management and a roster of four fund managers. As a consequence of being a new firm, there is very low manager experience on average, four years. Despite the lack of experienced managers, FMQQ has done very well at retaining its team. 

 The below-average fees of FMQQ's open-end and exchange-traded funds display a commitment to maximizing investor returns. The average net expense ratio for its funds ranks within the second-lowest quintile of peer asset managers.  

 To retain an Average rating, FMQQ needs to maintain a consistent track record of positive investor experience.

Average

Parent

The Next Frontier Internet & Ecommerce ETF

FMQQ is a passively managed fund that invests in internet and e-commerce companies from emerging and frontier markets.

Emerging Markets Internet & Ecommerce ETF

INQQ The India Internet & Ecommerce ETF

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News for The Next Frontier Internet & Ecommerce ETF ETF (FMQQ)