The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Themes Global Systemically Imp Bks ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's inexperienced portfolio management team drives the strategy's Below Average People Pillar. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in momentum exposure and has a considerable underweight in quality exposure compared with category peers. 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 firm has some investor-friendly attributes, like continuity among portfolio managers, but it is held back by portfolio managers with limited tenures at the firm. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Deutsche Bank

Wells Fargo

Citigroup

Goldman Sachs

JPMorgan Chase & Co

Bank of America

Morgan Stanley

Bank of New York Mellon

Royal Bank of Canada

UBS Group AG

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. Themes Global Systemically Imp Bks 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. A low expense ratio, with fees ranking in its category's cheapest fifth, also strengthens the process. Expenses reduce net returns and are one of the most reliable predictors of future performance. Lastly, the process is limited by the experience of the management team, which averages three months at this fund.

 This strategy skews toward larger, more undervalued companies compared with its average peer in the Financial Morningstar Category. Analyzing additional factors, this strategy has consistently had exposure to high-momentum stocks compared with Morningstar Category peers over the past few years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy has also favored low-quality stocks. This means the fund avoids 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. In addition, this strategy has an underweight bias to the volatility factor, meaning investing in stocks that have a lower standard deviation of returns. These companies have historically been a valuable ballast to steady portfolio returns during market downturns. In recent months, the strategy also had less Volatility factor exposure than 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 is overweight in financial services by 15.9 percentage points in terms of assets compared with the category average, and its consumer defensive allocation is similar to the category. The sectors with low exposure compared to category peers are technology and consumer cyclical, with technology underweighting the average portfolio by 5.7 percentage points of assets and consumer cyclical similar to the average. The portfolio is positioned across 31 holdings and is diversified among those holdings. In its most recent portfolio, 36.8% of the portfolio's assets were concentrated in the top 10 fund holdings, compared to the category’s 46.9% average.

Average

Process

Themes Global Systemically Imp Bks ETF earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is limited by the experience of the management team, which averages three months at this fund. The number of months that the management team has been running this vehicle together also holds the rating back. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.


Dingxun(Kevin) Shao is a new manager with little listed portfolio management experience under their belt.  Dingxun(Kevin) Shao's supporting team is small and largely unproven, with only one other listed manager. Together, they average less than one year of listed portfolio management experience.

Below Average

People

Even though Themes ETF Trust's limited history of three months as a firm is working against its rating, they've proven to be an industry-standard steward, warranting an Average Parent Pillar rating. The firm currently manages 21 vehicles, with a total of $28.5 million under management across a bench of two strategy managers. As a new firm, there is very low manager industry experience--on average, less than six months. The firm's earliest portfolio manager hire, Dingxun(kevin) Shao, has only one year of industry experience. 
 
   

 As Themes ETF Trust builds and continues to develop a track record, its rating will be adjusted accordingly.

Parent

Themes Global Systemically Important Banks ETF

GSIB is an actively managed, concentrated portfolio of large-cap stocks selected solely based on the designation as a Global Systemically Important Bank. Stocks are equally weighted in the portfolio.

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News for Themes Global Systemically Important Banks ETF ETF (GSIB)