The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Tema Obesity & Cardiometabolic ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest 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 gets an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by 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.

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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 Obesity & Cardiometabolic ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the firm's five-year retention rate of 100% over the period. The scale of the portfolio management team also contributes to the process. With five 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 skews toward smaller, more growth-oriented companies than its average peer in the Health Morningstar Category. Analyzing additional factors, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also demonstrated more exposure to high-momentum stocks over peers in recent 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. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. In addition, this strategy has not maintained a defensive tilt, demonstrated by low exposure to the quality factor. This means the fund avoids holding firms that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. In recent months, the strategy also had less Quality 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 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 43 holdings and its assets are more dispersed than peers in the category. In particular, 38.3% of the fund’s assets are concentrated in the top 10 fund holdings, compared to the typical peer's 41.0%.

Average

Process

Tema Obesity & Cardiometabolic ETF earns a Below Average People Pillar rating. The team is strengthened by the firm's five-year retention rate of 100%. However, the rating is held back 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 weakens 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 Obesity & Cardiometabolic ETF

HRTS is an actively managed fund that concentrates on companies focused on the treatment of cardiovascular diseases and/or metabolic diseases from companies all around the world. Using both top-down and bottom-up stock selection, the fund identifies innovative companies deemed attractive.

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