Columbia India Consumer ETF retains its Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in quality exposure and an underweight in liquidity exposure compared with category peers. A high quality exposure means holding stocks that are consistently profitable, growing, and have solid balance sheets. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. The team managing this passive strategy earns a Below Average People Pillar rating. 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

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. Columbia India Consumer ETF earns an Above Average Process Pillar rating. The most significant contributor to the rating is the fund's impressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category average, which suggests that the process was successful over that period. This fund tracks an index, which also increases its process rating. Historical data, like Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Lastly, the process is limited by the parent firm's five-year retention rate of 67%, which suggests it could do more to hold onto its portfolio managers.

The investment strategy as stated in the fund's prospectus is:  The investment seeks investment results that correspond to the price and yield performance of the Indxx India Consumer Index.  The fund will invest at least 80% of its net assets in Indian consumer companies included in the index and the advisor generally expects to be substantially invested at such times, with at least 95% of its net assets invested in these securities. The index is a maximum 30-stock free-float adjusted market capitalization-weighted index designed to measure the market performance of companies in the consumer industry in India, and as defined by Indxx's proprietary methodology. It is non-diversified. 

 The portfolio is overweight in consumer defensive and consumer cyclical relative to the category average by 63.2 and 17.1 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and technology, underweight the average by 26.4 and 11.4 percentage points of assets, respectively. The portfolio is composed of 16 holdings and is relatively top-heavy. Of the strategy's assets, 86.1% are concentrated within the top 10 holdings, compared to the category’s 35.7% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 22% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

Columbia Threadneedle’s team receives a Below Average People Pillar rating. The team is supported by the strategy's fees, which rank in its category's least expensive quintile. A higher expense ratio reduces net returns, so low costs give this team an advantage. However, the rating is limited by the parent firm's five-year retention rate of 67%, which suggests it could do more to keep its portfolio managers. The parent firm's five-year success ratio of 49% also holds the team back. 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 subpar success ratio suggests that the firm could do better across its fund lineup.

Below Average

People

Columbia Threadneedle is undergoing significant transitions on the personnel and operational fronts, underpinning an Average rating.

Colin Moore, Columbia CIO for nearly 20 years, retired at the end of 2021; William Davies, who had been CIO of global equities, replaced him. Moore had worked over the past several years to promote collaboration across his investment teams, including compelling portfolio managers to work with a centralized research pool and to act within consistent risk guardrails. The firm also made moves to streamline its product offerings, including merging or liquidating 28 strategies from January 2020 through March 2022.
These are sensible efforts, though there remain ongoing areas of uncertainty for Davies and CEO Ted Truscott to navigate. Though the firm's fixed-income team is mostly stable, its domestic-equity team has struggled for years with elevated turnover. Adding to this complexity, Columbia closed on its acquisition of Bank of Montreal's European investment business in November 2021, gaining numerous new U.S., U.K., and European-domiciled equity strategies, a compelling environmental, social, and governance capability, and a staff of 700 people. Though there are opportunities for Columbia to draw additional resources and capabilities from BMO, including specialists such as Pyrford International, it will take time to assess how these two firms mesh as a combined entity.

Average

Parent

Columbia India Consumer ETF

INCO tracks a market-cap-weighted index of 30 Indian consumer-sector stocks listed on the National Stock Exchange or the Bombay Stock Exchange.

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Emerging markets continued to expand at a solid pace midway into the first quarter of 2024, supported by broad-based expansion across both manufacturing and service sectors.

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India's consumer names continue to outperform the broader market. Sector valuations are also high, though investors willing to underwrite the quality and long-term growth on offer stand to be well-rewarded. As one of the few sector-focused India funds listed in the US, low-cost consumer ETF, INCO, screens attractively.

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For investors seeking momentum, Columbia India Consumer ETF INCO is probably on the radar. The fund just hit a 52-week high and is up 26.92% from its 52-week low price of $43.16/share.

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India's equities have shown stability and outperformed other emerging markets, making it a top-performing market. The Columbia India Consumer ETF provides exposure to India's automotive and consumer industries. India's demographics, including a young population and growing middle class, make it an attractive market for MNCs and potential for increased consumer spending.

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The Columbia India Consumer ETF portfolio has continued to outshine the rest of India's equity universe in recent months. And backed by some of the most attractive structural growth drivers out there, the Indian consumer growth story likely still has legs. While the fund screens very richly here, the widening growth premium enjoyed by India's consumer sector means INCO should still grow into its valuation over time.

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Within India, it may be worth considering a little-known ETF - The Columbia India Consumer ETF. INCO is well-poised to benefit from the growing clout of the Indian middle class.

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News for Columbia India Consumer ETF ETF (INCO)