Despite People Pillar weakness and an Average Process Pillar, India Internet & Ecommerce ETF gets enough right to retain its Morningstar Medalist Rating of Bronze. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy gets an Average Process Pillar. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a high quality exposure is rooted in holding stocks that are consistently profitable, growing, and have solid balance sheets. The team managing this passive strategy earns a Low People Pillar rating. To be considered a quality steward, this strategy's parent organization needs to improve factors like a lack of inside investments from portfolio managers and a relatively inexperienced portfolio management team. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

MakeMyTrip

Freshworks

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. India Internet & Ecommerce ETF earns an 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 size of the portfolio management team also strengthens the process. With four portfolio managers, the fund is reasonably well-resourced. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 0%. The measure indicates the percentage of a firm's funds that survived and outperformed 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 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 INQQ The India Internet & Ecommerce IndexTM.  The fund invests in securities comprising the index or in depositary receipts representing securities of the index. The index was designed by the index Provider to measure the performance of an investable universe of publicly-traded, and Indian internet and ecommerce companies. The fund is non-diversified. 

 The portfolio is overweight in communication services and consumer cyclical relative to the category average by 12.8 and 9.7 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and basic materials, underweight the average by 8.9 and 8.2 percentage points of assets, respectively. The strategy owns 27 securities and is quite concentrated. Specifically, 64.0% of the strategy's assets are housed within the top 10 holdings, compared to the category’s 35.7% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 46% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Exchange Traded Concepts’s team receives a Low People Pillar rating. The most important determinant of the rating is the experience of the management team, which averages four years at this fund. Turnover at its parent firm also holds the rating back. The firm's asset-weighted manager tenure of four years suggests it could do more to hold onto portfolio managers. The parent firm's five-year success ratio of 0% further limits the team. 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.

People

Exchange Traded Concepts lags peer asset managers in a number of stewardship qualities, resulting in a Below Average Parent Pillar rating. Portfolio managers at Exchange Traded Concepts tend not to invest alongside their shareholders, detracting from the overall stewardship assessment. None of the firm’s assets are covered by an invested manager. A notable weakness of Exchange Traded Concepts is the inexperience of its longest-tenured managers compared with other asset managers. Managing capital through a full market cycle is a challenging prospect for seasoned managers, but with only four years of average asset-weighted tenure, there's cause for concern. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Below Average

Parent

INQQ The India Internet & Ecommerce ETF

INQQ tracks an index of companies centered around the internet and e-commerce technology in India. Securities are selected and weighted by market-cap.

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