The combination of a middling Process Pillar rating and a Low People Pillar rating limit  Wedbush ETFMG Global Cloud Tech 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 team managing the passive strategy earns a Low 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 substantial underweight position in quality exposure and has a considerable overweight in volatility exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. To be considered a quality steward, this strategy's parent organization needs to improve factors like unsubstantial personal investments from portfolio managers and a bench of limited-tenure portfolio managers. The firm currently obtains a Low Parent Pillar rating, the result of a recent pillar downgrade from Below Average.

Analyst Rating

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Open Text

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Samsara

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. Wedbush ETFMG Global Cloud Tech ETF earns an Average Process Pillar rating. The leading factor in the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low expenses across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also influence the rating. The pattern of low costs at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 14%. The measure indicates the percentage of a firm's funds that survived and beat 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 track the total return performance, before fees and expenses, of the Dan Ives Global Cloud Technology Prime Index NTR (the “index”).  The fund invests at least 80% of its total assets, exclusive of collateral held from securities lending, and in the component securities of the index and in ADRs and GDRs based on the component securities in the index. The index tracks the performance of the exchange-listed equity securities of companies across the globe that are known collectively as “Cloud Technology Companies”. 

 The portfolio is overweight in technology and real estate relative to the category average by 17.1 and 2.6 percentage points, respectively. The sectors with low exposure compared to category peers are communication services and consumer cyclical, underweight the average by 6.5 and 5.5 percentage points of assets, respectively. The strategy owns 70 securities and is less top-heavy than peers. Specifically, 37.9% of the strategy's assets are concentrated within the top 10 fund holdings, as opposed to the category average's 48.5%. And in closing, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.

Average

Process

ETF Managers’s team earns a Low People Pillar rating. The main detractor from the rating is the instability of talent across its parent firm. The firm's asset-weighted manager tenure of five years suggests it could do more to retain portfolio managers. The parent firm's inferior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 1.0 stars, also limits the team. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The combined average five-year excess return of each manager detracts from the rating as well. It indicates that the funds they manage have fallen short of their respective category's average return.

People

ETF Managers fails to meet industry-standard stewardship qualities, culminating in a Low Parent Pillar rating. None of the firm’s assets are covered by an invested manager. Team members’ investments are regarded as helping to encourage long-term thinking and align portfolio manager and investor interests. Only five years of average asset-weighted tenure among ETF Managers's longest-tenured managers gives us pause. In isolation, seasoned teams tend to have more experience to draw upon should they need to navigate turbulent market conditions. With an average five-year Morningstar Rating of 2.1 stars, the risk-adjusted performance of ETF Managers's open-end and exchange-traded funds falls short of competitors.

Parent

Wedbush ETFMG Global Cloud Technology ETF

IVES tracks a market cap-weighted index of global equities related to cloud technology companies. 

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