Despite People Pillar weakness and an Average Process Pillar, Roundhill Alerian LNG ETF gets enough right to retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The strategy receives an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in quality exposure and liquidity exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. The team managing this passive strategy earns a Low People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like overall affordable fees, but is held back by an unfavorable lineup success ratio. This earns the firm an Average Parent Pillar rating.

Analyst 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 index on a risk-adjusted basis over the long term. Roundhill Alerian LNG ETF earns an Average Process Pillar rating. The main contributor to 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 supports 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 modest 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 performance, before fees and expenses, of the Alerian Liquefied Natural Gas Index.  The index is composed of the common stock of domestic and international companies in both developed and emerging markets, that are principally engaged in or derive significant revenue from the liquefied natural gas industry. Under normal circumstances, at least 80% of the fund’s net assets will be invested in constituents of the index or investments with similar economic characteristics, and including American Depositary Receipts. The fund is non-diversified. 

 The portfolio is overweight in utilities by 14.6 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared to category peers are energy and technology, with energy underweighting the average portfolio by 12.8 percentage points of assets and technology similar to the average. The portfolio is composed of 30 holdings and is relatively top-heavy. Of the strategy's assets, 69.9% are concentrated within the top 10 holdings, compared to the typical peer's 51.2%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 11% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Roundhill’s team receives a Low People Pillar rating. The most meaningful detractor from the rating is the experience of the management team, which averages four years at this fund. The instability of talent across its parent firm also holds the team back. The firm's asset-weighted manager tenure of two 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 relatively low success ratio suggests that the firm could do better across its fund lineup.

People

Roundhill has some investor-friendly attributes, but other attributes warrant caution, leading to an Average Parent Pillar rating. One notable advantage of Roundhill is its below-average fees. On average, the firm's open-end and exchange-traded fund fees fall in the second-cheapest quintile of category peers. Roundhill strategies have failed to have lengthy success. In particular, the firm's three-year success ratio demonstrates that only 0% have both survived and beaten their respective category median. A low success ratio indicates poor performance and raises questions about a firm’s discipline around investment strategy and product development. The Roundhill roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as seen in its average three-year Morningstar Rating of 1.3 stars.

Parent

Roundhill Alerian LNG ETF

LNGG tracks a revenue-adjusted, market cap-weighted index of stocks from around the world that are materially engaged in the liquefied natural gas industry, such as liquefied natural gas liquefaction, carrier services, and regasification.

Alerian Energy Infrastructure ETF

Summary U.S. LNG export capacity set to increase by 80% to 24.9 billion cubic feet per day (Bcf/d) over the next few years based on projects already under construction. Several more projects are signing long-term offtake agreements with a view to starting construction this year.

Midstream Positions for Ballooning U.S. LNG Exports

Summary Liquefied natural gas (LNG) has an important and growing role to play in the global energy mix, which was further underscored by Russia's invasion of Ukraine. The global LNG market is expected to grow by upward of 60% through 2040.

Global LNG Market Poised for Long-Term Growth

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Roundhill Investments has expanded its ETF lineup to offer exposure to the fast-growing LNG market. The Roundhill Alerian LNG ETF (LNGG), listed on NYSE Arca on September 22, provides access to U.S. and international companies materially engaged in the LNG industry.

Roundhill Offers Exposure to Global LNG Market With LNGG

LNGG tracks the Alerian Liquefied Natural Gas Index, providing access to leading companies across the Liquefied Natural Gas (LNG) value chain. LNGG is the world's first dedicated LNG ETF.

News for Roundhill Alerian LNG ETF ETF (LNGG)