Weakness in Tema Luxury ETF's Process and People Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy receives a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in liquidity exposure and an overweight in quality exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And a high quality exposure is rooted in holding stocks with low financial leverage and strong returns on equity. The strategy's portfolio management team has comparable experience to other strategies in the industry. However, due to other weaknesses, the strategy earns a Below Average 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 relatively short-tenured portfolio managers. As a result, the firm obtains a Below 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 benchmark on a risk-adjusted basis over the long term. Tema Luxury ETF earns a Below Average Process Pillar rating. 

The process is strengthened by the firm's five-year retention rate of 100% over the period. However, the rating is limited by the experience of the management team, which averages six years at this fund. High costs across its parent firm's funds, whose fees rank in their respective category's most-expensive quintile on average, also hold the process back. While this fund's costs are most relevant to investors, the pattern at the broader firm suggests it could do more to keep fees low.

 This strategy leans toward larger, more growth-oriented companies than its average peer in the Consumer Cyclical Morningstar Category. Analyzing additional factors, this strategy consistently held some companies with relatively lower trading volume compared with Morningstar Category peers in the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy also has had a position favoring high-quality stocks in recent years, which could contribute to higher downside risk protection. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. In addition, this strategy has displayed lower yield exposure than peers, holding fewer companies with high dividend or buyback yields over recent years. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. In recent months, the strategy also had less Yield 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 is overweight in consumer defensive by 23.2 percentage points in terms of assets compared with the category average, and its healthcare allocation is similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and industrials, underweight the average by 11.3 and 8.3 percentage points of assets, respectively. The portfolio is composed of 33 holdings and is relatively top-heavy. Of the strategy's assets, 59.4% are concentrated within the top 10 holdings, compared to the typical peer's 44.1%.

Below Average

Process

Tema Luxury ETF earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is weakened by the experience of the management team, which averages six years at this fund. The number of months that the management team has been running this vehicle together also holds the rating back. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.


The team is backed by Yuri Khodjamirian, the longest-tenured manager on the strategy, who brings 10 years of listed portfolio management experience.  The team consists of five additional named managers, who have six years of average listed portfolio management experience. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

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 Luxury ETF

LensCrafters is an American retailer of prescription eyewear, and prescription sunglasses, and the largest optical chain in the United States, with about 90 stores in California alone. It was founded in 1983 in the U.S. and has subsequently expanded to over 850 stores in Canada, the United States(Including Puerto Rico) and Hong Kong. The stores usually feature independent optometrists on-site or in an adjacent store. The company has its corporate headquarters in Mason, Ohio, a suburb of Cincinnati. LensCrafters, Sunglass Hut International and Pearle Vision are all wholly owned subsidiaries of Italy-based Luxottica, the largest eyewear company in the world.

LensCrafters

LUX seeks long-term growth from an actively managed portfolio of global companies that provide luxury goods and services. 

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