Despite People Pillar weakness and an Average Process Pillar, Roundhill S&P Global Luxury 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-lowest 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 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 team managing this passive strategy earns a Low People Pillar rating. The strategy's parent organization doesn't stand out, earning the firm an Average Parent Pillar rating. It has displayed a handful of investor-friendly attributes including overall attractive fees but is held back by a below-average success ratio across its lineup.

Analyst Rating

Cullen/Frost Bankers

Moelis

Ferrari

SPDR Bloomberg Barclays Mortgage Backed Bond ETF

Marriott

NIKE

Hilton Worldwide Holdings

Estee Lauder

Royal Caribbean Cruises

Tesla

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 S&P Global Luxury ETF earns an Average Process Pillar rating. The most significant 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. Low expenses across its parent firm's funds, whose fees, on average, rank in the second-cheapest quintile of their respective category, also support the rating. The pattern of low costs at the firm suggests that it is focused on delivering strong results for investors. 

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the performance, before fees and expenses, of the S&P Global Luxury Index.  The index is composed of common stock of U.S. and international companies of any capitalization engaged in the production, distribution, or provision of luxury goods and services. Under normal circumstances, at least 80% of the fund’s net assets (plus any borrowings for investment purposes) will be invested in the constituents of the index or investments with similar economic characteristics, and including American Depositary Receipts (“ADRs”). The fund is non-diversified. 

 The portfolio is overweight in consumer defensive and consumer cyclical relative to the category average by 7.4 and 6.1 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and communication services, with industrials underweighting the average portfolio by 8.3 percentage points of assets and communication services similar to the average. The strategy owns 82 securities and is relatively concentrated. Specifically, 54.7% of the strategy's assets are housed within the top 10 holdings, compared with the typical peer's 44.1%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 1% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Average

Process

Roundhill’s team earns a Low People Pillar rating. The main factor behind the rating is the experience of the management team, which averages four years at this fund. Turnover at its parent firm also limits the team. The firm's asset-weighted manager tenure of two years suggests it could do more to retain portfolio managers. The parent firm's five-year success ratio of 0% further 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.

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 S&P Global Luxury Etf

LUXX is passively managed to provide exposure to stocks listed globally that provide goods or services defined as a luxury. Stocks are selected and weighted based on the amount of luxury market exposure and market capitalization.

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