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

 The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and an underweight in momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. 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 low fees but is held back by a pattern of portfolio manager churn.

Analyst Rating

Apple

Roblox

NVIDIA

Microsoft

QUALCOMM

Autodesk

Alphabet

Amazon

Unity Software

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. Roundhill Ball Metaverse ETF earns an Average Process Pillar rating. The most important driver of 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. A low expense ratio, with costs ranking in its category's cheapest fifth, also supports the rating. Expenses reduce net returns and are one of the most reliable predictors of future performance. 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 relatively low 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 Ball Metaverse Index (the "index").  The index seeks to track the performance of globally-listed equity securities of companies that engage in activities or provide products, services, technologies, or technological capabilities to enable the Metaverse, and benefit from its generated revenues. "Metaverse" is a term used to refer to a future iteration of the Internet. Under normal circumstances, at least 80% of the fund's net assets will be invested in Metaverse Companies, and which may include investments in ADRs or SPACs. The fund is non-diversified. 

 The portfolio is overweight in communication services by 28.4 percentage points in terms of assets compared with the category average, and its consumer cyclical allocation is similar to the category. The sectors with low exposure compared to category peers are technology and industrials, with technology underweighting the average portfolio by 24.3 percentage points of assets and industrials similar to the average. The portfolio is composed of 50 holdings and invests 49.0% of assets in its top 10 holdings, similar to the category average. And in closing, in terms of portfolio turnover, this portfolio trades more frequently than the average peer in its category, which may result in higher trading costs for investors and cause a drag on performance.

Average

Process

Roundhill’s team remains inferior, compared with better-resourced rivals, resulting in a Low People Pillar rating. There are three managers listed on the fund: Gabriel Tan, Andrew Serowik, Todd Albrecio. The team is largely unproven, as its members only average three years of portfolio management experience. Though they do not manage other products together, managers may manage them individually.

People

Roundhill is an industry-standard asset manager, leading to an Average Parent Pillar rating. A strength of Roundhill is that its product shelf of open-end and exchange-traded funds is, on average, offered at a minimal cost, suggesting that it considers what's best for its investor base. On average, fees for funds are in the second-cheapest quintile of respective category peers. Roundhill has undergone a bout of turnover in the past five years, as seen in its lower-than-average portfolio manager retention. This is a concern, as long-term stability tends to support positive results. With an average five-year Morningstar Rating of 1.0 stars, the risk-adjusted performance of Roundhill's open-end and exchange-traded funds falls short of competitors.

Parent

Roundhill Ball Metaverse ETF

The Roundhill Ball Metaverse ETF is an exchange-traded fund incorporated in the US. The fund seeks to track the performance of the Ball Metaverse Index, which is comprised of leading companies across major categories of the Metaverse.  “Metaverse” is a concept of a next-gen Internet that’s persistent, interoperable, synchronous, and open to everyone, with its own fully functioning economy and both virtual and real-world experiences. 

METV is a passively-managed ETF investing in globally-listed equities spanning various industries, all relating to what it defines as a future iteration of the internet  Metaverse. Stocks are selected by a committee and weighted in tiers.

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The Roundhill Ball Metaverse ETF has experienced losses in the past year, while the Invesco QQQ Trust has seen gains due to interest in artificial intelligence. Interest in the metaverse theme has declined, with companies like Facebook and Disney scaling back their metaverse plans. METV has remained relatively resilient due to its exposure to both the metaverse and AI industry, with holdings in companies like Apple, Nvidia, and Roblox.

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Walmart

The Metaverse is a shared virtual 3D world, or worlds, that are interactive and collaborative. Bloomberg Intelligence expects the market opportunity for the metaverse to reach $800 billion by 2024 from $500 billion in 2020.

News for Roundhill Ball Metaverse ETF ETF (METV)