Weakness in Global X Millennials Consumer ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The team managing the passive strategy earns a Low People Pillar. The strategy earns a Low Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Chipotle

Alphabet

PayPal

NIKE

Lululemon Athletica

Costco

Apple

Intuit

Lowe's

Amazon

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. Global X Millennials Consumer ETF earns a Low Process Pillar rating. The main driver of the rating is the fund's weak long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's disappointing risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.3 stars, also limits the process. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The parent firm's five-year risk-adjusted success ratio of 28% further detracts from the process. 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 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 provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Millennials Thematic Index.  The fund invests more than 80% of its total assets in the securities of the underlying index. The underlying index is designed to measure the performance of U.S. listed companies that provide exposure to the millennial generation consumption trends, (collectively, "Millennial Companies"), and as defined by the index provider. The millennial generation refers to the demographic in the U.S. with birth years ranging from 1980 to 2000. 

 The portfolio is overweight in consumer cyclical and communication services relative to the category average by 27.7 and 10.2 percentage points, respectively. The sectors with low exposure compared to category peers are technology and healthcare, underweight the average by 21.3 and 12.2 percentage points of assets, respectively. The strategy owns 81 securities and its assets are more dispersed than peers in the category. In particular, 40.5% of the strategy's assets are concentrated in the top 10 fund holdings, compared to the category average's 53.2%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 17% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Process

Global X’s team receives a Low People Pillar rating. The most meaningful detractor from the rating is the parent firm's five-year success ratio of 28%. 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 modest success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 58% also limits the team. The experience of the management team, which averages four years at this fund, limits the rating as well.

People

Mirae Asset Global Investments is a Korean asset manager and a key player in the Asian financial market. It is a wholly owned subsidiary of Mirae Asset Financial Group, founded by Hyeon Joo Park. Park’s leadership and entrepreneurial spirit have been the driving force behind the global rise of Mirae, and he holds a majority stake in the business. 
Mirae Asset has grown significantly over the years (USD 198 billion as of December 2022) across a diversified platform, of which about 60% of assets are managed in South Korea. We believe that Mirae’s core mutual fund business in the Asia-Pac region is relatively strong. It has a collaborative structure, a strong and large investment team, low manager turnover, competitive fees, and a disciplined approach to product-development pointing toward better stewardship practices relative to peers in these markets. However, this is in stark contrast to its exchange-traded fund business, which accounts for 41% of the total assets. 
The firm’s ETF lineup focuses largely on high-risk thematic strategies that seem gimmicky, emphasizing short-term asset-gathering. The firm appears to leverage trending topics such as robotics and artificial intelligence, virtual reality and gaming, and cloud computing. There’s a notable concern regarding the potential liquidation of these funds since they seem to be designed around investment fads. Furthermore, these products are often expensive, especially compared with broadly diversified index funds and ETFs. Unsurprisingly, Mirae's reflexive product-development strategy has led to an increase in fund closures.
Our experience engaging with the MAGI team to gather critical information for the parent assessment has not been as positive. It hasn’t been as transparent in its disclosures, and unlike its peers, its responsiveness has been inadequate. We prefer firms with a more transparent corporate culture. Overall, these actions hold us back, and the firm retains its Parent Pillar rating of Average.

Average

Parent

Global X Millennials Thematic ETF

MILN tracks an index composed of US-listed companies that derive a significant source of their revenue from spending categories determined to be associated with millennials - people born between 1980 and 2000.

iShares Russell 1000 Growth ETF

Schwab U.S. Mid-Cap ETF

SPDR S&P Dividend ETF

Xtrackers MSCI USA ESG Leaders Equity ETF

Millennials can put time to work and even invest in themselves with some of the following exchange traded funds.
The post 5 ETFs for Savvy Millennial Investors appeared first on InvestorPlace.

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