The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Tema Neuroscience and Mental Health ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. To be considered a quality steward, this strategy's parent organization needs to improve factors like minimal personal investments from portfolio managers and relatively short-tenured portfolio managers. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst Rating

Vertex Pharmaceuticals

Eli Lilly

Regeneron Pharmaceuticals

Biogen

Neurocrine Biosciences

Stryker

Denali Therapeutics

DexCom

Crinetics Pharmaceuticals Inc

Day One Biopharmaceuticals

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. Tema Neuroscience And Mental Health ETF earns an Average Process Pillar rating. 

The predominant contributor to the rating is the firm's five-year retention rate of 100% over the period. The depth of the portfolio management team also reinforces the process. With five portfolio managers, the fund is well-staffed. Lastly, the process is limited by the experience of the management team, which averages six years at this fund.

 This strategy tends to hold smaller, higher-growth companies than its average peer in the Health Morningstar Category. Looking at additional factor exposure, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. This orientation tends to pay off most prominently when markets are hot. Compared with category peers, the strategy also had more exposure to the Volatility 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. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. 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 has allocations in its top two sectors, healthcare and energy, that are similar to the category. The sectors with low exposure compared to category peers are basic materials and technology; however, the allocations are similar to the category. The portfolio is composed of 46 holdings and is about as top-heavy as the category average, with 40.0% of assets in the top 10 holdings.

Average

Process

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


None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

Below Average

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 Neuroscience and Mental Health ETF

MNTL is actively managed, concentrating on companies engaged in addressing disorders of the central nervous system and mental health worldwide. Using both top-down and bottom-up stock selection, the fund identifies innovative companies deemed attractive.

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News for Tema Neuroscience and Mental Health ETF ETF (MNTL)