The combination of a middling Process Pillar rating and a Low People Pillar rating limit  Range Global Offshore Oil Services ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The team managing the passive strategy earns a Low People Pillar. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight liquidity exposure and has a substantial overweight in momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by 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.

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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. Range Global Offshore Oil Services ETF earns an Average Process Pillar rating. The predominant 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. The size of the portfolio management team also supports the process. With four portfolio managers, the fund is reasonably well-resourced. 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 subpar 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, before fees and expenses, correspond generally to the total return performance of the Range Global Offshore Oil Services Index.  The index is designed to track the performance of companies that are involved in the offshore oil services ecosystem, particularly in the areas of production, exploration, development, transportation, and distribution. Under normal circumstances, and the fund invests at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in securities of offshore oil companies. The fund is non-diversified. 

 The portfolio is overweight in industrials by 7.7 percentage points in terms of assets compared with the category average, and its energy allocation is similar to the category. The sectors with low exposure compared to category peers are utilities and technology, with utilities underweighting the average portfolio by 6.8 percentage points of assets and technology similar to the average. The portfolio is positioned across 35 holdings and is relatively concentrated. In particular, 59.8% of the strategy's assets are housed within the top 10 holdings, compared with the typical peer's 51.2%.

Average

Process

Exchange Traded Concepts’s team receives a Low People Pillar rating. The most significant detractor from the rating is the experience of the management team, which averages four years at this fund. Turnover at its parent firm also detracts from the team. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers. The parent firm's five-year success ratio of 0% further hinders the team. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

People

Exchange Traded Concepts lags peer asset managers in a number of stewardship qualities, resulting in a Below Average Parent Pillar rating. Portfolio managers at Exchange Traded Concepts tend not to invest alongside their shareholders, detracting from the overall stewardship assessment. None of the firm’s assets are covered by an invested manager. A cause for concern at Exchange Traded Concepts is its relatively inexperienced longest-tenured management. In particular, average asset-weighted tenure at the firm is only four years, a negative contributor to the rating. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fund fees on its products fall in the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Below Average

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NEW YORK , Jan. 24, 2024 /PRNewswire/ -- Exchange Traded Concepts is delighted to introduce the new lineup of Range ETFs: Range Global LNG Ecosystem Index ETF (NYSE: LNGZ), Range Nuclear Renaissance Index ETF (NYSE: NUKZ), Range Global Coal Index ETF (NYSE: COAL), and Range Global Offshore Oil Services Index ETF (NYSE: OFOS). The unifying theme of the Range ETFs is the belief that energy will be the driving force of the global markets for the next decade.

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News for Range Global Offshore Oil Services Index ETF ETF (OFOS)