The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Tema American Reshoring 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 strategy changed its peer group last March, moving from the Large Value category to the Mid-Cap Blend Morningstar Category. 

 The longest-tenured manager has a wealth of experience, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a substantial underweight position in liquidity exposure and has a significant overweight in momentum exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. To be considered a quality steward, this strategy's parent organization needs to improve factors like minimal personal investments from portfolio managers and portfolio managers with limited tenures at the firm. As a result, the firm obtains a Below Average Parent Pillar rating.

Analyst 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 index on a risk-adjusted basis over the long term. Tema American Reshoring ETF earns an Average Process Pillar rating. 

The main driver of the rating is the firm's five-year retention rate of 100% over the period. The size of the portfolio management team also reinforces the process. With five portfolio managers, the fund is well-staffed. Lastly, the process is limited by high costs across its parent firm's funds, whose fees rank in their category's costliest quintile on average. While this fund's costs are most relevant to investors, the pattern at the broader firm suggests it could do more to keep fees low.

 This strategy tends to hold larger, higher-growth companies compared with its average peer in the Mid-Cap Blend Morningstar Category. Analyzing additional factors, this strategy consistently held some companies with relatively lower trading volume compared with Morningstar Category peers in the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy has also had more exposure to high-momentum stocks in recent years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. Additionally, this strategy has demonstrated a tilt toward low-volatility stocks in these years, meaning companies with a lower historical standard deviation of returns over its peers. Such holdings can limit a strategy's downside, but cause it to lag in bull markets. In recent months, the strategy also had less Volatility 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 is overweight in industrials and basic materials relative to the category average by 52.0 and 12.5 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and technology, underweight the average by 14.5 and 14.3 percentage points of assets, respectively. The portfolio is positioned across 33 holdings and is quite concentrated. More concretely, 42.2% of the portfolio's assets are housed within the top 10 holdings, as opposed to the category’s 15.4% average.

Average

Process

Tema American Reshoring ETF earns a Below Average People Pillar rating. The team is bolstered by the firm's five-year retention rate of 100%. However, the rating is weakened 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. 


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 American Reshoring ETF

RSHO actively manages a narrow portfolio of US stocks that are anticipated to benefit from deglobalization. The funds adviser combines a top-down and bottom-up approach to selecting and weighting fund holdings.

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