Increased confidence in Themes Cybersecurity ETF's prospects relative to its Morningstar Category peers leads to an upgrade in this strategy's Morningstar Medalist Rating to Silver from Bronze. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position 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 Below Average People Pillar rating. The strategy's parent firm has some investor-friendly attributes, like continuity among portfolio managers, but it is held back by relatively short-tenured portfolio managers. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Palo Alto Networks

CACI

CrowdStrike

Booz Allen Hamilton Hld

NEXTDC Limited

SentinelOne

Alarm.com

Okta

Zscaler

Varonis Systems

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. Themes Cybersecurity ETF earns an Above Average Process Pillar rating. The predominant contributor to 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. The firm's five-year retention rate of 100% also supports the process. Lastly, the process is limited by the experience of the management team, which averages three months at this fund.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the performance, before fees and expenses, of Solactive Cyber Security Index.  The index is designed to provide exposure to companies that have business operations in the cybersecurity industry. The fund will invest, under normal circumstances, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, and in securities that comprise the index and in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”) based on the securities in the index. The fund is non-diversified. 

 The portfolio is overweight in technology by 15.8 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared to category peers are communication services and consumer cyclical, underweight the average by 9.5 and 4.4 percentage points of assets, respectively. The portfolio is positioned across 39 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 49.3% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 52.4%.

Above Average

Process

Themes ETF Trust’s team receives a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is weakened by the experience of the management team, which averages three months at this fund. The number of months that the management team has been running this vehicle together also holds the rating back. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy.

Below Average

People

Even though Themes ETF Trust's limited history of three months as a firm is working against its rating, they've proven to be an industry-standard steward, warranting an Average Parent Pillar rating. The firm currently manages 21 vehicles, with a total of $28.5 million under management across a bench of two strategy managers. As a new firm, there is very low manager industry experience--on average, less than six months. The firm's earliest portfolio manager hire, Dingxun(kevin) Shao, has only one year of industry experience. 
 
   

 As Themes ETF Trust builds and continues to develop a track record, its rating will be adjusted accordingly.

Average

Parent

Themes Cybersecurity ETF

SPAM seeks to track a concentrated index of stocks from developed markets that derive their revenues from digital security software. Stocks are weighted based on market capitalization.

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There are more than 200 ETF providers in the $8 trillion U.S. ETF market, but I'm intrigued by a recent entrant's ambitions. In December 2023, Themes ETFs introduced 11 ETFs.

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The Themes Cybersecurity ETF (SPAM) looks to track the Solactive Cybersecurity Index, which identifies the largest 35 companies by market capitalization in digital security software.

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Priced at 0.35%, over 40% below the average expense ratio charged by other thematic funds, Themes ETFs seeks to provide investors with targeted thematic exposure at low costs.1 NEW YORK , Dec. 8, 2023 /PRNewswire/ -- Themes ETFs  debuts in the US market with the launch of 7 funds in its suite of low-cost thematic ETFs, which will begin trading on the Nasdaq over the coming weeks. With expense ratios priced at 0.35%, the company's 7 thematic funds are 40% cheaper than the average expense ratio of 0.60% charged by other thematic ETFs.1 Ticker Thematic Fund Name Expense Ratio GSIB Themes Global Systemically Important Banks ETF 0.35 % WISE Themes Generative Artificial Intelligence ETF 0.35 % CLOD Themes Cloud Computing ETF 0.35 % FINE Themes European Luxury ETF 0.35 % SPAM Themes Cybersecurity ETF 0.35 % AUMI Themes Gold Miners ETF 0.35 % AIRL Themes Airlines ETF 0.35 % 1 Source: ETF.com, Universe of 318 Theme Investing ETFs, as of 30 November 2023 Alongside its thematic offering, the company is also launching 4 low-cost fundamental ETFs.

Themes ETFs Launch with Expense Ratios 40% Below the Category Average

News for Themes Cybersecurity ETF ETF (SPAM)