Robo Global® Artificial Intelligence ETF retains its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the second-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 an overweight in liquidity exposure and an underweight in quality exposure compared with category peers. 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 team managing this passive strategy earns a Low People Pillar rating. To be considered a quality steward, this strategy's parent organization needs to improve factors like a lack of inside investments from portfolio managers and a cohort of unseasoned portfolio managers. 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 benchmark on a risk-adjusted basis over the long term. Robo Global® Artificial Intelligence ETF earns an Above Average Process Pillar rating. The leading factor in 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 parent firm's five-year risk-adjusted success ratio of 100% also strengthens 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. Their commendable success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by the experience of the management team, which averages three years at this fund.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that, before fees and expenses, and correspond generally to the price and yield performance of the ROBO Global® Artificial Intelligence Index.  The fund will normally invest at least 80% of its total assets in securities of the index or in depositary receipts representing securities of the index. The index is designed to measure the performance of publicly-traded companies that have a significant portion of their revenue derived from the field of artificial intelligence. It is non-diversified. 

 The portfolio is overweight in consumer cyclical and healthcare relative to the category average by 5.6 and 3.8 percentage points, respectively. The sectors with low exposure compared to category peers are technology and communication services, with technology underweighting the average portfolio by 5.1 percentage points of assets and communication services similar to the average. The strategy owns 68 securities and its assets are more dispersed than peers in the category. In particular, 19.8% of the fund’s assets are concentrated in the top 10 fund holdings, compared to the typical peer's 48.5%. And in closing, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.

Above Average

Process

Robo Global’s team remains inferior, compared with better-resourced rivals, resulting in a Low People Pillar rating. There are three managers listed on the fund: Gabriel Tan, Andrew Serowik, Todd Alberico. The team is inadequately equipped. Together, they average three years of portfolio management experience. Together, they manage a total of 23 strategies, with an asset-weighted average Morningstar Medalist Rating of Neutral. This means, in aggregate, the team falls short and will struggle to produce positive alpha relative to the category median.

People

Robo Global fails to meet industry-standard stewardship qualities, culminating in a Below Average Parent Pillar rating. None of the firm’s assets are covered by an invested manager. Team members’ investments are viewed as helping to encourage long-term thinking and align portfolio manager and investor interests. A notable weakness of Robo Global is the inexperience of its longest-tenured managers compared with other asset managers. Managing capital through a full market cycle is a challenging prospect for seasoned managers, but with only one year of average asset-weighted tenure, there's cause for concern. The product lineup at Robo Global has exhibited exemplary durability when looked at over the past five years. Notably, its five-year success ratio stands at 100%, meaning that 100% of its products have survived and beaten their respective category median.

Below Average

Parent

Robo Global Artificial Intelligence ETF

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