Increased confidence in Themes Generative Artificial Int 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 effective investment philosophy supports 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 portfolio managers with limited tenures at the firm. As a result, the firm gets an 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. Themes Generative Artificial Int 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 firm's five-year retention rate of 100% also buttresses 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 Generative Artificial Intelligence Index.  The index is designed to provide exposure to companies that have business operations in AI related industries. 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 has allocations in its top two sectors, technology and financial services, that are similar to the category. The sectors with low exposure compared to category peers are communication services and industrials, with communication services underweighting the average portfolio by 3.7 percentage points of assets and industrials similar to the average. The portfolio is positioned across 45 holdings and is diversified among those holdings. In its most recent portfolio, 46.7% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 52.4% average.

Above Average

Process

Themes ETF Trust’s team earns a Below Average People Pillar rating. The team is strengthened by the firm's five-year retention rate of 100%. However, the rating is limited 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 Generative Artificial Intelligence ETF

WISE seeks to track a concentrated index of stocks from developed markets that derive their revenues from artificial intelligence related industries. Stocks are weighted based on their relevance to the investment theme.

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News for Themes Generative Artificial Intelligence ETF ETF (WISE)