Increased confidence in Themes Cloud Computing ETF's prospects relative to its Morningstar Category peers results in  an upgrade in this strategy's Morningstar Medalist Rating to Silver from Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive 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 an underweight position in quality exposure and yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent firm has some investor-friendly attributes, like low portfolio manager turnover, 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

Alphabet

Intuit

Amazon

ServiceNow

Microsoft

SAP SE

Adobe

Oracle

Synopsys

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 Cloud Computing ETF earns an Above Average Process Pillar rating. The most important driver of 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 contributes to 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 the Solactive Cloud Computing Index.  The index is designed to provide exposure to companies that have business operations in the field of cloud computing based in developed market countries. 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 and consumer cyclical relative to the category average by 4.3 and 4.0 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and communication services; however, the allocations are similar to the category. The strategy owns 52 securities and its assets are more dispersed than peers in the category. In particular, 47.6% of the portfolio's assets are concentrated in the top 10 fund holdings, compared to the category’s 52.4% average.

Above Average

Process

Themes ETF Trust’s team earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is held back 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 Cloud Computing ETF

CLOD is passively managed, tracking an index comprised of firms in the cloud computing industry in developed markets.

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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.

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News for Themes Cloud Computing ETF ETF (CLOD)