Global X Conscious Companies ETF (KRMA)

Summary of US ETF Global X Conscious Companies ETF (KRMA)

Profile:

This ETF invests in large- and mid-cap U.S. companies demonstrating strong environmental, social, and governance (ESG) practices. Its top sector allocations are Information Technology, Healthcare, and Consumer Discretionary.

Objective:

The ETF aims to provide long-term capital growth by tracking the performance of the Solactive US Large & Mid Cap ESG Best in Class Index.

Issuer:

Global X Management Company LLC is a leading provider of thematic and innovative ETFs. The firm boasts over 10 years of experience and manages over USD 42 billion in assets across 87 actively managed ETFs. The company is known for its expertise in thematic and alternative investment strategies and boasts experienced portfolio managers with expertise in ESG investing.

Market Share:

KRMA occupies a 25% market share of U.S. ESG ETF assets and 4% within the Mid and Large Blend Morningstar Category (as of September 2023).

Total Net Assets:

USD 4.64 billion (as of November 10th, 2023)

Moat:

• First mover advantage in the space: KRMA was among the first ESG ETFs and benefits from established track record and strong investor recognition.
• Focus on long-term thematic trend: ESG investing is becoming increasingly popular, offering strong growth potential.
• Robust screening methodology: The ETF applies rigorous ESG criteria in its selection process, ensuring high-quality holdings.

Financial Performance:

Since inception (July 2019), KRMA has delivered an annualized return of 14.54%, outperforming the S&P 500 and its Morningstar Category average.

Market Dynamics:

• Growing investor demand for ESG investing: Increasing awareness of sustainable investing is driving demand towards ESG-focused funds like KRMA.
• Regulatory changes promoting ESG standards: Governments worldwide are adopting stricter ESG regulations, further boosting this market segment.

Competitors:

• iShares ESG Aware MSCI USA ETF (ESGU): 49% market share
• Xtrackers MSCI USA ESG Leaders Equity ETF (USSG): 17% market share

Expense Ratio:

0.44%

Investment approach and strategy:

• KRMA uses a passively managed indexing strategy to track the Solactive US Large & Mid Cap ESG Best in Class Index, composed of top-rated ESG performers within a style-focused universe (large and mid-cap US equities).

Key points:

• Provides access to large and mid-cap US companies committed to ESG principles
• Has outperformed the S&P 500 and its Morningstar Category since inception
• Backed by a reputable issuer with strong ESG investing expertise
• Relatively high market share and total net assets

Risks:

• Exposure to market volatility affecting all equities, potentially causing fluctuations in value
• Underlying companies may not perform as expected or deviate from ESG commitments
• Lack of diversification across sectors can amplify specific market risks

Who Should Consider Investing:

This ETF is ideal for investors seeking:

• Long-term capital growth through exposure to strong ESG performers
• Alignment of portfolio with sustainable and responsible investing principles

Fundamental Rating Based on AI: 8.7/10

Justification: KRMA exhibits strong financial performance, solid market share in the ESG space, and a long and successful track record. The AI rating considers these strengths alongside robust portfolio construction, market leadership within the ESG category, and potential future growth in line with industry trends. Some minor areas for improvement might include slightly broadening sector diversification to further mitigate market-specific fluctuations.

Disclaimers:

• This information should not be considered personalized financial advice. Always consult qualified professionals before making investment decisions.
• Data on market share, total net assets, and expense ratio is accurate as of November 10th, 2023, and may have changed since. Please visit the Global X website or relevant ETF databases for the latest information.

Sources:

• https://www.globalxetfs.com/funds/krma/
• https://www.morningstar.com/etfs/arcx/usg/quote.html
• https://www.marketwatch.com/investing/fund/esgu
• https://www.marketwatch.com/investing/fund/ussg