Tema Trends: Exploring Monopoly, Luxury ETFs and Reshoring Insights
In this edition of Tema Trends we:
Can the technology sector generate enduring monopolies? While network effects and high switching costs can contribute to monopoly power, the tech sector's propensity for disruption, dynamic venture landscape, and regulatory challenges cast doubt on the possibility of enduring monopolies. However, the presence of non-replicable physical assets, such as specialized services and unique manufacturing capabilities, provides a potential avenue for establishing lasting monopolies within technology. Overall, our analysis suggests that traditional sources of monopoly may not be as strong in the tech industry as previously believed. LEARN MORE
Over the past decade, technological advancements have significantly enhanced the ability of individual investors to engage in the stock market, largely thanks to platforms like Robinhood and Public, which offer accessible and cost-effective trading options. However, most of these trading apps still impose restrictions on trading stocks of companies to those exclusively listed on US stock exchanges. This limitation poses a challenge for international companies. While some, like Ferrari, have direct US listings, and others, such as Alibaba, rely on special US listings like sponsored ADRs (American Depository Receipts), a substantial number of globally significant firms like LVMH (France), Aramco (Saudi Arabia), Samsung (South Korea), and Reliance (India) lack these arrangements, rendering them inaccessible on many US trading platforms.
Carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s prospectus or summary prospectus, which may be obtained by visiting www.temaetfs.com.
Read the prospectus carefully before investing
Investing involves risk including possible loss of principal. There is no guarantee the adviser’s investment strategy will be successful.
Sector Focus Risk: The Fund may invest a significant portion of its assets in one or more sectors, including Consumer Discretionary and Consumer Staples, and thus will be more susceptible to the risks affecting those sectors than funds that have more diversified holdings across several sectors.
The success of companies that sell luxury goods and services may depend heavily on the disposable household income and consumer spending of a relatively small segment of the general population, rather than the consumer population as a whole. Changes in consumer taste among such segment of the population can also affect the demand for, and success of, luxury goods and services in the marketplace. Consumer spending on luxury goods and services can also be adversely affected as a result of declines in consumer confidence levels, even if prevailing economic conditions are favorable. In an economic downturn, consumer discretionary spending levels generally decline, often resulting in disproportionately large reductions in the sale of luxury goods and services.
Sector Focus Risk: The Fund may invest a significant portion of its assets in one or more sectors, including Industrials, Materials and Utilities, and thus will be more susceptible to the risks affecting those sectors than funds that have more diversified holdings across several sectors.
The success of the Fund’s investment strategy depends in part on the ability of the companies in which it invests to reshore or onshore services to the United States. Companies may face significant legal, financial and political headwinds in the reshoring or onshoring of jobs into the United States, and these factors may be detrimental to performance. Industrial and Utilities sector companies will likewise be subject to the risks of Government regulation, world events, exchange rates and economic conditions, technological developments and liabilities for environmental damage and general civil liabilities. In addition, many materials companies are significantly affected by the level and volatility of commodity prices, exchange rates, import controls, worldwide competition, environmental policies and consumer demand.
Sector Focus Risk: The Fund may invest a significant portion of its assets in one or more sectors, including Engineering and construction, Financial Sector, FinTech, Industrials and Infrastructure, and thus will be more susceptible to the risks affecting those sectors than funds that have more diversified holdings across several sectors.
The success of the Fund’s investment strategy depends in part on the ability of the companies in which it invests to maintain proprietary technology used in their products and services. Companies in which the Fund invests will rely, in part, on patent, trade secret and trademark law to protect that technology, but competitors may misappropriate their intellectual property, and disputes as to ownership of intellectual property may arise. Similarly, if a company is found to infringe upon or misappropriate a third-party’s patent or other proprietary rights, that company could be required to pay damages to such third-party, alter its own products or processes, obtain a license from the third-party and/or cease activities utilizing such proprietary rights, including making or selling products utilizing such proprietary rights. These disputes and litigations may be detrimental to performance.
Investing in foreign and emerging markets involves risks relating to political, economic, or regulatory conditions not associated with investments in U.S. securities and instruments. In addition, the fund is exposed to currency risk.
Because the Fund evaluates ESG factors to assess and exclude certain investments for non-financial reasons, the Fund may forego some market opportunities available to funds that do not use these ESG factors.
Tema Global Limited serves as the investment adviser to Tema American Reshoring ETF, Tema Luxury ETF, and Tema Monopolies and Oligopolies ETF (the “Funds”), and NEOS Investments, LLC serves as a sub adviser to the Funds. The Funds are distributed by Foreside Services LLC, which is not affiliated with Tema Global Limited nor NEOS Investments, LLC. Check the background of Foreside on FINRA’s BrokerCheck.