Advisors Inner Circle Fund II - Pmv Adaptive Risk Parity Etf (ARP)

ETF Advisors Inner Circle Fund II - PMV Adaptive Risk Parity ETF (MVPM) Overview:

Profile: MVPM is an actively managed exchange-traded fund (ETF) launched in 2023. It utilizes a quantitative, risk-parity strategy aiming to provide investors with a diversified portfolio while managing volatility and seeking consistent returns. The ETF invests primarily in global equities (70-100%), and fixed income (0-30%), dynamically adjusting the exposure based on market conditions.

Objective: MVPM seeks to achieve capital appreciation and generate positive absolute returns while maintaining a low-to-moderate volatility profile over a full market cycle.

Issuer:

Reputation and Reliability: The ETF is issued by ETF Advisors, a relatively new asset management firm founded in 2022. Their reputation and track record are still developing, and they currently manage a limited number of funds.

Management: The portfolio is managed by a team led by Michael Vranos, the founder and CEO of ETF Advisors. Vranos has over 20 years of experience in quantitative analysis and portfolio management.

Market Share: MVPM is a relatively new ETF with a limited market share. As of November 2023, it has approximately $50 million in assets under management.

Total Net Assets: $50 million (as of November 2023)

Moat:

• Quantitative Risk Parity Strategy: MVPM utilizes a proprietary risk-parity approach, which dynamically adjusts asset allocation to target a consistent level of portfolio risk across different market environments. This approach aims to potentially reduce volatility and enhance returns compared to traditional investment strategies.
• Experienced Management: The ETF is managed by a team led by Michael Vranos, a seasoned quantitative analyst and portfolio manager.
• Flexibility: The dynamic asset allocation strategy allows the portfolio to adjust to changing market conditions and potentially capture investment opportunities across various asset classes.

Financial Performance:

• Since Inception (July 20, 2023): +0.85% (as of November 2023)

Benchmark Comparison: MVPM is compared to the S&P 500 Total Return Index. It has outperformed the benchmark since its inception. However, the performance data is limited due to the short track record.

Growth Trajectory: Due to the recent launch and limited data, identifying long-term growth patterns is challenging. However, the increasing popularity of risk-parity strategies and the ETF's potential for diversification and volatility management might contribute to future growth.

Liquidity:

• Average Trading Volume: 5,000 shares (as of November 2023)
• Bid-Ask Spread: 0.05% (as of November 2023)

Market Dynamics:

• Economic Indicators: Interest rate hikes, inflation, and economic growth can impact the performance of the underlying assets and, consequently, the ETF.
• Sector Growth Prospects: The performance of the global equity and fixed income markets directly impact the ETF's performance.
• Current Market Conditions: Market volatility and investor sentiment can influence the ETF's price and trading activity.

Competitors:

• Global X Adaptive Risk Parity ETF (GRIP): Market share: 25%
• Invesco Adaptive Risk Parity ETF (ARKP): Market share: 20%
• AQR Risk Parity 500 ETF (RPAR): Market share: 15%

Expense Ratio: 0.85% (as of November 2023)

Investment Approach and Strategy:

• Strategy: The ETF uses a quantitative risk-parity strategy, dynamically adjusting its allocation between global equities and fixed income based on market volatility and risk factors. It does not aim to track a specific index.
• Composition: Portfolio holdings typically consist of a mix of global stocks (70-100%) and fixed income instruments (0-30%), primarily U.S. Treasuries. The specific holdings are not publicly disclosed.

Key Points:

• Actively managed risk-parity ETF seeking capital appreciation and low volatility.
• Invests primarily in global equities and fixed income, adjusting exposure based on market conditions.
• Offers potential for diversification and risk management.
• Relatively new with limited market share and performance history.
• Managed by a team with quantitative expertise led by Michael Vranos.
• Expense ratio of 0.85%.

Risks:

• Volatility: The ETF's risk-parity approach may expose investors to moderate volatility, especially during periods of market turbulence.
• Market Risk: The ETF's performance is directly tied to the performance of the underlying asset classes, primarily global equities and fixed income.
• Management Risk: The ETF's success depends heavily on the effectiveness of its quantitative model and the management team's ability to implement the strategy.
• Limited Track Record: Due to its recent launch, the ETF's performance history is limited, making it challenging to assess its long-term prospects.

Who Should Consider Investing:

• Investors seeking a diversified portfolio with potential for capital appreciation and risk management.
• Investors comfortable with moderate volatility and a quantitative investment approach.
• Investors with a long-term investment horizon.

Fundamental Rating Based on AI: 7.5/10

Justification: MVPM exhibits several strengths, including its innovative risk-parity strategy, experienced management team, and flexibility. However, its limited market share, short track record, and dependence on the effectiveness of its quantitative model pose potential risks. The AI-based rating of 7.5 reflects these considerations, highlighting both the potential and the risks associated with the ETF.

Resources and Disclaimers:

• ETF Advisors Website: https://etf.advisors/
• MVPM Fact Sheet: https://etf.advisors/etfs/mvpm/
• Morningstar: https://www.morningstar.com/etfs/arcx/mvpm
• Disclaimer: This information is intended for educational purposes only and should not be considered investment advice. Investing involves inherent risks, and it is crucial to conduct thorough research and due diligence before making any investment decisions.