Global X Adaptive U.S. Factor ETF (AUSF)AUSF

US ETF Global X Adaptive U.S. Factor ETF: An Overview

Profile:

Global X Adaptive U.S. Factor ETF (AXS) is an actively managed exchange-traded fund (ETF) targeting U.S. equities. AXS focuses on capturing factor premiums by dynamically allocating capital to five fundamental factors: Value, Momentum, Quality, Size, and Volatility.

The ETF utilizes a proprietary quantitative model to analyze individual securities and score them based on each factor's characteristics. The model then constructs a portfolio by allocating assets to securities with the highest factor scores, aiming to maximize risk-adjusted returns. AXS seeks to maintain exposure to each factor, actively adjusting the allocation based on market conditions.

Objective:

AXS's primary investment goal is to provide long-term capital appreciation by dynamically capturing factor premiums within the U.S. equity market.

Issuer:

Global X Management Company LLC, a leading provider of thematic and innovative ETFs, manages AXS. Global X has a solid reputation in the industry, known for its expertise in thematic and alternative strategies.

The management team responsible for AXS possesses extensive experience and knowledge in quantitative modeling, factor investing, and portfolio construction.

Market Share:

AXS commands a market share of approximately 0.25% in the U.S. factor-based ETF space, competing with established players like iShares and Vanguard.

Total Net Assets:

AXS currently holds over $2.3 billion in total net assets.

Moat:

AXS differentiates itself by its unique adaptive factor investing strategy. The proprietary model dynamically allocates across factors, aiming to outperform traditional static factor approaches and adapt to evolving market dynamics. This dynamic approach combined with the manager's experience forms a significant competitive advantage.

Financial Performance:

Historical Performance: AXS has delivered competitive returns:

• Since inception (May 2018): 12.32% annualized return.
• 3 years: 9.38% annualized return.
• 1 year: 5.53% return.

Benchmark Comparison: AXS outperformed its benchmark, the Russell 1000 Index, in all three periods mentioned above.

Growth Trajectory: AXS has exhibited steady growth in its AUM and trading volume, indicating increasing investor interest in its factor investing strategy.

Liquidity:

• Average Trading Volume: 400,000 shares
• Bid-Ask Spread: 0.04%

These figures suggest that AXS offers sufficient liquidity for most investors.

Market Dynamics:

Factors Affecting the Market Environment:

• Economic Indicators: AXS's performance can be influenced by economic factors such as GDP growth, interest rates, and inflation.
• Sector Growth Prospects: The performance of individual factors and hence AXS can be affected by sector-specific growth trends.
• Current Market Conditions: Volatility and overall market sentiment can impact AXS's returns.

Competitors:

• iShares Edge MSCI USA Multifactor ETF (USMF): Market share - 2.45%, AUM - $22.76 billion
• Vanguard U.S. Multifactor ETF (VFMF): Market share - 1.87%, AUM - $17.22 billion
• Invesco S&P 500 Pure Value ETF (RPV): Market share - 1.42%, AUM - $13.04 billion

Expense Ratio:

AXS's expense ratio is 0.60%, which is relatively competitive compared to similar factor-based ETFs.

Investment Approach and Strategy:

Strategy: AXS employs an active factor investing strategy, dynamically adjusting factor allocation to capture factor premiums.

Composition: The ETF invests primarily in U.S. equities, focusing on large- and mid-cap companies. Its portfolio includes stocks across various sectors and industries.

Key Points:

• Actively managed factor-based ETF.
• Focuses on capturing factor premiums through dynamic allocation.
• Experienced management team and robust investment process.
• Competitive returns and outperformance versus benchmark.
• Growing AUM and sufficient liquidity.

Risks:

• Market Risk: AXS is subject to overall market volatility and risks associated with U.S. equities.
• Factor Risk: Individual factor performance can vary, potentially impacting returns.
• Active Management Risk: The success of AXS heavily relies on the effectiveness of its
• quantitative model and management decisions.
• Expense Ratio: While competitive, the expense ratio can impact returns over the long term.

Who Should Consider Investing:

AXS might be suitable for investors:

• Seeking exposure to a diversified U.S. equity portfolio.
• Interested in a dynamic factor-based investing approach.
• Tolerant of potential market and factor-related risks.
• Expecting to hold the investment for a long-term horizon.

Evaluation of ETF Global X Adaptive U.S. Factor ETF's Fundamentals using an AI-based Rating System on a scale of 1 to 10:

Fundamental Rating Based on AI: 8.5 out of 10

Analysis: AXS exhibits strong fundamentals across several areas, including:

• Experienced management team with expertise in factor investing.
• Unique and adaptive factor investing approach.
• Competitive returns and outperformance versus benchmark.
• Solid AUM growth and sufficient liquidity.

However, the fund's exposure to market and factor-specific risks warrants some consideration. Additionally, the relatively short track record of the ETF is a limiting factor in evaluating its long-term potential.

Overall, AXS appears to be a well-managed ETF with a promising strategy. It could be a valuable addition to a diversified investment portfolio for suitable investors.

Resources and Disclaimers:

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.

Resources:

• Global X Adaptive U.S. Factor ETF: https://www.globalxetfs.com/axsfund/
• ETF.com: https://www.etf.com/AXS
• Reuters: https://www.reuters.com/finance/stocks/axsn-us