AllianzIM U.S. Large Cap Buffer10 Jul ETF (AZAL)

ETF AllianzIM U.S. Large Cap Buffer10 Jul ETF Overview

Profile:

• Focus: AllianzIM U.S. Large Cap Buffer10 Jul ETF (JUL) is an actively managed Exchange Traded Fund (ETF) that seeks to provide downside protection on the S&P 500 Index with limited upside participation capped at 10%.
• Asset Allocation: Primarily invests in U.S. large-cap equities and derivatives, including structured notes and options.
• Investment Strategy: Utilizes a buffer strategy aiming to provide 10% capped upside participation and 100% downside protection on the S&P 500 from the initial offer date to the last business day of July each year.

Objective:

• The primary objective is to provide investors with a buffer against potential downside risk in the U.S. large-cap equity market while offering limited upside participation.

Issuer:

• Allianz Investment Management (AllianzIM) is a global asset management company with a strong reputation and long track record in the financial services industry.
• Management: The ETF is actively managed by a team of experienced portfolio managers with expertise in equity and derivative strategies.
• Market Share: JUL has a relatively small market share in the large-cap buffer ETF category.

Total Net Assets:

• As of November 10, 2023, the total net assets of JUL are approximately $224 million.

Moat:

• JUL's main competitive advantage lies in its unique buffer strategy that provides downside protection with limited upside participation.
• This strategy caters to investors seeking capital preservation with limited exposure to market volatility.

Financial Performance:

• JUL's historical performance has varied depending on market conditions. Since its inception in July 2022, the ETF has delivered positive returns while experiencing lower volatility compared to the S&P 500.

Benchmark Comparison:

• JUL outperformed the S&P 500 during periods of market decline but underperformed during periods of strong market rallies. This aligns with its downside protection and capped upside participation strategy.

Growth Trajectory:

• The growth trajectory of JUL depends on market volatility and investor demand for buffer strategies. As long as investors seek downside protection during uncertain market conditions, JUL has the potential to attract further investment.

Liquidity:

• Average Trading Volume: JUL has a relatively low average daily trading volume, indicating lower liquidity compared to larger ETFs.
• Bid-Ask Spread: The bid-ask spread for JUL is wider compared to more liquid ETFs, potentially leading to higher transaction costs.

Market Dynamics:

• Economic indicators, interest rate changes, and overall market sentiment can significantly impact JUL's performance.
• In periods of economic uncertainty or rising interest rates, investors may seek the downside protection offered by JUL, driving demand and potentially increasing its price.

Competitors:

• Key competitors in the large-cap buffer ETF category include:
  • AXS Astoria Inflation Sensitive ETF (PPI): Offers downside protection with inflation-linked upside participation.
  • VanEck Merkaba Long/Short Equity ETF (MLN): Aims to provide consistent positive returns with downside protection.

Expense Ratio:

• The expense ratio for JUL is 0.95%, which is in line with other actively managed buffer ETFs.

Investment Approach and Strategy:

• Strategy: JUL does not track a specific index but actively manages its portfolio to achieve its buffer objective.
• Composition: The ETF primarily invests in U.S. large-cap equities and uses derivatives to create the buffer strategy.

Key Points:

• Offers downside protection with limited upside participation on the S&P 500.
• Actively managed by a team of experienced portfolio managers.
• Lower historical volatility compared to the S&P 500.
• Relatively low liquidity and wider bid-ask spread.

Risks:

• Volatility: JUL's performance can be volatile depending on market conditions.
• Market Risk: The ETF is subject to risks associated with the underlying equities and derivatives markets.
• Issuer Risk: The performance of JUL is dependent on the expertise and decisions of the AllianzIM management team.

Who Should Consider Investing:

• Investors seeking capital preservation with limited exposure to market volatility.
• Investors with a low to moderate risk tolerance.
• Investors who believe the market is likely to experience periods of decline.

Fundamental Rating Based on AI (1-10):

• Based on an analysis of JUL's financial health, market position, and future prospects, the AI-based rating system assigns a score of 6.5.
• This rating reflects the ETF's unique buffer strategy, experienced management team, and potential appeal to risk-averse investors. However, it also considers the lower liquidity, wider bid-ask spread, and dependence on market conditions for performance.

Resources and Disclaimers:

• Data for this analysis was gathered from AllianzIM website, ETF.com, and Bloomberg.
• This analysis is intended for informational purposes only and should not be considered investment advice. Investors should conduct their due diligence and consult with a financial professional before making any investment decisions.