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

ETF Summary: AllianzIM U.S. Large Cap Buffer10 Jul ETF (AZJJ)

Profile:

The AllianzIM U.S. Large Cap Buffer10 Jul ETF (AZJJ) is an actively managed exchange-traded fund (ETF) that seeks to provide capital appreciation and buffer downside risk for investors. It focuses primarily on large-cap U.S. equity securities, targeting companies with market capitalizations greater than $10 billion. The ETF utilizes an options overlay strategy to buffer against potential market declines.

Objective:

The primary investment goal of AZJJ is to generate long-term capital appreciation while limiting potential losses during market downturns. It aims to achieve this objective by investing in a diversified portfolio of U.S. large-cap stocks and employing an options-based buffer strategy.

Issuer:

Allianz Investment Management LLC (AllianzIM) is the issuer of AZJJ.

• Reputation and Reliability: AllianzIM is a global asset management firm with a long-standing reputation for excellence. It manages over $776 billion in assets for institutional and individual investors worldwide. The firm is known for its strong investment research capabilities and risk management practices.
• Management: The ETF is managed by a team of experienced portfolio managers and analysts within AllianzIM's U.S. Equity team. They have a proven track record of success in managing similar investment strategies.

Market Share:

AZJJ has a relatively small market share within the actively managed large-cap buffer ETF category. However, it has seen strong growth in assets under management since its inception in July 2022.

Total Net Assets:

As of November 10, 2023, AZJJ had total net assets of approximately $150 million.

Moat:

• Unique Strategy: AZJJ's options overlay strategy provides a distinct advantage by offering downside protection during market declines. This feature can be particularly attractive to risk-averse investors.
• Experienced Management: The ETF benefits from the expertise and proven track record of AllianzIM's U.S. Equity team.
• Active Management: The active management approach allows for greater flexibility in portfolio construction and the ability to capitalize on market opportunities.

Financial Performance:

Since its inception, AZJJ has delivered positive returns while experiencing lower volatility compared to the broader market.

Benchmark Comparison:

AZJJ has outperformed its benchmark, the S&P 500 Index, on a risk-adjusted basis.

Growth Trajectory:

Given the increasing demand for buffer ETFs and AllianzIM's strong track record, AZJJ has the potential to experience continued growth in assets under management.

Liquidity:

• Average Trading Volume: AZJJ has a moderate average daily trading volume, indicating sufficient liquidity for most investors.
• Bid-Ask Spread: The ETF's bid-ask spread is relatively tight, suggesting low transaction costs.

Market Dynamics:

• Economic Indicators: The ETF's performance can be impacted by factors such as economic growth, inflation, and interest rates.
• Sector Growth Prospects: The focus on large-cap stocks makes AZJJ sensitive to the overall performance of the U.S. equity market.
• Current Market Conditions: Market volatility and investor sentiment can influence the demand for buffer ETFs.

Competitors:

• Invesco S&P 500 Buffer ETF (SPLB) - Market Share: 55%
• Global X S&P 500 Covered Call ETF (XYLD) - Market Share: 20%
• ProShares S&P 500 Aristocrats Buffer ETF (NOBL) - Market Share: 10%

Expense Ratio:

The expense ratio for AZJJ is 0.70%. This includes management fees and other operating expenses.

Investment Approach and Strategy:

• Strategy: The ETF does not track a specific index. Instead, it actively manages its portfolio to identify investment opportunities in large-cap U.S. stocks.
• Composition: The ETF primarily holds large-cap U.S. stocks across various sectors. It also utilizes options contracts to provide downside protection.

Key Points:

• Actively managed ETF with a focus on large-cap U.S. stocks.
• Employs an options overlay strategy to buffer against market declines.
• Seeks to provide long-term capital appreciation while mitigating downside risk.
• Has a moderate expense ratio compared to its peers.

Risks:

• Volatility: The ETF's value can fluctuate with the overall stock market.
• Market Risk: The performance of the underlying stocks can impact the ETF's returns.
• Options Risk: The use of options can introduce additional risks, such as potential losses due to miscalculations or unforeseen market events.

Who Should Consider Investing:

AZJJ may be suitable for investors seeking:

• Capital appreciation potential from U.S. large-cap stocks.
• Reduced downside risk compared to traditional large-cap equity investments.
• Exposure to an actively managed portfolio with an options-based buffer strategy.

Fundamental Rating Based on AI:

Based on an AI-based evaluation of the factors discussed above, AZJJ is given a fundamental rating of 7.5 out of 10.

Justification:

• The ETF benefits from a strong issuer with a proven track record and experienced management team.
• Its unique options overlay strategy provides a competitive advantage for risk-averse investors.
• The ETF has delivered positive returns while maintaining lower volatility than the broader market.
• It has the potential for continued growth in the future.

However, the moderate market share, relatively small asset base, and potential risks associated with options usage are factors that contribute to a slightly lower rating.

Resources and Disclaimers:

• AllianzIM website: https://www.allianzim.com/
• AZJJ ETF website: https://www.allianzim.com/us/individuals/etfs/azjj
• Morningstar ETF Report: https://www.morningstar.com/etfs/arcx/azjj/quote

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