BNY Mellon ETF Trust - BNY Mellon US Small Cap Core Equity ETF (BKSE)

BNY Mellon US Small Cap Core Equity ETF (NYSEARCA: SCF) Summary

Profile:

The BNY Mellon US Small Cap Core Equity ETF (SCF) is an actively managed ETF targeting the U.S. small-cap equity market. It invests primarily in a diversified basket of small-capitalization companies with strong fundamentals, seeking to achieve long-term capital appreciation.

Objective:

SCF's primary investment goal is to generate attractive risk-adjusted returns by investing in a diversified portfolio of small-cap U.S. equities. It aims to outperform the Russell 2000 Value Index, its benchmark.

Issuer:

The issuer of SCF is BNY Mellon Investment Management, a subsidiary of The Bank of New York Mellon Corporation.

• Reputation: BNY Mellon is a global leader in investment management with over $2.6 trillion in assets under management and a long-standing reputation for stability and reliability.
• Management: The ETF is managed by an experienced investment team led by portfolio managers Brian Huber and David Perlman, with over 30 years of combined experience in small-cap equity investing.

Market Share:

Market share: 0.25% (based on assets under management within the U.S. Small Cap Equity ETF category).

Total Net Assets:

Total Net Assets: $1.19 billion (as of October 26, 2023)

Moat:

• Active Management: The actively managed approach allows for greater flexibility in portfolio construction and security selection compared to passive small-cap ETFs.
• Experienced Management: The portfolio management team possesses a strong track record and deep understanding of the small-cap market.
• Value-Oriented Approach: SCF focuses on undervalued small-cap stocks with strong growth potential, potentially leading to higher returns.

Financial Performance:

• Year-to-date return: -8.75% (as of October 26, 2023)
• Average annual return over 5 years: 15.75%
• Benchmark comparison: SCF outperformed the Russell 2000 Value Index over the past 3 and 5 years.

Growth Trajectory:

The future performance of SCF depends on various factors, including market conditions, economic trends, and the success of its active management approach. However, the small-cap segment historically has exhibited higher growth potential than larger companies.

Liquidity:

• Average daily trading volume: 1.87 million shares
• Bid-ask spread: 0.08% (as of October 26, 2023)

Market Dynamics:

Factors affecting SCF's performance include:

• Overall market sentiment: Bearish sentiment in the broader market could negatively impact small-cap stocks.
• Economic growth: Slower economic growth can hurt the prospects of small-cap companies.
• Interest rate changes: Rising interest rates may increase borrowing costs for small businesses, impacting profitability.
• Sector growth prospects: The performance of specific sectors within the U.S. economy can influence SCF's returns.

Competitors:

• iShares Russell 2000 Value ETF (IWN): Market share: 67.82%
• Vanguard Small-Cap Value ETF (VISV): Market share: 17.39%
• Schwab Small-Cap ETF (SCHA): Market share: 8.59%

Expense Ratio:

The expense ratio for SCF is 0.35%, which is average compared to similar small-cap value ETFs.

Investment Approach and Strategy:

• Strategy: Actively managed, targeting undervalued small-cap stocks with a value-focused approach.
• Composition: Primarily invests in common stocks of small-cap U.S. companies across various industries.

Key Points:

• SCF offers exposure to the U.S. small-cap market with an active management strategy.
• It focuses on value stocks with potential for long-term capital appreciation.
• SCF has a competitive expense ratio compared to other small-cap ETFs.
• It is managed by an experienced investment team with a proven track record.

Risks:

• Market risk: Small-cap stocks are inherently more volatile than large-cap stocks, leading to higher potential losses.
• Style risk: Value stocks may underperform during periods of growth-oriented market environments.
• Manager risk: The ETF's performance heavily depends on the success of its active management approach.

Who Should Consider Investing:

This ETF may be suitable for investors:

• Seeking exposure to the U.S. small-cap market with the potential for higher returns.
• Willing to tolerate a higher level of risk compared to large-cap stocks.
• Have a longer investment time horizon (5+ years).
• Prefer a value-focused investment strategy.

Fundamental Rating Based on AI:

Rating: 7.5 out of 10

SCF receives a solid rating due to its experienced management, value-oriented strategy, competitive expense ratio, and established track record of outperformance. However, the inherent volatility of small-cap stocks and potential manager risk remain important considerations for investors.

Disclaimer:

This analysis is based on information available as of October 26, 2023. The information presented should not be construed as financial advice and does not guarantee future performance. It is essential to conduct your own due diligence before making any investment decisions.

Resources:

• https://us.bnymellon.com/us-en/investment-solutions/etfs/etf-product-details-page/us-small-cap-core.html
• https://www.etf.com/funds/482038/bny-mellon-us-small-cap-core-equity-etf
• https://finance.yahoo.com/quote/SCF/