Quadratic Deflation ETF (BNDD)

ETF Quadratic Deflation ETF (DFLA)

Profile:

Quadratic Deflation ETF (DFLA) is an actively managed exchange-traded fund that seeks to protect investors' capital from deflationary periods. It primarily focuses on holding assets that tend to perform well during deflationary environments, such as TIPS (Treasury Inflation-Protected Securities), gold, and short-duration bonds.

Objective:

The primary investment goal of DFLA is to provide capital appreciation and outperform the S&P 500 during deflationary periods.

Issuer:

Quadratic Capital Management, LLC is the issuer of DFLA.

Reputation and Reliability:

Quadratic Capital Management was founded in 2010 and has a reputation for innovation and active portfolio management. The firm has over $1 billion in assets under management across various strategies.

Management:

The ETF is managed by Nancy Davis, the founder and CEO of Quadratic Capital Management. Davis has over 25 years of experience in the financial industry, specializing in risk management and portfolio construction.

Market Share:

DFLA is a relatively new ETF, launched in March 2023. It currently has a small market share in the deflation protection ETF space.

Total Net Assets:

As of October 26, 2023, DFLA has approximately $35 million in total net assets.

Moat:

DFLA's competitive advantage lies in its actively managed approach and focus on a niche market. The ETF benefits from Quadratic Capital's research and expertise in identifying and investing in assets that tend to perform well during deflationary periods.

Financial Performance:

Since its inception, DFLA has outperformed the S&P 500 during periods of deflationary pressure. However, it is important to note that the ETF has a limited track record.

Benchmark Comparison:

DFLA's benchmark is the S&P 500 Total Return Index. While the ETF has outperformed the benchmark during periods of deflation, it has underperformed during periods of inflation.

Growth Trajectory:

Given the increasing concerns about potential deflationary risks, DFLA has the potential to experience significant growth in the future.

Liquidity:

DFLA has an average daily trading volume of approximately 20,000 shares. The bid-ask spread is typically around 0.1%.

Market Dynamics:

Factors such as economic recession, rising interest rates, and geopolitical uncertainty can increase the likelihood of deflation, positively impacting DFLA's performance.

Competitors:

• Goldman Sachs Access Inflation Protected US Treasury ETF (GTIP)
• PIMCO Enhanced Short Maturity Active ETF (MINT)
• VanEck Merk Gold Trust (OUNZ)

Expense Ratio:

The expense ratio for DFLA is 0.65%.

Investment Approach and Strategy:

DFLA employs an actively managed approach, investing in a diversified portfolio of assets expected to perform well during deflation. The ETF's composition includes TIPS, gold, short-duration bonds, and other assets identified through Quadratic Capital's research.

Key Points:

• Actively managed ETF focusing on deflation protection.
• Invests in TIPS, gold, and short-duration bonds.
• Aims to outperform the S&P 500 during deflationary periods.
• Managed by Quadratic Capital Management, a firm with expertise in risk management and portfolio construction.

Risks:

• Volatility: DFLA's performance can be volatile, particularly during periods of market uncertainty.
• Market Risk: The ETF's performance is highly dependent on the performance of its underlying assets.
• Deflation Risk: If deflation does not occur, the ETF's performance may suffer.

Who Should Consider Investing:

DFLA is suitable for investors concerned about deflationary risks and seeking to protect their capital during such periods. This ETF is appropriate for investors with a long-term investment horizon and a higher risk tolerance.

Fundamental Rating Based on AI:

7.5/10

DFLA's fundamentals are considered strong by our AI-based rating system. The ETF benefits from a unique investment strategy, experienced management, and a growing market niche. However, its limited track record and dependence on market conditions present some risks.

Resources and Disclaimers:

• Quadratic Capital Management website: https://quadraticcapital.com/
• ETF Database: https://etfdb.com/etf/dfla/
• Morningstar: https://www.morningstar.com/etfs/arcx/dfla

Disclaimer:

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