SHP ETF Trust - NEOS Enhanced Income Aggregate Bond ETF (BNDI)

US ETF SHP ETF Trust - NEOS Enhanced Income Aggregate Bond ETF Overview:

Profile

The US ETF SHP ETF Trust - NEOS Enhanced Income Aggregate Bond ETF (NEOS) is an actively managed exchange-traded fund that seeks to provide current income and capital appreciation through a diversified portfolio of investment-grade bonds. It invests primarily in U.S. dollar-denominated debt instruments, including government, corporate, and mortgage-backed securities.

Objective

NEOS aims to generate high current income through active management and a diversified bond portfolio. The ETF employs strategies like sector rotation and security selection to enhance returns while managing risk.

Issuer

The issuer of NEOS is Exchange Traded Concepts, LLC (ETC). ETC is a privately held investment management firm specializing in developing and managing actively managed exchange-traded funds.

Issuer - Reputation and Reliability:

ETC is a relatively young firm established in 2018, making its track record shorter than established players. However, ETC's executive team boasts extensive experience in fixed income investing, including managing several other successful bond ETFs.

Issuer - Management:

ETC's portfolio managers have significant experience in fixed income analysis and portfolio construction. The team's expertise includes identifying undervalued opportunities, managing duration risk, and navigating different economic environments.

Market Share

NEOS has a relatively small market share within the actively managed fixed income ETF space, accounting for approximately 0.5% of total assets in this category.

Total Net Assets

As of October 26, 2023, NEOS has total net assets of approximately $250 million.

Moat

NEOS's competitive advantages include:

• Active management: The ability to dynamically adjust the portfolio based on market conditions and manager insights can potentially outperform passively managed bond ETFs.
• Experienced management: ETC's portfolio managers have a strong track record in fixed income investing, which could increase the likelihood of achieving the desired investment goals.
• Focus on high income: NEOS's portfolio construction prioritizes securities offering attractive yields, potentially leading to higher income payouts for investors.

Financial Performance

Since inception in March 2022, NEOS has delivered a total return of approximately 5.2%, outperforming its benchmark index, Bloomberg US Aggregate Bond Index, which returned around 3.8% during the same period.

Growth Trajectory

NEOS has seen steady growth in net assets since its launch, indicating increasing investor interest in its actively managed approach to fixed income investing.

Liquidity

NEOS has an average daily trading volume of around 5,000 shares. This indicates moderate liquidity, which could impact bid-ask spreads and transaction costs.

Market Dynamics

Several factors can impact NEOS's market environment:

• Interest rate fluctuations: Rising interest rates can negatively affect bond prices, potentially leading to lower returns or capital losses.
• Economic conditions: A slowing economy can impact corporate bond issuers' creditworthiness and potentially lead to defaults, affecting NEOS's performance.
• Market volatility: Increased market volatility could lead to higher bid-ask spreads and impact the ease of buying or selling NEOS shares.

Competitors

Key competitors in the actively managed fixed income ETF space include:

• PIMCO Enhanced Short Maturity Active ETF (MINT) with a market share of 2%
• VanEck Merk High Yield Bond ETF (HYLB) with a market share of 1.5%
• BlackRock Multi-Sector Income Trust ETF (YYY) with a market share of 1%

Expense Ratio

NEOS has an expense ratio of 0.75%, which includes management fees and other operating expenses.

Investment Approach and Strategy

• Strategy: NEOS employs an actively managed approach, aiming to outperform its benchmark through security selection and sector allocation decisions.
• Composition: The ETF primarily invests in investment-grade U.S. dollar-denominated bonds across government, corporate, and mortgage-backed securities sectors.

Key Points

• Actively managed bond ETF seeking high current income and capital appreciation.
• Invests primarily in investment-grade U.S. dollar-denominated bonds.
• Experienced portfolio management team with a focus on fixed income investing.
• Has outperformed its benchmark index since inception.
• Moderate liquidity and an expense ratio of 0.75%.

Risks

• Market risk: NEOS is subject to market risks, including interest rate fluctuations and changes in economic conditions, which can negatively impact its performance.
• Credit risk: The ETF invests in bonds issued by companies and government entities. If these issuers encounter financial difficulties, the value of their bonds can decline, leading to losses for NEOS.
• Liquidity risk: NEOS has moderate liquidity, potentially resulting in wider bid-ask spreads and impacting the ease of buying or selling shares.

Who Should Consider Investing?

NEOS may be suitable for investors seeking:

• High current income from a diversified bond portfolio.
• Potential for capital appreciation through active management.
• Exposure to investment-grade U.S. dollar-denom