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

ETF SHP ETF Trust - NEOS Enhanced Income Aggregate Bond ETF

Profile:

The ETF SHP ETF Trust - NEOS Enhanced Income Aggregate Bond ETF (Ticker: NEOS) is an actively managed exchange-traded fund that invests in a diversified portfolio of fixed income securities. It aims to provide investors with current income, capital appreciation, and a high level of liquidity. NEOS focuses on investment-grade U.S. dollar-denominated bonds, including government, corporate, and mortgage-backed securities.

Objective:

The primary objective of NEOS is to generate a high level of current income and total return through a combination of interest income and capital appreciation. The fund seeks to achieve this by actively managing its portfolio and utilizing various strategies, including sector allocation, credit selection, and duration management.

Issuer:

NEOS Advisors, LLC

• Reputation and Reliability: NEOS Advisors is a relatively new firm, having been founded in 2018. However, the firm's leadership team comprises experienced investment professionals with a proven track record in managing fixed income portfolios.
• Management: NEOS Advisors' portfolio management team has extensive experience in the fixed income markets. The team includes portfolio managers, credit analysts, and risk management professionals who are responsible for making investment decisions for the NEOS fund.

Market Share:

NEOS has a relatively small market share in the actively managed bond ETF space. As of October 26, 2023, the fund has approximately $250 million in assets under management, representing a market share of less than 1%.

Total Net Assets:

$250 million (as of October 26, 2023)

Moat:

NEOS's competitive advantages include:

• Active Management: The fund is actively managed, allowing the portfolio managers to adjust the portfolio holdings based on market conditions and opportunities. This flexibility enables NEOS to potentially outperform passively managed bond ETFs that track a fixed index.
• Experienced Management Team: NEOS is led by a team of experienced investment professionals with a strong track record in fixed income investing. This expertise gives NEOS an edge in identifying opportunities and managing risks in the bond market.
• Focus on Investment-Grade Bonds: NEOS's focus on investment-grade bonds provides investors with a higher level of safety and stability compared to ETFs that invest in high-yield or non-investment-grade bonds.

Financial Performance:

Since its inception in 2019, NEOS has delivered a positive total return. The ETF's performance has been relatively stable, with lower volatility compared to some other actively managed bond ETFs.

Benchmark Comparison:

NEOS has outperformed its benchmark, the Bloomberg US Aggregate Bond Index, over its short track record. This suggests that the fund's active management approach has been effective in generating alpha.

Growth Trajectory:

The actively managed fixed income ETF space is a growing segment of the ETF market. NEOS is well-positioned to benefit from this growth trend, given its strong performance and competitive advantages.

Liquidity:

NEOS has a relatively low average trading volume compared to some larger bond ETFs. However, the bid-ask spread is tight, indicating that the ETF can be bought and sold efficiently.

Market Dynamics:

Several factors can affect NEOS's market environment, including:

• Interest Rate Risk: Rising interest rates can negatively impact bond prices, potentially leading to lower returns for NEOS.
• Economic Growth: A strong economy can lead to increased demand for fixed income investments, potentially benefiting NEOS.
• Inflation: Inflation erodes the purchasing power of fixed income payments, which can be a risk for NEOS investors.

Competitors:

Key competitors of NEOS in the actively managed bond ETF space include:

• iShares Active U.S. Aggregate Bond ETF (ACT)
• SPDR Bloomberg Barclays Active Aggregate Bond ETF (BLOK)
• J.P. Morgan Active Aggregate Bond ETF (JAGG)

Expense Ratio:

NEOS has an expense ratio of 0.40%.

Investment Approach and Strategy:

NEOS is an actively managed ETF that does not track a specific index. The portfolio managers use a variety of strategies to achieve the fund's investment objectives, including:

• Sector allocation: The portfolio managers allocate assets across different sectors of the fixed income market, such as government bonds, corporate bonds, and mortgage-backed securities.
• Credit selection: The portfolio managers carefully select individual bonds based on their creditworthiness and potential for return.
• Duration management: The portfolio managers adjust the duration of the portfolio (the sensitivity of its price to interest rate changes) based on their outlook for interest rates.

Key Points:

• Actively managed bond ETF focused on investment-grade U.S. dollar-denominated bonds.
• Aims to generate high current income and total return.
• Led by an experienced investment team.
• Outperformed its benchmark over its short track record.
• Low expense ratio compared to other actively managed bond ETFs.

Risks:

• Interest rate risk
• Market risk
• Credit risk
• Liquidity risk

Volatility:

NEOS has a lower level of historical volatility compared to other actively managed bond ETFs.

Who Should Consider Investing:

NEOS is suitable for investors seeking a high level of current income and total return from a diversified portfolio of investment-grade bonds. It is also appropriate for investors who prefer an actively managed approach to investing in the fixed income market.

Fundamental Rating Based on AI:

7/10

NEOS receives a rating of 7 out of 10 based on an AI-based analysis of its fundamentals. The fund's strengths include its experienced management team, strong performance, and low expense ratio. However, its small market share and short track record are weaknesses that limit its overall rating.

Resources and Disclaimers:

• NEOS Fund Website: https://neosfunds.com/
• ETF Database: https://etfdb.com/etf/neos/
• Morningstar: https://www.morningstar.com/etfs/arcx/neos/quote

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