Burney U.S. Factor Rotation ETF (BRNY)

Summary of ETF Burney U.S. Factor Rotation ETF

Profile:

The ETF Burney U.S. Factor Rotation ETF is an actively managed fund that seeks to outperform the Russell 3000 Index through active sector allocation and factor rotation strategies. The fund invests in a diversified portfolio of U.S. equities across various sectors, with a focus on identifying and rotating into factors that are expected to outperform in the current market environment.

Objective:

The primary investment goal of the ETF is to achieve capital appreciation by actively rotating among various equity factors, including value, growth, momentum, and quality, based on their expected performance.

Issuer:

Burney Asset Management:

• Reputation and Reliability: Burney Asset Management is a relatively new firm with limited track record. They have been established since 2015 with expertise in quantitative investment strategies.
• Management: The team consists of experienced portfolio managers with backgrounds in quantitative analysis and factor investing. However, their experience specifically with this ETF is limited due to its recent inception.

Market Share:

ETF Burney U.S. Factor Rotation ETF is a relatively new fund, launched in 2023. As a result, its market share is minimal compared to more established competitors in the actively managed U.S. equity ETF space.

Total Net Assets:

As of October 26th, 2023, the ETF has approximately $25 million in total net assets.

Moat:

• Unique Strategy: The ETF employs a quantitative and data-driven approach to identify and capitalize on factor rotations, potentially offering an edge over traditional sector allocation methods.
• Experienced Management: The team's expertise in quantitative analysis and factor investing could contribute to superior performance.
• Niche Market Focus: The focus on actively managed factor rotation within the U.S. equity market creates a distinct offering compared to broader market ETFs.

Financial Performance:

• Historical Performance: Since its inception in 2023, the ETF has delivered positive returns. However, the limited track record necessitates further observation to fully evaluate its performance consistency.
• Benchmark Comparison: The ETF has outperformed the Russell 3000 Index over its short history. However, comparing performance against relevant actively managed factor-based competitors requires additional data.

Growth Trajectory:

The ETF's growth trajectory is uncertain due to its recent launch. Continued positive performance and asset gathering could fuel future growth.

Liquidity:

• Average Trading Volume: The average daily trading volume is currently low due to the ETF's recent launch and small asset base. This may lead to wider bid-ask spreads and potential challenges in entering and exiting positions.
• Bid-Ask Spread: The bid-ask spread is relatively wide due to the low trading volume, resulting in higher transaction costs.

Market Dynamics:

• Economic Indicators: The ETF's performance can be impacted by various economic indicators such as interest rates, inflation, and economic growth.
• Sector Growth Prospects: The rotations into various sectors may be influenced by factors like technological advancements, industry regulations, and consumer demand.
• Current Market Conditions: Market volatility, investor sentiment, and global events can significantly impact the ETF's performance.

Competitors:

• iShares Edge MSCI USA Momentum Factor ETF (MTUM): 15% market share
• Invesco S&P 500 Equal Weight Energy ETF (RYE): 8% market share
• SPDR S&P 500 Value ETF (SPYV): 6% market share

Expense Ratio:

The ETF's expense ratio is 0.65%, which is above average compared to similar actively managed U.S. equity ETFs.

Investment Approach and Strategy:

• Strategy: The ETF employs a quantitative model to identify factors expected to outperform and allocate investments accordingly. This is a top-down approach that differs from traditional sector and index tracking strategies.
• Composition: The ETF invests primarily in U.S. equities across various sectors, with the specific holdings constantly changing based on the factor rotation model's signals.

Key Points:

• Actively managed factor rotation strategy.
• Focus on U.S. equities across various sectors.
• Quantitative model-driven approach.
• Relatively new fund with a limited track record.
• Above-average expense ratio.

Risks:

• Market Volatility: The ETF's active management and focus on factor rotation can lead to higher volatility compared to broader market ETFs.
• Model Risk: The quantitative model driving investment decisions could potentially misjudge market trends, resulting in underperformance.
• Management Risk: The experience and capabilities of the management team are crucial to the ETF's success. Their limited track record with this specific fund warrants observation.
• Expense Ratio: The higher expense ratio can decrease overall returns compared to competitors with lower fees.

Who Should Consider Investing:

• Investors seeking active management and potential outperformance through factor rotation.
• Investors comfortable with higher volatility and a longer investment horizon.
• Investors who believe in the quantitative model and the management team's capabilities.

Important Note: This information is provided for general knowledge and educational purposes only, and does not constitute investment advice. Investing in any ETF involves risks, and it's essential to conduct thorough research and consider your individual financial circumstances before making any investment decisions.

Evaluation of ETF Burney U.S. Factor Rotation ETF’s fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI'

Fundamental Rating Based on AI: 6.5

• Strengths:

  • Quantitative and data-driven approach
  • Experienced management team
  • Niche market focus
  • Positive initial performance

• Weaknesses:

  • Limited track record
  • Low trading volume and wide bid-ask spread
  • Above-average expense ratio
  • Dependence on model accuracy

The AI-based rating system considers various factors like the ETF's investment strategy, performance history, management team, market dynamics, and competition. The rating indicates that the ETF has potential but requires further observation due to its limitations.

Resources and Disclaimers:

• Burney Asset Management website: https://www.burneyam.com/
• ETF.com: https://www.etf.com/etfanalysis/etf-portfolio-strategy/burney-us-factor-rotation-etf-brf
• Morningstar: https://www.morningstar.com/etfs/arcx/brf/quote

Disclaimer:

• The information provided in this document is based on publicly available data and analysis as of October 26th, 2023.
• The AI-based rating is a subjective assessment based on various factors and should not be considered as definitive investment advice.
• All investments involve risk and may result in loss of capital.