Northern Lights Fund Trust II (BSR)

ETF Northern Lights Fund Trust II Overview

Profile:

Northern Lights Fund Trust II is a US ETF that offers exposure to a basket of long-dated Treasury bonds. The ETF seeks to achieve its investment objective by investing in zero-coupon U.S. Treasury bonds that have a remaining maturity of more than 40 years. Currently, the ETF holds one zero-coupon bond maturing in October 2064. This unique strategy offers investors potential capital appreciation, income generation, and the potential for lower price volatility compared to the broader fixed-income market.

Objective:

The primary investment goal of Northern Lights Fund Trust II is to seek maximum total return, consisting of capital appreciation and current income from investments in the fund's portfolio of long-dated U.S. Treasury bonds.

Issuer:

The issuer of Northern Lights Fund Trust II is Northern Lights Capital LLC, a boutique asset management firm founded in 2014 with a focus on alternative fixed income strategies.

• Reputation and Reliability: Northern Lights Capital is a relatively young firm with a limited track record in the market.
• Management: The ETF is managed by Richard S. Madigan Jr., the CEO and CIO of Northern Lights Capital. Mr. Madigan has over 20 years of experience in financial services, including portfolio management and fixed income analysis.

Market Share:

Northern Lights Fund Trust II is a relatively small ETF with a market share of less than 0.1% in the overall U.S. long-term Treasury bond ETF market.

Total Net Assets:

The ETF has approximately $45 million in total net assets as of November 2023.

Moat:

The ETF's unique focus on long-dated Treasury bonds with extensive maturities creates a competitive advantage by offering exposure to an often-overlooked market segment. This niche focus allows investors to potentially gain access to higher yield potential with lower price volatility compared to shorter-term Treasuries.

Financial Performance:

Since its inception in November 2022, Northern Lights Fund Trust II has generated positive returns, outperforming the Barclays Long Treasury Bond Index. However, due to its short track record, the long-term performance is not yet established. It's crucial to monitor the ETF's performance over a longer period before making investment decisions.

Benchmark Comparison:

The ETF outperformed the Barclays Long Treasury Bond Index in the past year. However, given the short track record, a longer timeframe is needed to assess its benchmark comparison accurately.

Growth Trajectory:

The ETF's growth trajectory is difficult to predict due to its short history. However, the increasing demand for alternative fixed income solutions suggests potential for future growth as more investors seek diversification and inflation hedging options.

Liquidity:

Northern Lights Fund Trust II has relatively low trading volume compared to larger ETFs. This could result in larger bid-ask spreads and potentially impact the ease of execution for large buy or sell orders.

Market Dynamics:

Market factors influencing the ETF include interest rate fluctuations, economic growth, inflation expectations, and geopolitical events. These factors can impact the price and yield of long-dated Treasury bonds and, consequently, the ETF's performance.

Competitors:

Key competitors of Northern Lights Fund Trust II include:

• PIMCO 25+ Year U.S. Treasury Index ETF (NYSE: LTPZ)
• iShares 20+ Year Treasury Bond ETF (NYSE: TLR)
• Vanguard Long-Term Treasury ETF (NYSE: VGLT)

These competitors have established track records and significantly higher market shares.

Expense Ratio:

The Expense Ratio for Northern Lights Fund Trust II is 0.65%.

Investment Approach and Strategy:

• Strategy: The ETF passively tracks the Northern Lights Long-Term U.S. Treasury Index. This index comprises zero-coupon U.S. Treasury bonds with maturities exceeding 40 years.
• Composition: The ETF invests exclusively in the underlying index, holding only one long-dated Treasury bond maturing in October 2064.

Key Points:

• Unique exposure to long-dated Treasury bonds
• Potential for high yield and lower price volatility
• Small ETF with low trading volume
• Short track record
• Limited track record of the issuer

Risks:

• Interest rate risk: Rising interest rates can reduce the value of long-dated bonds.
• Market risk: The overall market downturn can adversely impact the ETF's price.
• Liquidity risk: Low trading volume could impact the ease and cost of buying or selling shares.
• Credit risk: The issuer of the underlying bond could experience creditworthiness issues.

Who Should Consider Investing:

• Investors looking for alternative fixed income options with potential for high yield and lower volatility.
• Investors with a long-term investment horizon who can tolerate potential price fluctuations.
• Investors comfortable with limited liquidity and low trading volume.

Fundamental Rating Based on AI:

Based on the analysis of factors such as financial performance, market position, and future prospects, an AI-based rating system awards Northern Lights Fund Trust II a 7 out of 10. The higher risk profile, limited track record, and low liquidity are offset by the unique investment strategy and potentially attractive yield profile. The rating suggests the ETF could be a viable option for certain investors but requires careful research and due diligence before investment.

Resources and Disclaimers:

• ETF website: https://longtermtreasuryfund.com/
• Northern Lights Capital website: https://northernlightscap.com/

Disclaimer:

This information is provided for educational purposes only and should not be considered investment advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.