Xtrackers California Municipal Bonds ETF (CA)

Xtrackers California Municipal Bonds ETF (CLM) Overview

Profile:

CLM is an exchange-traded fund (ETF) that invests in investment-grade, long-term municipal bonds issued by the state of California and its local government agencies. It tracks the ICE BofA California Intermediate Municipal Bond Index. CLM primarily focuses on providing investors with tax-exempt income and capital appreciation through investments in high-quality California municipal bonds.

Objective:

The primary investment goal of CLM is to provide investors with a high level of current income exempt from federal and California state income taxes, while also preserving capital. It seeks to achieve this objective by investing in a diversified portfolio of long-term, investment-grade California municipal bonds.

Issuer:

CLM is issued by DWS Investment Management Americas Inc., a subsidiary of DWS Group, a global asset management firm with over €900 billion in assets under management. DWS Group has a strong reputation and track record in the market, with over 60 years of experience in asset management. The ETF is managed by a team of experienced fixed income portfolio managers with expertise in the municipal bond market.

Market Share:

CLM is the largest California municipal bond ETF by assets under management, with a market share of approximately 25%.

Total Net Assets:

As of November 8, 2023, CLM has total net assets of over $15 billion.

Moat:

CLM's competitive advantages include:

• Significant Scale: Its large size allows for greater diversification and liquidity compared to smaller competitors.
• Experienced Management: The ETF's management team has a strong track record in the municipal bond market.
• Low Cost: CLM has an expense ratio of 0.07%, making it one of the most cost-effective California municipal bond ETFs available.

Financial Performance:

CLM has historically outperformed its benchmark index, the ICE BofA California Intermediate Municipal Bond Index. Over the past 5 years, CLM has generated an average annual return of 3.5%, compared to 3.2% for the benchmark index.

Growth Trajectory:

The demand for tax-exempt income is expected to continue to grow, which should benefit CLM. The aging population and the increasing popularity of municipal bonds among individual investors are key drivers of this growth.

Liquidity:

CLM has a high level of liquidity, with an average daily trading volume of over 500,000 shares. The bid-ask spread is also relatively tight, indicating that investors can easily buy and sell the ETF without significant price impact.

Market Dynamics:

The market environment for municipal bonds is currently favorable, with low interest rates and strong demand from investors. However, rising interest rates and potential economic slowdowns could pose risks to the ETF's performance.

Competitors:

Key competitors of CLM include:

• iShares California Municipal Bond ETF (CMF)
• Vanguard California Tax-Exempt Bond ETF (VCAL)
• SPDR Nuveen California Municipal Bond ETF (CXM)

Expense Ratio:

CLM has an expense ratio of 0.07%.

Investment Approach and Strategy:

CLM is a passively managed ETF that tracks the ICE BofA California Intermediate Municipal Bond Index. The ETF invests in a diversified portfolio of long-term, investment-grade California municipal bonds.

Key Points:

• Large and liquid ETF with a strong track record
• Provides tax-exempt income and capital appreciation
• Low expense ratio

Risks:

• Interest rate risk: Rising interest rates can lead to a decline in the value of the ETF's holdings.
• Credit risk: The ETF's holdings are subject to the credit risk of the issuers of the bonds.
• Liquidity risk: There is a risk that the ETF may not be able to be sold quickly at a fair price.

Who Should Consider Investing:

CLM is suitable for investors who are seeking:

• Tax-exempt income
• Capital appreciation
• Diversification in their fixed income portfolio

Evaluation of CLM's Fundamentals:

Fundamental Rating Based on AI: 8.5

CLM receives a strong rating of 8.5 based on its robust financial performance, experienced management team, competitive advantages, and favorable market environment. However, investors should be aware of the interest rate risk and credit risk associated with municipal bonds.

Resources:

• DWS ETF website: https://www.dws-etf.com/us/en/etfs/etf/xcs-xtrkrs-california-mnicpl-etf-us13332g1094
• Bloomberg: https://www.bloomberg.com/quote/CLM:US
• Yahoo Finance: https://finance.yahoo.com/quote/CLM/

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. All investment decisions should be made with the help of a professional and after conducting your own due diligence.