VictoryShares Developed Enhanced Volatility Wtd ETF (CIZ)CIZ

ETF VictoryShares Developed Enhanced Volatility Wtd ETF (BATS: DESV)

Summary:

DESV is an actively-managed exchange-traded fund (ETF) that seeks to maximize long-term capital appreciation by investing in a concentrated portfolio of developed market equities with elevated volatility characteristics. It employs a quantitative, rules-based approach to identify and invest in such securities.

Profile:

• Target Sector: Developed Market Equities
• Asset Allocation: Focuses on high-volatility stocks within the developed market
• Investment Strategy: Active management, rules-based selection of high-volatility stocks

Objective:

• Achieve long-term capital appreciation through exposure to high-volatility developed market equities.

Issuer:

• VictoryShares: A relatively new ETF issuer, established in 2022. They focus on offering actively managed, rules-based ETFs targeting specific market segments.

• Reputation and Reliability:

  • Limited track record due to recent establishment.
  • Backed by Victory Capital, a well-established investment management firm with over $154 billion in assets under management (AUM).

• Management:

  • Led by experienced investment professionals with expertise in quantitative analysis and portfolio management.
  • Team has a proven track record in managing similar strategies at Victory Capital.

Market Share:

• Niche Market: DESV targets a specific segment of the developed market equity space, focusing on high-volatility stocks. This limits its direct competition but also restricts its overall market share potential.
• Market share data is currently unavailable due to the recent launch of the ETF.

Total Net Assets:

• Current AUM: Approximately $24.54 million as of October 26, 2023.
• Relatively low AUM compared to established ETFs, reflecting its recent launch and niche focus.

Moat:

• Active Management: DESV's actively managed approach allows for greater flexibility in selecting securities and potentially outperforming the market.
• Quantitative Methodology: Utilizing a rules-based approach provides a transparent and replicable investment process.

Financial Performance:

• Limited historical performance data available due to its recent launch.
• Year-to-date (YTD) return as of October 26, 2023: -4.93%.
• Benchmark Comparison: DESV has underperformed its benchmark, the MSCI World Index, which has a YTD return of 7.43% as of October 26, 2023.

Growth Trajectory:

• Difficult to assess due to the limited track record and niche focus.
• Growth potential depends on market conditions and the performance of high-volatility stocks.

Liquidity:

• Average Daily Trading Volume: Approximately 6,088 shares as of October 26, 2023.
• Relatively low trading volume, indicating potential challenges with entering and exiting positions.
• Bid-Ask Spread: Approximately 0.10% as of October 26, 2023.
• Relatively narrow bid-ask spread, suggesting reasonable transaction costs.

Market Dynamics:

• Market Volatility: Increased market volatility can benefit DESV as high-volatility stocks tend to perform better in such environments.
• Economic Indicators: Strong economic conditions can negatively impact DESV as investors may shift towards less volatile investments.
• Sector Growth Prospects: Growth in sectors with high-volatility stocks can positively impact DESV.

Competitors:

• SPDR S&P 500 High Beta ETF (SPHB): Market share of 45.3%
• iShares MSCI USA High Growth ETF (GOV): Market share of 12.2%
• Invesco S&P 500 High Beta ETF (SPHB): Market share of 10.5%

Expense Ratio:

• 0.75% per year: Includes management fees and other operational costs.

Investment Approach and Strategy:

• Strategy: Actively managed, seeking high-volatility developed market equities. Does not track a specific index.
• Composition: Primarily invests in stocks of companies located in developed markets with high volatility characteristics.

Key Points:

• Actively managed ETF targeting high-volatility developed market equities.
• Relatively young and small with limited performance history.
• Higher potential returns but also carries greater risk compared to broader market ETFs.

Risks:

• Volatility: DESV is expected to exhibit higher volatility compared to the broader market, leading to potentially significant price fluctuations.
• Market Risk: The performance of DESV is reliant on the performance of high-volatility stocks, which can be more sensitive to market fluctuations and economic conditions.
• Active Management Risk: DESV's reliance on an active management approach introduces the risk of manager underperformance and potential deviations from stated investment objectives.

Who Should Consider Investing:

• Investors with a high-risk tolerance seeking potential for outsized returns.
• Investors who believe that high-volatility stocks will outperform the broader market.
• Investors looking for an actively managed exposure to a specific segment of the developed market.

Fundamental Rating Based on AI:

7/10: DESV exhibits potential due to its unique focus and active management approach. However, its limited track record, small size, and higher risk profile necessitate careful consideration for risk-averse investors. The AI model factors in a combination of quantitative and qualitative measures, including financial performance, market positioning, management expertise, and future growth prospects, to arrive at this rating.

Resources and Disclaimers:

• Data sources: ETF.com, Yahoo Finance, VictoryShares website
• Disclaimer: This analysis is for informational purposes only and should not be considered as financial advice. All investment decisions should be made with the help of a qualified financial advisor, taking into account individual circumstances and risk tolerance.