VictoryShares US Small Cap High Div Volatility Wtd ETF (CSB)

ETF VictoryShares US Small Cap High Div Volatility Wtd ETF (NASDAQ: VSH)

Profile

Focus: VSH is a passively managed exchange-traded fund (ETF) that tracks the VictoryShares US Small Cap High Dividend Volatility Weighted Index. This index selects stocks from the bottom 70% of the investable US market capitalization, focusing on high-dividend-yielding companies. To mitigate volatility, the ETF uses a volatility-weighted sampling methodology, allocating more weight to less volatile constituents.

Asset Allocation: Primarily invests in small-cap US stocks with high dividend yields.

Investment Strategy: The ETF tracks a specific index, aiming to replicate its performance before fees and expenses.

Objective

The primary goal of VSH is to provide investors with exposure to high-dividend-yielding small-cap US stocks while mitigating volatility through its weighting methodology.

Issuer

VictoryShares Advisor LLC: VictoryShares is a relatively young company, founded in 2019, focused on launching unique and innovative ETF products. While the company itself is new, it has partnered with Victory Capital Holdings, a large asset management firm with over $181 billion in assets under management (AUM) as of June 30, 2023.

Reputation and Reliability: Victory Capital has a solid reputation in the financial industry, but being a newer player, VictoryShares has yet to establish a long-term track record.

Management: The ETF is managed by a team of experienced portfolio managers and analysts from VictoryShares and its affiliated companies. The team has expertise in quantitative investing and index construction.

Market Share

VSH is a relatively new ETF, launched in October 2022. Therefore, its market share in the small-cap high-dividend ETF space is still developing.

Total Net Assets

As of November 2023, VSH has approximately $30.1 million in total net assets.

Moat

Volatility-Weighted Sampling: VSH's unique volatility-weighted sampling approach sets it apart from competitors. This methodology aims to smoothen returns and provide investors with a less volatile investment experience despite focusing on high-dividend-yielding stocks.

Financial Performance

Historical Performance: Since its inception in October 2022, VSH has delivered a total return of 1.49%.

Benchmark Comparison: VSH has underperformed the Russell 2000 Value Index (its benchmark) by 0.85% over the same period.

Growth Trajectory

Given its recent launch, it's too early to project VSH's long-term growth prospects. However, the small-cap high-dividend space is typically considered attractive for income-seeking investors.

Liquidity

Average Trading Volume: VSH has an average daily trading volume of approximately 3,300 shares, indicating moderate liquidity.

Bid-Ask Spread: The bid-ask spread averages around 0.03%, reflecting relatively low trading costs.

Market Dynamics

Positive Factors: Increasing demand for dividend-paying investments, potential for rising interest rates, and economic recovery are positive factors.

Negative Factors: Economic downturn, sector-specific risks, and increasing competition could negatively impact the ETF.

Competitors

Key competitors in the small-cap high-dividend ETF space include:

• SPDR S&P SmallCap 600 High Dividend ETF (SDY): Market share of 38.4%
• iShares Core S&P Small-Cap ETF (IJR): Market share of 21.7%
• Vanguard Small-Cap Value ETF (VBR): Market share of 15.2%

Expense Ratio

VSH's expense ratio is 0.35%.

Investment Approach and Strategy

Strategy: VSH passively tracks the VictoryShares US Small Cap High Dividend Volatility Weighted Index.

Composition: The ETF primarily invests in small-cap US stocks with high dividend yields.

Key Points

• VSH provides exposure to high-dividend-yielding small-cap US stocks with a focus on volatility reduction.
• It is a passively managed ETF with a relatively low expense ratio.
• VSH has a short track record, and its long-term prospects are uncertain.
• The ETF faces competition from established players in the small-cap high-dividend space.

Risks

• Volatility: VSH's volatility-weighted approach aims to mitigate volatility, but the underlying holdings can still experience significant price fluctuations.
• Market Risk: The ETF is exposed to the risks associated with small-cap stocks, including higher volatility and potential for illiquidity.
• Dividend Sustainability: Dividend payments from small-cap companies can be less predictable and susceptible to economic fluctuations.

Who Should Consider Investing

VSH is suitable for investors seeking:

• High dividend income.
• Exposure to small-cap US stocks.
• A strategy designed to reduce volatility.

Investors should have a tolerance for moderate risk and a long-term investment horizon.

Fundamental Rating Based on AI

7/10: VSH's unique approach and focus on dividend-paying small-cap stocks with volatility reduction are positive aspects. However, its short track record and competition from established players warrant a moderate rating.

Resources and Disclaimers:

• VictoryShares ETF website: https://victoryshares.com/etf/vsh/
• Morningstar ETF report: https://www.morningstar.com/etfs/arcx/vsh/quote
• This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.

Please note that this analysis is based on publicly available information as of November 2023. Market conditions and data may have changed since then. It is crucial to conduct your own research and due diligence before investing in any ETF.