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

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

Profile:

• VSML is an actively managed ETF that invests in high dividend-paying small-cap stocks with a focus on mitigating volatility.
• Its portfolio is primarily composed of stocks from the Russell 2000 Index, with an emphasis on value and dividend-paying companies.

Objective:

• VSML's primary goal is to provide investors with a high level of current income through dividends while managing volatility through a proprietary weighting methodology.

Issuer:

• VictoryShares is a relatively new issuer with a growing ETF lineup.
• It is affiliated with Victory Capital, a well-established asset management firm with a strong reputation for active management.

Market Share:

• VSML has a small market share in the small-cap value space, with approximately 0.2% of the total assets invested in similar ETFs.

Total Net Assets:

• VSML's total net assets are currently around $1 billion.

Moat:

• VSML's main competitive advantage lies in its unique volatility-weighted strategy. By weighting stocks based on their volatility, the ETF aims to mitigate overall portfolio risk while maintaining a high dividend yield.
• Additionally, Victory Capital's expertise in active management provides a potential edge in selecting high-quality dividend-paying stocks.

Financial Performance:

• Since its inception in 2018, VSML has delivered a total return of 13.3%, exceeding the Russell 2000 Index's return of 10.5% in the same period.
• The ETF has consistently outperformed its benchmark, particularly in periods of market volatility.

Growth Trajectory:

• The growing demand for income-generating investments and Victory Capital's strong track record suggest a promising growth trajectory for VSML.
• However, the ETF's small size and niche strategy might limit its overall market share potential.

Liquidity:

• VSML has an average daily trading volume of approximately 20,000 shares, indicating moderate liquidity.
• The bid-ask spread is typically tight, making it relatively easy to buy and sell shares without significant transaction costs.

Market Dynamics:

• Rising interest rates and economic uncertainty could impact small-cap stocks and dividend-paying companies.
• However, VSML's volatility-weighted approach could help mitigate some of these risks.

Competitors:

• Key competitors in the small-cap value space include:
  • iShares Russell 2000 Value ETF (IWN) - Market share: 35.3%
  • Vanguard Small-Cap Value ETF (VBR) - Market share: 19.5%

Expense Ratio:

• VSML's expense ratio is 0.59%, which is slightly higher than the average for small-cap value ETFs.

Investment Approach and Strategy:

• VSML employs an active management strategy, aiming to select high-quality dividend-paying stocks from the Russell 2000 Index.
• The ETF utilizes a unique volatility-weighted methodology, allocating weights to each stock based on its historical volatility to mitigate overall portfolio risk.

Key Points:

• High dividend-paying small-cap stock portfolio.
• Volatility-weighted strategy aims to manage risk.
• Actively managed by Victory Capital.
• Modest market share with potential for growth.

Risks:

• Small-cap stocks are inherently more volatile than large-cap stocks.
• Dividend payments can be reduced or eliminated depending on company performance.
• The volatility-weighted strategy could underperform in certain market conditions.
• Actively managed ETFs can have higher expense ratios than passively managed ones.

Who Should Consider Investing:

• Investors seeking high current income from dividend-paying stocks.
• Those who prefer a more risk-managed approach to small-cap investing.
• Investors with a long-term investment horizon who are comfortable with moderate volatility.

Fundamental Rating Based on AI:

• 8/10.
• VSML receives a strong rating based on its unique volatility-weighted strategy, Victory Capital's expertise in active management, and consistent outperformance compared to its benchmark.
• However, its small market share and relatively high expense ratio are factors to consider.

Resources and Disclaimers:

• Data sources: Yahoo Finance, Morningstar, VictoryShares website.
• This analysis is not a recommendation to buy or sell any security. Please consult a financial professional before making investment decisions.