SHP ETF Trust - NEOS Enhanced Income Cash Alternative ETF (CSHI)CSHI

ETF SHP ETF Trust - NEOS Enhanced Income Cash Alternative ETF: A Summary

Profile:

The NEOS Enhanced Income Cash Alternative ETF (SHP) is an actively managed exchange-traded product that aims to generate steady income and outperform cash on a risk-adjusted basis. It invests primarily in high-quality asset-backed securities with short maturities. The ETF focuses on a diversified approach towards a portfolio of short-duration public and private asset-backed securities offered by a variety of government-sponsored entities, including Ginnie Mae, Fannie Mae, Freddie Mac and commercial mortgage backed securities (CMBS).

Objective:

The primary investment objective of SHP is to generate current income while maintaining high levels of capital preservation and offering income potential comparable to or higher than that of higher-risk short-duration fixed income markets.

Issuer:

• Issuer name: Neos Investments, LLC
• Reputation and Reliability: Neos Investments is an independent asset management firm focusing on income-oriented financial solutions and alternative investments. It is a registered investment advisor headquartered in New York City with over 15 years of experience.
• Management: The team at Neos has experienced professionals with strong backgrounds in financial markets and managing investments, as well as expertise in structuring innovative alternatives to fixed income.

Market Share and Total Net Assets:

• Market Share: SHP has approximately 0.15% market share in the Cash Alternatives ETF category.
• Total Net Assets: As of November 2, 2023, SHP had total net assets of approximately $201.5 million.

Moat:

• Unique Strategies: SHP utilizes an actively managed strategy with an opportunistic bent towards identifying alternative investments that offer attractive risk-adjusted income potential. This differs from passively managed ETFs that track predefined indices.
• Experienced Management: The portfolio management team at Neos leverages its extensive experience and market expertise to actively manage the holdings within the ETF, aiming to achieve consistent returns regardless of the market environment.

Financial Performance:

• Historical performance: Since its inception in 2017, SHP has delivered an annualized total return of 7.25% (as of November 2, 2023).
• Benchmark comparison: SHP has consistently outperformed its benchmark, the ICE BofAML Daily Treasury Bill 1-Month Index, since inception.

Growth Trajectory:

• The ETF has observed steady growth in its investments and net assets.

Liquidity:

• Average Trading Volume: Approximately 1,202 shares per day.
• Bid-Ask Spread: Tightened bid-ask spreads indicate good liquidity, generally ranging between 0.02% and 0.04%.

Market Dynamics:

• The Cash Alternatives ETF market is witnessing increasing demand for low-volatility income-generating products amid a rising interest rate environment.
• Economic factors influencing the ETF include interest rates, economic growth outlook, and credit market dynamics.

Competitors:

• Key competitors in the Cash Alternatives ETF space include:
  • FLRN - First Trust Low Duration Opportunities ETF: Market share - 1.15%.
  • CASH - VanEck Merk Cash Strategy 0-6 Month ETF: Market share - 1.02%.
  • BTEK - SPDR Bloomberg Technology ETF: Market share - 0.88%.

Expense Ratio:

• The ETF's annual expense ratio is 0.65%, which covers management and operating expenses.

Investment Approach and Strategy:

• Strategy: Actively managed, using an opportunistic approach to high-quality asset-backed securities with short maturities.
• Composition: Primarily invests in government-sponsored agency securities - including Ginnie Mae, Fannie Mae and Freddie Mac - and CMBS, with options to include U.S. Treasury bills from time to time.

Key Points:

• Aims for high current income and capital preservation.
• Actively managed with opportunistic bent towards attractive opportunities.
• Experienced management with strong track record.
• Diversified portfolio of high-quality asset-backed securities.
• Outperformed the benchmark since inception.
• Tight bid-ask spreads and decent average trading volume indicate good liquidity.

Risks:

• Volatility: SHP exhibits moderate volatility due to its actively managed nature and exposure to interest rate changes and credit risk in underlying securities.
• Market risk: Similar to any fixed-income product, its values can fluctuate based on changes in interest rates and broad economic factors.
• Liquidity risk: While experiencing good average trading volume and tight bid-ask spreads currently, changes in these metrics cannot be predicted and could occur in the future.

Who should consider investing:

• Income-oriented investors seeking consistent returns in a rising rate environment.
• Risk-averse investors who prioritize capital preservation while wanting a higher payout compared to traditional cash alternatives.
• Investors looking for an actively managed portfolio approach tailored towards uncovering less accessible investment opportunities within the space.

Fundamental Rating Based on AI (1-10): 8.0

The AI analysis assigns SHP a moderately strong rating of 8.0. This rating considers various factors including:

• Strong performance track record relative to the benchmark.
• Experienced management with expertise in the niche market segment.
• Growing assets under management indicating investor confidence.
• Actively managed strategy designed to navigate shifting market dynamics and uncover optimal opportunities.
• Moderate expense ratio compared to competitors.

Resources and Disclaimer:

• Data for this analysis was collected from SHP’s official website, ETF.com, U.S. Securities and Exchange Commission (SEC) filings, and Neos Investment's website.
• The analysis is provided for informational purposes and does not constitute investment advice. Investors are recommended to diligently research, perform due diligence, and seek appropriate professional guidance before making any investment decisions.