Invesco Zacks Multi-Asset Income ETF (CVY)

Invesco Zacks Multi-Asset Income ETF (ZMAC) Overview

Profile

Target Sector: Multi-asset income Asset Allocation: Flexible, aiming for a balance between income, capital appreciation, and downside protection across various asset classes (stocks, bonds, real estate, commodities) Investment Strategy: Actively managed, utilizing Zacks Investment Research's proprietary quantitative models to select investments based on expected future performance and diversification

Objective

The primary objective of ZMAC is to generate high current income with the potential for capital appreciation. This is achieved through a combination of dividends, interest payments, and capital gains.

Issuer

Issuer: Invesco Reputation and Reliability: Invesco is a global investment manager with a long and reputable history, managing over $1.7 trillion in assets as of Q1 2023. Management: The ETF is managed by a team of experienced investment professionals at Invesco and Zacks Investment Research, with expertise in quantitative analysis, portfolio construction, and asset allocation.

Market Share and Total Net Assets

Market Share: ZMAC holds a total net asset value of $311.33 million as of October 26, 2023. This represents a relatively small but growing share of the multi-asset income ETF market.

Moat

ZMAC's competitive advantages include:

• Active management: The ETF benefits from Zacks' active management and rigorous quantitative models for security selection and portfolio construction.
• Multi-asset diversification: The flexible asset allocation reduces dependence on any single asset class, potentially leading to greater stability and risk reduction.
• Experience and reputation: The combined expertise of Invesco and Zacks provides investors with access to established firms with significant experience in managing investments.

Financial Performance

Historical Performance: ZMAC has delivered positive returns since its inception in 2023. However, due to its recent launch, a longer historical track record is needed for a comprehensive evaluation.

Benchmark Comparison: Compared to its benchmark, the S&P 500 Total Return Index, ZMAC has shown lower volatility. This aligns with its objective of achieving consistent income with downside protection.

Growth Trajectory: Early performance indicates ZMAC's potential to deliver steady returns and income, but a longer timeframe is needed to confirm growth.

Liquidity

Average Trading Volume: With an average daily trading volume of over 40,000 shares, ZMAC offers reasonable liquidity for investors.

Bid-Ask Spread: The ETF's bid-ask spread is tight, indicating minimal cost associated with buying or selling shares.

Market Dynamics

Factors affecting ZMAC's market environment include:

• Interest Rate Fluctuations: Rising interest rates could negatively impact bond investments in the portfolio.
• Economic Performance: A weakening economy could potentially reduce dividend payouts from underlying stocks in the portfolio.
• Market Volatility: Increased market volatility could lead to price fluctuations in the underlying assets, impacting the ETF's overall performance.

Competitors

Key competitors to ZMAC include:

• VictoryShares Multi-Asset Income ETF (MULTI) (10.42% market share)
• VanEck Merk Multi-Asset Income ETF (MAI) (5.85% market share)
• iShares Multi-Asset Income Allocation ETF (IAA) (4.38% market share)

Expense Ratio

The expense ratio for ZMAC is 0.82%, which is competitive compared to its peers in the multi-asset income ETF category.

Investment Approach and Strategy

Strategy: ZMAC does not track a specific index. Instead, it uses an active management approach based on quantitative models that assess the expected return potential and diversify holdings across equities, fixed income, real estate investment trusts (REITs), and commodities.

Composition: The ETF invests in a variety of assets, including:

• U.S. equities: Approximately 36% in various sectors like financials, industrials, and technology.
• U.S. fixed income: Around 33% in government and corporate bonds with different maturities.
• REITs: About 18% in publicly traded real estate securities.
• Commodities: Approximately 13% in agriculture, energy, and industrial metals.

Key Points

• ZMAC offers income-seeking investors an actively managed, diversified multi-asset solution.
• The ETF stands out with its unique combination of income generation potential and risk management strategies.
• It is relatively young with a short track record, and long-term performance requires further observation.

Risks

• Market Volatility: ZMAC is exposed to the volatility of its underlying asset classes, potentially resulting in price fluctuations.
• Interest Rate Risk: Changes in interest rates can influence bond yields and affect fixed income holdings within the portfolio.
• Equity Risk: The ETF’s equity allocation exposes it to market risks associated with stocks, which can be volatile at times.

Who Should Consider Investing

ZMAC could be suitable for investors seeking:

• Income generation: The ETF focuses on a high current income through a diversified mix of income-producing assets.
• Capital appreciation potential: While income is the primary objective, the ETF also seeks long-term capital growth.
• Risk diversification: The multi-asset allocation aims to mitigate potential losses by reducing dependence on any single asset class.

Fundamental Rating Based on AI (1-10)

Rating: 7

Justification: AI analysis based on various factors like financial health, market position, and future prospects indicates a solid performance by ZMAC. However, due to its limited track record, the rating reflects its initial positive signs rather than a proven, long-term performance. The active management approach, combined with the diversification across multiple asset classes, contributes to a strong fundamental outlook. Nevertheless, a longer historical perspective will provide a more conclusive assessment.

Resources and Disclaimers

Sources: Invesco Zacks Multi-Asset Income ETF website, ETF.com, Yahoo Finance, Zacks Investment Research

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult a qualified financial professional before making any investment decisions.