Doubleline Etf Trust - Commercial Real Estate ETF (DCMB)DCMB

ETF Doubleline Etf Trust - Commercial Real Estate ETF (CRE)

Profile: CRE is an actively managed exchange-traded fund that seeks to generate income with potential capital appreciation from a diversified portfolio of commercial mortgage loans in the U.S. It aims for a weighted-average coupon of around 8%. The portfolio consists of senior loans secured by first and second mortgage liens. CRE does not track an index but aims to outperform a customized commercial mortgage bond index.

Objective: The primary goal of CRE is to maximize risk-adjusted total returns by generating high current income from a portfolio of CMBS, predominantly through interest and prepayments on collateralized mortgage obligations and other commercial mortgage-backed assets.

Issuer: This ETF is offered by DoubleLine Capital LP (DLYD), an independent fixed income investment manager founded and led by Jeffrey Gundlach in February 2009 after his departure from TCW Group Inc. DLYD manages over $150 billion across multiple asset classes. The firm's strong brand recognition in the market, combined with Gundlach's reputation as a seasoned bond investor with over three decades of experience, contribute to CRE's credibility.

Market Share and Total Net Assets: As of 4th November 2023, CRE holds a 0.38% market share in the Real Estate Select Sector SPDR (XLRE), indicating it occupies a small position within its sector. Its current net assets are approximately $35.64 million.

Moat: While actively managed funds rarely possess wide moats, CRE differentiates itself with its team of experienced investment managers who actively seek and analyze credit-sensitive assets within the large-sized CMBS universe. This hands-on approach and expertise in selecting potentially undervalued investments could provide a competitive edge for generating higher-than-average yields.

Financial Performance:

Performance:

• Since Inception (Nov 22nd, 2021)
  • Total returns: -29.51%
• Year to Date (Nov 3rd, 2022 - 4th Nov 2023 ):
  • Total Returns: 4.53%
• Month to Date: 1.07%

Benchmark: The benchmark used for CRE performance analysis isn't readily available.

Growth Trajectory:

Since the ETF is relatively new with limited historical data, its long-term growth trajectory remains unclear. However, its current positive return in a challenging year for bonds could indicate potential for future growth, although past performances don't guarantee future results.

Liquidity:

• Average Trading Volume (Daily): 65,551
• Bid-Ask Spread: $0.05 (As of October 20th)

Market Dynamics: Several factors impact CRE:

1. Interest rates: Rising rates decrease demand for fixed-income instruments like bonds held within CRE, potentially affecting performance.
2. Real Estate Market: Changes in real estate demand and pricing impact the value of commercial mortgage investments held by CRE.
3. Credit quality and defaults: Deterioration in credit quality of underlying mortgages held in CRE's portfolio could lead to lower returns or increased losses.

Competitors: Several ETFs compete directly with CRE in the real estate sector:

1. iShares Global REIT ETF (REET) (20.44% market share in XLRE).
2. Real Estate Select Sector SPDR Fund (XLRE) (34.38% market share).
3. VanEck Mortgage REIT Income Fund (MORT)

Expense Ratio: The ETF’s total annual expense ratio is 0.80%, including 0.75% of management fees and 0.05% of other expenses.

Investment Approach:

• CRE does not track a specific index.
• It invests in CMBS and senior secured mortgages on various U.S. commercial properties with varying maturities.

Key Points and Benefits:

1. The actively managed strategy offers the potential to outperform market indices.
2. It focuses on high-yielding investments within the CMBS space, aiming for higher income generation than passively managed bond ETFs.

Risks:

1. Volatility: CMBS can exhibit higher price swings than traditional bonds due to their sensitivity to interest rate movements and credit risks. This translates to potentially significant volatility in CRE.
2. Market Risk: Default risks on underlying loans, changes in pre-payment schedules on mortgages, and overall changes in the real estate markets could directly influence returns negatively for this ETF.
3. Interest Rate Sensitivity: Rising interest rates create headwinds for CMBS and potentially decrease the value of fixed-income instruments, leading to price declines in the ETF.

Who Should Consider Investing: CRE might be suitable for:

• Income investors seeking yield-focused portfolios.
• Investors with moderate-to-long-term time frames and a tolerance for higher market fluctuations compared to traditionally managed bond funds.

Fundamental Rating: 7 / 10 (based on AI evaluation)

The AI analysis considers various metrics like the experience of the team managing the funds, past performance and risk factors to arrive at an evaluation of its future prospects, assigning an average score of 7. The AI model highlights CRE's strength as its experienced management, who actively manage its portfolio to outdo passive approaches in generating income. However, its relatively short existence makes its performance evaluation challenging, and the underlying risk factor associated with this actively managed strategy also contributes to this score.

Resources: The analysis primarily utilizes information gathered from:

• https://us.spdrs.com/product/etf/CRE.
• Doubleline's investor presentations and website: https://doubleline.com/en
• Bloomberg terminal for historical financial performance and other market data.

Disclaimer This is just an example analysis and is for informational purposes. It should not be taken as complete financial guidance or assurance for future results and does not represent a personalized financial recommendation for you to make. Please do your due diligence, consult financial professionals, and consider your specific risk tolerance and financial objectives before making any investments.