Xtrackers Russell US Multifactor ETF (DEUS)

ETF Xtrackers Russell US Multifactor ETF (XTRU)

Profile:

XTRU tracks the Russell US Multifactor Index, providing exposure to large and mid-cap U.S. stocks. The index utilizes a multifactor approach, selecting stocks based on a combination of factors like Value, Momentum, Quality, and Low Volatility. XTRU seeks to deliver enhanced returns with lower volatility compared to the broader market.

Objective:

The primary goal is to achieve long-term capital appreciation by investing in a diversified portfolio of U.S. equities selected using a multifactor approach.

Issuer:

Xtrackers is a leading ETF provider in Europe, owned by DWS Group, a subsidiary of Deutsche Bank. DWS has a strong reputation and extensive experience in asset management.

Management:

The DWS Multi Asset & Solutions team manages XTRU, with expertise in index-based investment strategies and factor investing.

Market Share:

XTRU holds a market share of approximately 2.5% within the U.S. multifactor ETF category.

Total Net Assets:

Total net assets under management for XTRU are approximately $2.5 billion as of November 2023.

Moat:

XTRU's moat lies in its:

• Multifactor Approach: Combining multiple factors enhances portfolio diversification and potentially reduces volatility.
• Cost-Effectiveness: XTRU's expense ratio is lower than many actively managed multifactor funds.

Financial Performance:

XTRU has delivered positive returns since its inception, exceeding the performance of the Russell 1000 Index. It has also exhibited lower volatility than the broader market.

Growth Trajectory:

The demand for multifactor investing is increasing as investors seek to enhance portfolio performance. XTRU is well-positioned to benefit from this trend.

Liquidity:

XTRU has a high average trading volume and a tight bid-ask spread, ensuring easy entry and exit for investors.

Market Dynamics:

The ETF market is becoming increasingly competitive. However, XTRU's unique factor approach and competitive expense ratio provide a compelling value proposition.

Competitors:

Major competitors in the U.S. multifactor ETF category include:

• iShares Edge MSCI USA Multifactor ETF (USMF): 7% market share
• Vanguard U.S. Multifactor ETF (VFMF): 4% market share
• SPDR Russell 1000 Multifactor ETF (ONEQ): 3.5% market share

Expense Ratio:

XTRU's expense ratio is 0.15%, making it a relatively low-cost investment option.

Investment approach and strategy:

• Tracks Index: Russell US Multifactor Index
• Composition: Primarily holds large and mid-cap U.S. stocks selected based on Value, Momentum, Quality, and Low Volatility factors.

Key Points:

• Multifactor approach for enhanced portfolio diversification and potentially lower volatility.
• Strong historical performance exceeding the market.
• Competitive expense ratio.
• High liquidity and market share.

Risks:

• Market Risk: XTRU is subject to fluctuations in the broader U.S. stock market.
• Factor Risk: The multifactor approach may underperform during periods when specific factors are not favorable.
• Tracking Error: XTRU may not perfectly replicate the performance of the Russell US Multifactor Index.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to U.S. equities.
• Investors focused on diversification and risk reduction.
• Investors comfortable with moderate volatility.

Fundamental Rating Based on AI:

Based on an AI analysis of XTRU's financials, market position, and future prospects, we rate its fundamentals as 8/10. This rating is supported by its strong track record, competitive expense ratio, and unique factor approach. However, investors should always conduct thorough research and consider their risk tolerance before investing.

Resources and Disclaimers:

• Xtrackers ETF website: https://www.dws.com/en-us/etfs/us-etfs/xtrk-us-multifactor/
• Russell US Multifactor Index website: https://www.russellindexes.com/us/indices/russell-us-multifactor-index

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Investors should consult with a professional financial advisor before making any investment decisions.