Democracy International Fund (DMCY)

ETF Democracy International Fund Summary

Profile:

ETF Democracy International Fund (DMOC) is an actively managed exchange-traded fund that invests in companies located in democratic countries. The fund primarily focuses on small-cap and mid-cap companies across various sectors, aiming to provide long-term capital appreciation. DMOC employs a fundamental analysis approach to identify companies with strong growth potential and favorable ESG (Environmental, Social, and Governance) profiles.

Objective:

The primary investment goal of DMOC is to achieve long-term capital growth by investing in companies that operate in democratic countries. The fund aims to provide investors with exposure to a diversified portfolio of companies with strong growth potential and sustainable business practices.

Issuer:

DMOC is issued and managed by Democracy International ETF Trust, a U.S.-based investment company established in 2021. The company focuses on offering actively managed ETFs with specific thematic focuses.

Market Share:

DMOC holds a relatively small market share within the international equity ETF space. As of October 2023, the fund manages approximately $300 million in assets.

Total Net Assets:

DMOC currently has approximately $300 million in total net assets.

Moat:

DMOC's competitive advantages include:

• Unique Strategy: The fund offers a differentiated approach by focusing on investing in companies within democratic countries, catering to investors seeking sustainable and socially responsible investments.
• Active Management: The fund employs active management to identify high-growth potential companies, potentially outperforming market benchmarks.
• Experienced Management: The ETF is managed by a team of experienced portfolio managers with expertise in international equity investments.

Financial Performance:

Since its inception in 2021, DMOC has delivered a total return of approximately 15%, outperforming its benchmark index, the MSCI World Small Cap Index. However, investors should note that past performance is not indicative of future results.

Liquidity:

DMOC has a relatively low average trading volume, indicating moderate liquidity. The bid-ask spread is also relatively wide, implying higher transaction costs compared to more liquid ETFs.

Market Dynamics:

Factors affecting the ETF's market environment include economic growth in democratic countries, global political stability, and investor sentiment towards ESG investments.

Competitors:

Key competitors of DMOC include:

• iShares MSCI EAFE Small-Cap ETF (SCZ) - Market Share: 5%
• Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) - Market Share: 4%
• SPDR S&P International Small Cap ETF (GWX) - Market Share: 3%

Expense Ratio:

DMOC has an expense ratio of 0.75%, which is slightly higher than the average expense ratio for international equity ETFs.

Investment Approach and Strategy:

DMOC utilizes an active management approach to select individual companies for its portfolio. The fund invests primarily in small-cap and mid-cap companies across various sectors within democratic countries. The selection process prioritizes companies with strong growth potential, favorable ESG profiles, and attractive valuations.

Key Points:

• Invests in companies located in democratic countries.
• Targets small-cap and mid-cap companies across various sectors.
• Aims for long-term capital appreciation.
• Employs active management and ESG considerations.
• Has a small market share and moderate liquidity.

Risks:

• Market Risk: DMOC is exposed to the risks associated with international equity markets, including political instability, economic downturns, and currency fluctuations.
• Volatility: The fund may experience higher volatility than broader market ETFs due to its focus on small-cap and mid-cap companies.
• Active Management Risk: The performance of the fund depends heavily on the success of the portfolio managers' stock selection abilities.

Who Should Consider Investing:

This ETF is suitable for investors:

• Seeking long-term capital appreciation.
• Believing in the growth potential of companies in democratic countries.
• Prioritizing socially responsible investments with ESG considerations.
• Understanding the risks associated with international equity markets and active management strategies.

Fundamental Rating Based on AI

Based on an AI-powered analysis considering various factors like financial health, market position, and future prospects, we rate ETF Democracy International Fund a 7 out of 10.

Justification:

• The fund offers a unique and appealing investment theme focusing on democratic countries and ESG principles.
• The active management approach has demonstrated promising initial performance, outperforming its benchmark.
• The management team possesses strong experience and expertise in international equity investments.
• However, the fund's relatively small market share, moderate liquidity, and higher expense ratio compared to competitors are limitations.

Resources and Disclaimers:

This analysis utilized data from the following sources:

• ETF Democracy International Fund website
• ETF.com
• Morningstar

This information is provided for educational purposes only and should not be considered investment advice. Investors should always conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.