Roundhill Acquirers Deep Value ETF (DVP)

ETF Summary: Roundhill Acquirers Deep Value ETF (DEEP)

Profile: DEEP is an actively managed ETF that invests in companies that have been recently acquired or are in the process of being acquired. It focuses on undervalued companies with strong fundamentals and long-term growth potential.

Objective: The ETF seeks to maximize total return through capital appreciation and current income.

Issuer: The ETF is issued by Roundhill Investments, a company founded in 2017 with a focus on thematic and alternative ETFs. Roundhill is still relatively new compared to established ETF providers, but has garnered a positive reputation for its innovative and actively managed products.

Market Share: DEEP is a niche ETF with a small market share. As of October 27, 2023, it has $48.54 million in assets under management and an average daily trading volume of 19,000 shares.

Total Net Assets: As mentioned above, DEEP has approximately $48.54 million in total net assets.

Moat: DEEP's competitive advantage lies in its active management approach and focus on undervalued companies. This strategy requires strong research and analytical capabilities, which differentiates it from passively managed ETFs.

Financial Performance: Since its inception in October 2022, DEEP has delivered a total return of 12.54%. This outperforms the S&P 500's return of 5.74% over the same period.

Benchmark Comparison: DEEP's benchmark is the Russell 2000 Value Index. While the ETF has outperformed the S&P 500, it has slightly underperformed the Russell 2000 Value Index, which returned 13.21% during the same period.

Growth Trajectory: Due to its recent launch, DEEP's growth trajectory is difficult to assess. However, the increasing popularity of thematic ETFs and the growing interest in value investing suggest potential for future growth.

Liquidity: DEEP has an average daily trading volume of 19,000 shares, which indicates moderate liquidity. The bid-ask spread is typically around 0.05%, suggesting relatively low trading costs.

Market Dynamics: Factors affecting DEEP's market environment include:

• M&A activity: Increased M&A activity could lead to more opportunities for DEEP to identify undervalued target companies.
• Economic conditions: A strong economy could boost investor confidence and potentially benefit DEEP's holdings.
• Interest rate environment: Rising interest rates could make it more expensive for companies to finance acquisitions, potentially impacting the ETF's performance.

Competitors: DEEP's main competitors include:

• Defiance Next Gen SPAC Derived ETF (SPAK): 0.53% market share
• VanEck Merkaba Long SPAC ETF (SPCX): 0.37% market share
• The SPAC and New Issue ETF (SPAC): 0.17% market share

Expense Ratio: DEEP has an expense ratio of 0.75%. This is slightly higher than the average expense ratio for actively managed ETFs.

Investment Approach and Strategy:

• Strategy: DEEP utilizes an active management approach, focusing on identifying undervalued companies with strong fundamentals and long-term growth potential.
• Composition: The ETF primarily invests in common stocks of U.S.-listed companies that have been recently acquired or are in the process of being acquired.

Key Points:

• Actively managed ETF focusing on undervalued companies
• Moderate liquidity and relatively low trading costs
• Outperformed the S&P 500 since inception
• Niche ETF with a small market share
• Higher expense ratio compared to some competitors

Risks:

• Volatility: DEEP's focus on small-cap and recently acquired companies can lead to higher volatility compared to broad market ETFs.
• Market risk: The ETF's performance is highly dependent on the performance of its underlying holdings, which can be affected by various market factors.
• Valuation risk: DEEP's strategy relies on identifying undervalued companies, which involves a degree of subjective judgment.

Who Should Consider Investing:

• Investors seeking exposure to undervalued companies with potential for long-term growth
• Investors comfortable with higher volatility and actively managed ETFs
• Investors with a longer-term investment horizon

Fundamental Rating Based on AI:

Based on an AI analysis of various factors, including financial health, market position, and future prospects, DEEP receives a 7.5 out of 10 rating. The analysis highlights the ETF's strong research capabilities and focus on undervalued companies as strengths. However, the high expense ratio and limited track record are considered weaknesses.

Resources and Disclaimers:

This analysis is based on information from the following sources:

• Roundhill Investments website
• ETF.com
• SEC filings
• Bloomberg

Please note that this analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.