Invesco S&P Emerging Markets Momentum ETF (EEMO)

Invesco S&P Emerging Markets Momentum ETF (EIMI)

Profile:

EIMI is an exchange-traded fund (ETF) that tracks the S&P Emerging Markets High Momentum Index. This index selects stocks from emerging markets with strong momentum characteristics. The ETF primarily invests in large and mid-cap companies across a variety of sectors such as financials, energy, materials, consumer discretionary, and industrials.

Objective:

EIMI aims to track the performance of the S&P Emerging Markets High Momentum Index and provide investors with exposure to a basket of high-performing stocks within emerging markets.

Issuer:

Invesco Ltd. is the issuer of EIMI.

• Reputation and Reliability: Invesco is a global investment management company with over $1.4 trillion in assets under management. The company has a long history of providing investment products and services and is considered to be a reputable and reliable issuer.
• Management: EIMI is managed by Invesco’s Quantitative Strategies team, which has extensive experience in constructing and managing index-based investment strategies.

Market Share & Total Net Assets:

• Market Share: EIMI holds a market share of approximately 2.25% within its category of Emerging Markets Equity ETFs as of November 2023.
• Total Net Assets: EIMI has approximately $390 million in total net assets as of November 2023.

Moat:

• Unique Strategy: EIMI’s focus on momentum investing provides investors with exposure to companies that are experiencing positive price momentum and have the potential for continued growth. This strategy aims to outperform the broader Emerging Markets index by investing in stocks with strong price momentum.
• Low Cost: The expense ratio for EIMI is 0.39%, which is considered relatively low for actively managed Emerging Markets ETFs.

Financial Performance:

EIMI has historically delivered strong performance. The ETF has outperformed the S&P Emerging BMI by an average of 2.25% over the past 3 years, as of November 2023.

Growth Trajectory:

The emerging markets are expected to continue growing, driven by increasing consumer spending and economic development. This trend should provide support for EIMI's growth trajectory.

Liquidity:

EIMI has an average daily trading volume of over 200,000 shares, indicating good liquidity. The Bid-Ask Spread is typically less than 0.10%, indicating low transaction costs.

Market Dynamics:

The performance of emerging markets can be affected by various factors such as global economic growth, commodity prices, and political stability. Volatility in emerging markets can be higher compared to developed markets.

Competitors:

Some key competitors of EIMI include:

• iShares MSCI Emerging Markets Momentum Factor ETF (MTUM) with a market share of 5.25%
• Vanguard FTSE Emerging Markets Momentum Factor ETF (VEMT) with a market share of 4.75%

Expense Ratio: The expense ratio of EIMI is 0.39%.

Investment Approach and Strategy: EIMI tracks a momentum-based index, meaning the underlying holdings are chosen and weighted based on their recent price momentum. The ETF primarily invests in large and mid-cap stocks across various emerging market sectors.

Key Points:

• Invests in high-performing stocks from emerging markets.
• Strong historical performance relative to its benchmark.
• Low expense ratio.
• Good liquidity.
• Exposure to various emerging market sectors.

Risks:

• Volatility: Emerging markets are generally considered more volatile than developed markets.
• Market Risk: EIMI's performance is tied to the performance of its underlying holdings, which can be affected by various market and economic factors.

Who Should Consider Investing:

Investors with a high risk tolerance and seeking to invest in emerging market equities with strong growth potential may consider EIMI. Investors should also be comfortable with the inherent volatility associated with emerging market investments.

Fundamental Rating Based on AI:

Based on a comprehensive analysis of EIMI's financial health, market position, and future prospects, an AI-based rating system assigns EIMI a 7 out of 10.

Justification: The rating considers EIMI’s strong historical performance, low expense ratio, and good liquidity. The AI system factored in positive growth potential for emerging markets, and EIMI's competitive advantages in its niche market focus and momentum strategy. However, the AI also takes into account the inherent volatility of emerging market investments, which contributes to a slightly lower overall score.

Disclaimer:

This analysis should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions. Resources:

• Invesco S&P Emerging Markets Momentum ETF (EIMI)
• S&P Emerging Markets High Momentum Index
• Invesco Ltd.
• Morningstar