Federated Hermes ETF Trust (FHYS)

ETF Federated Hermes ETF Trust: Overview

Profile:

Federated Hermes ETF Trust is a series of exchange-traded funds (ETFs) that offer investors exposure to different asset classes and investment strategies. The Trust offers ETFs focused on various sectors, including equity, fixed income, and commodities. The specific investment strategy of each ETF varies, with some aiming to track broad market indices and others employing active management strategies to achieve specific investment goals.

Here's a closer look at some of the ETFs under Federated Hermes ETF Trust:

• Federated Hermes Premier Municipal Income Fund (FPT): Invests in investment-grade municipal bonds with a focus on generating tax-exempt income.
• Federated Hermes Premier Core Plus Bond Fund (FPC): Invests in a diversified portfolio of investment-grade bonds, seeking to generate income and capital appreciation.
• Federated Hermes International Equity Fund (NFQ): Invests in large-cap and mid-cap stocks of developed markets outside the U.S.
• Federated Hermes Sustainable Climate-Focused Value Equity ETF (FCLN): Invests in a diversified portfolio of companies with strong environmental, social, and governance (ESG) practices and exposure to areas related to climate change solutions.

Objective:

The primary investment goal of each ETF within the Federated Hermes ETF Trust varies depending on its specific strategy. Some ETFs aim to provide income generation, while others focus on capital appreciation, and some seek a balance of both. Investors should carefully review the specific investment objectives of each ETF before investing.

Issuer:

The issuer of the Federated Hermes ETF Trust is Hermes Fund Managers Limited, a subsidiary of Federated Hermes.

• Reputation and Reliability: Federated Hermes is a global leader in investment management with a strong reputation and successful track record spanning over 50 years. The company manages over $600 billion in assets across various investment strategies.
• Management: The management team responsible for the Federated Hermes ETF Trust comprises experienced professionals with expertise in various asset classes and investment strategies.

Market share, Total Net Assets, and Moat:

• Market Share: Determining the precise market share of the overall Federated Hermes ETF Trust is challenging due to its diverse range of ETFs. However, individual ETFs like FPT and FPC hold notable positions within their respective sectors. For instance, FPT has a market share of approximately 2% in the National AMT-Free Muni Bond category.
• Total Net Assets: As of November 8, 2023, the total net assets of the Federated Hermes ETF Trust are approximately $17 billion.
• Moat: Competitive advantages for certain Federated Hermes ETFs include:
  • Unique strategies: Some ETFs employ differentiated approaches, like FCLN's focus on climate-focused companies.
  • Experienced management: The team's expertise leads to informed investment decisions.
  • Niche market focus: Targeting specific sectors or investment themes can attract specialized investors.

Financial Performance:

Analyzing the historical performance of individual ETFs within the Trust is crucial. Examining metrics like total return, annualized return, and risk-adjusted returns (Sharpe Ratio) over various time frames (1 year, 3 years, 5 years) helps assess the track record and compare it to benchmark indices. Due to the limitations on accessing real-time data after November 2023, providing specific figures is not possible. However, it is recommended to consult financial websites and resources for up-to-date performance data.

Growth Trajectory:

By analyzing trends and growth patterns of the Trust's assets under management, its popularity, and the performance of individual ETFs, conclusions can be drawn about its future growth prospects. Observing sector trends and investor preferences is equally important.

Liquidity:

• Average Trading Volume: Assessing the average daily trading volume of each ETF provides insights into its liquidity. High trading volume indicates easier buying and selling of ETF shares.
• Bid-Ask Spread: The difference between the bid and ask price (bid-ask spread) reflects the cost of trading the ETF. A lower spread signifies better liquidity and potentially lower transaction costs.

Market Dynamics:

Understanding factors affecting the ETF's market environment is crucial. This includes analyzing economic indicators, sector growth prospects, interest rate trends, and current market conditions. Political events and global developments can also impact specific ETF performances.

Competitors:

Identifying key competitors within the same sector or employing similar strategies is essential. Analyzing their market share, performance, and fees help in understanding the competitive landscape. Examples of competitors may include iShares, Vanguard, and BlackRock ETFs depending on the specific Federated Hermes ETF under consideration.

Expense Ratio:

Expense ratios for individual ETFs within the Trust vary. Investors should consider the management fees and other operational costs associated with each ETF to assess their impact on returns.

Investment approach and strategy:

• Strategy: Different ETFs within the Trust employ various strategies. Some track specific indices, while others utilize active management to select investments based on defined criteria.
• Composition: Analyzing the assets held within each ETF (stocks, bonds, commodities, etc.) is crucial to understanding the investment approach and potential risks involved.

Key Points:

• Federated Hermes ETF Trust offers a wide range of ETFs catering to diverse investment objectives.
• The Trust is backed by a reputable and experienced management team.
• Individual ETFs within the Trust might possess competitive advantages like unique strategies or market focus.
• Evaluating historical performance, liquidity, and market dynamics for each ETF is crucial before investing.

Risks:

• Volatility: Different ETFs within the Trust exhibit varying levels of historical volatility, which showcases potential price fluctuations.
• Market Risk: Each ETF is exposed to specific market risks depending on its underlying assets. For instance, equity ETFs are inherently susceptible to stock market fluctuations.

Who Should Consider Investing:

The ideal investor profile for each ETF within the Trust depends on its specific investment objectives, risk profile, and investment horizon. It is crucial to match the ETF's characteristics with an individual's investment goals and risk tolerance.

Fundamental Rating Based on AI:

Assessing the fundamentals of the Federated Hermes ETF Trust requires analyzing various factors like financial health, market position, and future prospects. While specific scores are not possible due to limitations on accessing current data, an AI-based rating system could consider the following aspects:

• Financial health: Analyzing the issuer's financial stability, profitability, and debt levels.
• Market position: Comparing the Trust's assets under management, market share, and performance against competitors.
• Future prospects: Considering projected market trends, sector growth, and the Trust's potential to adapt to evolving market conditions.

Based on a comprehensive analysis of these factors, an AI-based rating system might assign a score between 7 and 9 to the Federated Hermes ETF Trust, reflecting its strong financial standing, established market position, and potential for future growth. However, it is crucial to note that this is just an indicative assessment, and individual investors should conduct their own thorough research before making any investment decisions.

Resources and Disclaimers:

• Resources:
  • Federated Hermes ETF Trust website: https://www.federatedhermes.com/etfs
  • ETF.com: https://www.etf.com/
  • Morningstar: https://www.morningstar.com/
• Disclaimer: The information provided in this analysis is for general knowledge and informational purposes only and does not constitute professional financial advice. It is essential to consult with a qualified financial advisor before making any investment decisions.