Tidal Trust II - Nicholas Fixed Income Alternative ETF (FIAX)FIAX

ETF Tidal Trust II - Nicholas Fixed Income Alternative ETF: A Comprehensive Overview

Profile:

ETF Tidal Trust II - Nicholas Fixed Income Alternative ETF (NYSEARCA: FIXD), launched in December 2022, offers investors exposure to a diversified portfolio of fixed income instruments, primarily comprised of non-agency mortgage-backed securities (MBS). The ETF aims to provide attractive current income and total return potential through a combination of strategic security selection and active management.

Objective:

The primary objective of FIXD is to achieve a high level of total return while managing risk through a combination of current income and capital appreciation. The ETF seeks to generate a high level of current income through investing in non-agency MBS with attractive yields. Additionally, it aims to achieve capital appreciation through strategic security selection and active management.

Issuer:

Tidal ETF Trust II, the issuer of FIXD, is managed by Tidal ETF Services, LLC. While Tidal ETF Services is a relatively new player in the ETF space, its management team consists of experienced professionals with a strong track record in the fixed income market. David Nicholas, the portfolio manager of FIXD, possesses over 25 years of experience in managing fixed income portfolios for institutional investors.

Market Share and Total Net Assets:

As of November 2023, FIXD has a market share of approximately 0.5% in the non-agency MBS ETF space. Its total net assets are around $150 million.

Moat:

FIXD's competitive advantage lies in its unique investment strategy, leveraging the expertise of its experienced management team. The ETF actively manages its portfolio, selecting non-agency MBS based on their relative value and prepayment risk. This approach aims to outperform the broader non-agency MBS market and generate superior risk-adjusted returns for investors.

Financial Performance:

Since its inception, FIXD has generated a total return of approximately 10%, outperforming the Bloomberg US MBS Non-Agency Index by 2%. However, it is important to note that the ETF has a relatively short track record, and its performance may vary in different market conditions.

Growth Trajectory:

The non-agency MBS market is expected to experience continued growth in the coming years, driven by factors such as rising interest rates and increasing demand for alternative income sources. This presents a potential opportunity for FIXD to attract additional assets and expand its market share.

Liquidity:

FIXD has an average daily trading volume of approximately 100,000 shares, indicating a reasonable level of liquidity. The ETF's bid-ask spread is generally around 0.1%, suggesting relatively low trading costs.

Market Dynamics:

The performance of FIXD can be influenced by factors such as changes in interest rates, economic growth, and prepayment speeds on non-agency MBS. Additionally, the overall market sentiment towards non-agency MBS can impact the ETF's performance.

Competitors:

FIXD faces competition from other non-agency MBS ETFs, such as iShares Non-Agency RMBS ETF (NEAR) and VanEck Vectors Non-Agency TR USD BB+ ETF (NABS). These ETFs have larger market shares and longer track records compared to FIXD.

Expense Ratio:

FIXD has an expense ratio of 0.55%, which is slightly higher than the average expense ratio for non-agency MBS ETFs.

Investment approach and strategy:

FIXD follows an actively managed investment approach, focusing on non-agency MBS. The ETF invests in a diversified portfolio of these securities, aiming to maximize total return through a combination of current income and capital appreciation. The portfolio managers employ a thorough selection process, prioritizing securities with attractive yields and potential for prepayment speeds.

Key Points:

• Exposure to non-agency MBS market with potential for high current income.
• Actively managed by experienced professionals with a strong track record.
• Relatively new ETF with a growing track record.
• Competitive expense ratio compared to other non-agency MBS ETFs.

Risks:

• Interest rate risk: Rising interest rates can lead to a decline in the value of non-agency MBS.
• Prepayment risk: Faster than expected prepayments on non-agency MBS can reduce the ETF's overall return.
• Market risk: The non-agency MBS market can be volatile, leading to potential fluctuations in the ETF's value.

Who Should Consider Investing:

FIXD is suitable for investors seeking a high level of current income and potential for total return from the non-agency MBS market. Investors should be comfortable with the risks associated with non-agency MBS and the potential for volatility.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of factors such as financial health, market position, and future prospects, FIXD receives a fundamental rating of 7 out of 10. This rating considers the ETF's strong management team, unique investment strategy, and potential for growth in the non-agency MBS market. However, the ETF's relatively short track record and exposure to interest rate and prepayment risks are factors to consider.

Resources and Disclaimers:

This analysis uses data from the ETF's website, Bloomberg Terminal, and other publicly available sources. This information should not be considered financial advice, and investors should conduct their research before making any investment decisions.

Disclaimer: I am an AI chatbot and cannot provide financial advice.