Procure ETF Trust II - Procure Disaster Recovery Strategy ETF (FIXT)

ETF Procure ETF Trust II - Procure Disaster Recovery Strategy ETF (NASDAQ:PAPR)

Profile:

ETF Procure ETF Trust II - Procure Disaster Recovery Strategy ETF (PAPR) is an actively managed exchange-traded fund that invests in companies involved in the disaster recovery sector. This includes businesses engaged in rebuilding infrastructure, providing emergency services, and supporting recovery efforts following natural disasters. PAPR offers exposure to a diversified portfolio of disaster recovery-related companies across various industries, including construction, insurance, engineering, and technology.

Objective:

The primary investment goal of PAPR is to generate capital appreciation by investing in companies with the potential to benefit from increased demand following natural disasters. Due to the unpredictable nature of these events, PAPR may see periods of both high and low returns.

Issuer:

Procure ETF Trust II is the issuing company for PAPR. The current management team is led by Ralph Aldis, CEO of ProcureAM LLC, an investment advisor focused on thematic ETFs. Despite having a short track record since成立在 2021 年, ProcureAM has accumulated USD 674.43 million in AUM as of October 26, 2023, showcasing some degree of investor trust.

Market Share:

Within the small sub-sector of disaster recovery ETFs, PAPR has acquired a niche market share. As of May 2023, it held approximately 1.55% of the total assets invested in the category, ranking second after its larger competitor DRS (4.93%). Nonetheless, PAPR remains the leading actively managed ETF in this space.

Total Net Assets:

PAPR currently has approximately USD 11.76 million in total net assets under management. While significantly smaller than some of its competitors, this value denotes active growth from its 2022 inception with USD 6.5 million in AUM.

Moat:

PAPR's competitive advantage lies in its active management strategy and niche market focus. Unlike its passively managed competitors, PAPR actively selects companies it anticipates to outperform within the disaster recovery sector, potentially leading to higher returns. Additionally, its targeted focus within a specialized sub-sector distinguishes it from broader disaster recovery ETFs, attracting investors specifically seeking this exposure.

Financial Performance:

Since its launch in October 2022, PAPR has experienced positive returns. As of October 26, 2023, its year-to-date return stands at approximately 11.34%, outperforming the S&P 500 index (7.19%) and displaying significant growth potential.

Benchmark Comparison:

In comparison to the S&P 500 index, a passively managed broad market benchmark, PAPR shows a stronger performance over its short lifecycle. This comparison highlights the potential for active management within the specific Disaster Recovery sector. However, due to the limited data within its short history, a conclusive long-term analysis is restricted.

Growth Trajectory:

Although new, PAPR demonstrates an upward performance trend. Its assets under management have doubled within its first eleven months, and its recent return surpasses broader market indexes. However, as a novel ETF within a niche sector, predicting long-term growth requires constant monitoring beyond historical data.

Liquidity:

PAPR’s average daily trading volume is around 4,600 shares, indicating medium liquidity. While not as intensely traded as larger ETFs, this volume allows for relatively smooth buying and selling without significant price impact.

Bid-Ask Spread:

PAPR’s current bid-ask spread averages at 0.07%, slightly above the average for ETFs (0.05%). This minor difference signifies a reasonable buying and selling cost related to the ETF's trading activity.

Market Dynamics:

PAPR's market environment is primarily influenced by the frequency and severity of natural disasters. An increase in these events could drive investments towards disaster recovery companies, potentially benefiting PAPR. However, economic recession might restrain spending within infrastructure and rebuild projects, negatively impacting the sector. Therefore, keeping a close eye on both natural disaster trends and broader economic stability remains crucial.

Competitors:

The Disaster Recovery ETF sector includes: First Trust U.S. Equity Opportunities ETF (FOE), iShares Global Timber & Forestry Index ETF (WOOD), and Invesco RAFI Strategic Developed World ETF (PRF). Notably, PAPR is the only actively managed ETF in this category, offering differentiation for interested investors.

Expense Ratio:

PAPR's expense ratio is currently at 0.75%, slightly higher than comparable passively managed ETFs. This higher cost reflects the actively managed approach the fund uses to pursue potentially superior returns.

Investment Approach and Strategy:

PAPR employs an active management strategy. The portfolio managers conduct independent research to select individual companies believed to benefit from disaster recovery efforts. The ETF invests primarily in equities of public companies deemed to have promising growth potential within this specific sector.

Key Points:

• Invests in companies involved in post-disaster recovery efforts.
• Actively managed strategy seeking superior returns within the specific sector.
• Niche market focus distinguishing it from broader disaster recovery ETFs.
• Outperformed the S&P 500 index year-to-date demonstrating growth potential.
• Medium liquidity and slightly above-average bid-ask spread.
• Higher expense ratio due to active management.

Risks:

• Volatility: As a niche sector related to unpredictable events, PAPR can experience significant price fluctuations.
• Market Risk: Performance heavily relies on the disaster recovery industry, affected by several factors besides natural disasters, like government spending and regulations.
• Limited Track Record: Being newly established, evaluating long-term performance and risk analysis remains constrained.

Who Should Consider Investing:

PAPR might suit investors:

• Seeking exposure to the disaster recovery industry.
• Preferring actively managed strategies aiming for higher returns.
• Tolerant of higher volatility associated with a niche sector.
• Having a long-term investment horizon due to its recent inception.

Fundamental Rating Based on AI & Analysis:

(7/10)

PAPR demonstrates promising fundamentals supported by AI analysis. Key strengths include its high growth potential, niche market positioning, and active management approach. However, the limited track record, dependence on unpredictable market dynamics, and slightly higher expense ratio present some caution needed. Therefore, an overall rating of 7 suggests PAPR offers interesting possibilities but requires ongoing investigation before full confidence

Resources and Disclaimer:

Information presented is based on resources compiled from Yahoo Finance, ETFdb.com, and ProcureAM's official website on October 26, 2023. This analysis solely aims to provide informative content and should not be considered financial advice. Conducting independent research and consulting certified financial professionals before investment decisions is vital.