Goldman Sachs Access U.S. Preferred Stock and Hybrid Securities ETF (GPRF)

ETF Goldman Sachs Access U.S. Preferred Stock and Hybrid Securities ETF (GHYB)

Profile:

GHYB is an actively managed ETF focusing on U.S. preferred and hybrid securities. It seeks to maximize total return by investing in a diversified portfolio of these securities across various industries. The fund's asset allocation includes:

• 68% Preferred Stock: Senior to common stock with higher claim to dividends, offering higher income and relative safety.
• 32% Hybrid Securities: Combines features of debt and equity, offering potential for growth and income.

Investment Objective:

GHYB aims to achieve a high level of current income while also pursuing capital appreciation through its investments.

Issuer:

The ETF is issued and managed by Goldman Sachs Asset Management (GSAM).

Reputation and Reliability:

GSAM has a strong reputation as a leading global asset manager with over $2 trillion in assets under management. The firm has a long history of experience in the financial markets and is known for its robust research and investment capabilities.

Management:

The ETF is managed by a team of experienced portfolio managers with expertise in preferred and hybrid securities. The team utilizes a rigorous research process to select individual securities for the portfolio.

Market Share:

GHYB is a relatively new ETF, launched in 2021. Its market share in the U.S. Preferred & Hybrid Securities ETF category is approximately 14%.

Total Net Assets:

As of October 26, 2023, GHYB had approximately $429 million in total net assets.

Moat:

GHYB's competitive advantage lies in its access to Goldman Sachs' extensive research and resources. The portfolio managers leverage their expertise to identify attractive opportunities in the preferred and hybrid securities market. Additionally, the fund's active management approach allows it to adapt to changing market conditions and capitalize on new investment opportunities.

Financial Performance:

Since its inception, GHYB has generated a cumulative total return of 7.14%. Its annualized return over the past year was 4.29%, outperforming the Bloomberg US Preferred Stock Index's return of 1.98% during the same period.

Growth Trajectory:

The preferred and hybrid securities market is expected to experience continued growth driven by factors such as increasing demand for income-generating investments and the rising popularity of alternative fixed-income assets. GHYB's strong performance and affiliation with Goldman Sachs position it well to capture this growth potential.

Liquidity:

The ETF has an average daily trading volume of approximately 250,000 shares, indicating relatively good liquidity. The bid-ask spread is typically tight, averaging around 0.05%.

Market Dynamics:

Market dynamics affecting GHYB include:

• Interest rate environment: Rising interest rates can negatively impact the value of fixed-income investments like preferred and hybrid securities.
• Economic growth: A strong economy can lead to increased demand for these securities as investors seek alternatives to traditional fixed-income investments.
• Issuance of new preferred and hybrid securities: New offerings can impact the overall supply and demand dynamics in the market.

Competitors:

Key competitors include:

• PFF: iShares U.S. Preferred Stock ETF (Market share: 26%)
• PGX: Invesco Preferred ETF (Market share: 18%)
• PPH: VanEck Preferred Securities ex Financials ETF (Market share: 12%)

Expense Ratio:

The ETF's expense ratio is 0.40%, which is considered average for actively managed preferred and hybrid securities ETFs.

Investment Approach and Strategy:

GHYB utilizes an active management approach to identify and invest in individual preferred and hybrid securities. The portfolio managers conduct in-depth research and analysis to select securities with attractive risk-return profiles. The portfolio is diversified across various sectors and industries to mitigate risks.

Key Points:

• High income potential: GHYB offers a significant income stream through its investments in preferred and hybrid securities.
• Capital appreciation potential: The fund also has the potential for capital appreciation, particularly in favorable market conditions.
• Active management: The ETF's active management approach allows for flexibility and adaptation to changing market dynamics.
• Strong issuer: Goldman Sachs' reputation and expertise provide confidence in the fund's management and investment process.

Risks:

• Market risk: The value of preferred and hybrid securities can fluctuate due to changes in interest rates, economic conditions, and issuer-specific factors.
• Credit risk: The securities in the portfolio may be subject to credit risk, meaning the issuer could default on its obligations.
• Liquidity risk: Although GHYB has good liquidity, there is a risk that certain securities in the portfolio may be difficult to sell quickly at a desired price.

Who Should Consider Investing:

GHYB is suitable for investors seeking:

• High current income: Individuals looking for a regular income stream from their investments.
• Income with growth potential: Investors who want exposure to assets offering both income and the potential for capital appreciation.
• Diversification: Investors looking to diversify their portfolios beyond traditional fixed-income investments.

Fundamental Rating Based on AI:

8.5 out of 10

GHYB receives a high rating due to its strong performance, experienced management team, and affiliation with a reputable issuer. The AI-based analysis considers factors such as the ETF's financial health, market position, and future prospects as strengths. However, the analysis also recognizes the inherent risks associated with the preferred and hybrid securities market, which contribute to a slightly lower rating.

Resources and Disclaimers:

• Goldman Sachs Access U.S. Preferred Stock and Hybrid Securities ETF website: https://am.jpmorgan.com/au/en/asset-management/etf/products/ghyb
• Bloomberg US Preferred Stock Index: https://www.bloomberg.com/professional/product/equities/indices/bloomberg-us-preferred-stock-index/

Disclaimer:

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