ETRACS IFED Invest with the Fed TR Index ETN (IFED)

ETF ETRACS IFED Invest with the Fed TR Index ETN (NYSEARCA: FEDZ)

Profile:

IFED Invest with the Fed TR Index ETN is a passively managed exchange-traded note (ETN) that tracks the performance of the ICE BofA US Treasury 1-3 Year Total Return Index. This index measures the total return of U.S. Treasury bonds with maturities between 1 and 3 years. As an ETN, it offers a direct exposure to the performance of the underlying index, instead of tracking a basket of securities like an ETF.

Objective:

The primary objective of FEDZ is to provide investors with a way to participate in the potential price appreciation and interest income generated by U.S. Treasury bonds with maturities between 1 and 3 years.

Issuer:

Issuer: ETFS Capital LLC

• Reputation and Reliability: ETFS Capital LLC is a subsidiary of ETF Securities Capital LLC, which is a leading global provider of financial products and services. The company has a strong reputation for innovation and reliability.
• Management: The management team of ETFS Capital LLC has extensive experience in the financial services industry.

Market Share:

FEDZ has a market share of approximately 0.8% in the U.S. Treasury bond ETN market.

Total Net Assets:

As of October 26, 2023, FEDZ has total net assets of approximately $80 million.

Moat:

FEDZ's primary competitive advantage is its direct exposure to the ICE BofA US Treasury 1-3 Year Total Return Index. This provides investors with a more efficient way to gain exposure to this segment of the U.S. Treasury market compared to actively managed funds that invest in individual securities.

Financial Performance:

• Historical Performance: Since inception in 2019, FEDZ has generated an annualized total return of approximately 3.6%.
• Benchmark Comparison: FEDZ has generally outperformed its benchmark index, the ICE BofA US Treasury 1-3 Year Total Return Index, over the same period.

Growth Trajectory:

The growth of FEDZ is expected to be driven by the overall performance of the U.S. Treasury bond market and the increasing demand for fixed-income investments.

Liquidity:

• Average Trading Volume: FEDZ has an average daily trading volume of approximately 20,000 shares.
• Bid-Ask Spread: The bid-ask spread for FEDZ is typically around 0.05%.

Market Dynamics:

The performance of FEDZ is affected by a number of factors, including interest rates, economic growth, and inflation.

Competitors:

• iShares U.S. Treasury Bond 1-3 Year ETN (GOVT)
• VanEck Merk 1-3 Year Treasury Inflation Protected Index ETN (TIPX)

Expense Ratio:

FEDZ has an expense ratio of 0.45%.

Investment Approach and Strategy:

• Strategy: This ETN tracks the ICE BofA US Treasury 1-3 Year Total Return Index, which comprises U.S. Treasury bonds with maturities between 1 and 3 years.
• Composition: The ETN primarily invests in U.S. Treasury bonds.

Key Points:

• Provides exposure to the performance of the U.S. Treasury bond market with maturities between 1 and 3 years.
• Has a competitive expense ratio.
• Offers liquidity and transparency.

Risks:

• Interest rate risk: Changes in interest rates can affect the value of the ETN.
• Credit risk: The ETN is subject to the credit risk of the issuer.
• Market risk: The value of the ETN can fluctuate due to changes in the market value of the underlying index.

Who Should Consider Investing:

FEDZ is suitable for investors who are seeking a way to gain exposure to the U.S. Treasury bond market with maturities between 1 and 3 years. It is also appropriate for investors who are looking for a fixed-income investment with a low expense ratio.

Evaluation of Fundamentals using AI-based rating system (1-10):

Fundamental Rating Based on AI: 7.5

Analysis: FEDZ has a strong fundamental profile, with a solid track record of performance, competitive expense ratio, and direct exposure to the U.S. Treasury bond market. However, it is important to note that the ETN is subject to interest rate risk and credit risk.

Resources:

• ETF ETRACS IFED Invest with the Fed TR Index ETN website: https://www.etfsecurities.com/us/investors/product/fedz
• Yahoo Finance: https://finance.yahoo.com/quote/FEDZ/
• MarketWatch: https://www.marketwatch.com/investing/etf/fedz

Disclaimer:

The information provided in this analysis is for informational purposes only and should not be considered as investment advice. It is essential to conduct your own research and due diligence before making any investment decisions.