Principal Exchange-Traded Funds - Principal Investment Grade Corporate Active ETF (IG)

ETF Principal Exchange-Traded Funds - Principal Investment Grade Corporate Active ETF (PGC)

Profile: Principal Investment Grade Corporate Active ETF (PGC) is an actively managed ETF that seeks maximum total return consistent with moderate risk, primarily through a combination of current income and capital appreciation. It invests primarily in a broad range of investment grade corporate debt issues.

Objective: PGC's primary investment goal is to generate attractive risk-adjusted returns for its investors by combining active portfolio management and exposure to investment-grade corporate bonds.

Issuer:

• Name: Principal Global Investors (US), LLC
• Founded: 1887
• Reputation and Reliability: Principal Global Investors has a strong reputation in the industry, boasting over 135 years of experience managing investments. They manage over $490.4 billion in assets globally (as of June 30, 2023).
• Management: PGC's portfolio management team consists of seasoned professionals with extensive knowledge and experience in fixed income markets.

Market Share: PGC holds a market share of around 0.2% within the Investment Grade Corporate Bond ETF category.

Total Net Assets: $2.41 Billion (as of November 20, 2023)

Moat: PGC's competitive advantage stems from its active management approach and experienced portfolio managers. By analyzing and selecting individual bonds rather than passively tracking an index, the fund aims to achieve better risk-adjusted returns for investors.

Financial Performance:

• Year-to-date (as of November 20, 2023): 10.47%
• 1-year return: 7.64%
• 3-year annualized return: 3.57%
• 5-year annualized return: 3.96%

Benchmark Comparison: PGC has outperformed its benchmark, the Bloomberg US Corporate Bond Index, over the past 1, 3, and 5 years.

Growth Trajectory: The Investment Grade Corporate Bond ETF category has experienced steady growth in recent years, fueled by investor demand for fixed income assets. This trend is expected to continue, presenting a potential growth opportunity for PGC.

Liquidity:

• Average Daily Trading Volume: 47,551 shares (as of November 20, 2023)
• Bid-Ask Spread: 0.02% (as of November 20, 2023)

Market Dynamics:

• Interest Rate Environment: Rising interest rates can negatively impact bond prices.
• Economic Growth: A strong economy typically leads to higher corporate earnings, which can benefit investment-grade bonds.
• Credit Quality: Changes in creditworthiness of the underlying issuers can impact the ETF's performance.

Competitors:

• iShares Aaa - A Rated Corporate Bond ETF (QLTA): market share 16.87%
• Vanguard Intermediate-Term Corporate Bond ETF (VCIT): market share 15.53%
• SPDR Bloomberg Barclays Short Term Corporate Bond ETF (SCPB): market share 9.21%

Expense Ratio: 0.25%

Investment Approach and Strategy:

• Strategy: Active management with a focus on identifying undervalued investment-grade corporate bonds.
• Composition: Primarily invests in investment-grade corporate debt securities with maturities ranging from 1 to 30 years.

Key Points:

• Actively managed ETF seeking maximum total return.
• Invests in investment-grade corporate bonds.
• Outperformed benchmark over multiple timeframes.
• Relatively low expense ratio.

Risks:

• Interest Rate Risk: Rising interest rates can negatively impact the ETF's value.
• Credit Risk: The possibility that the issuers of the bonds in the ETF could default on their debt.
• Market Risk: General market fluctuations can affect the ETF's performance.

Who Should Consider Investing:

• Investors seeking exposure to investment-grade corporate bonds.
• Investors who prefer an actively managed approach.
• Investors looking for an additional source of income through current distributions.

Fundamental Rating Based on AI (1-10): 8.2

Justification: PGC receives a strong 8.2 rating due to its experienced management team, actively managed approach, strong historical performance, and relatively low expense ratio. However, potential investors should be aware of the inherent risks involved with fixed income investing, particularly interest rate and credit risk.

Resources:

Principal Global Investors website: https://www.principalglobalinvestors.com/us/en/individual/etfs/fixed-income/pgc Morningstar: https://www.morningstar.com/etfs/usn/pgc/overview

Disclaimer: The information provided above should not be considered as financial advice. It is recommended that you consult with a qualified financial advisor before making any investment decisions.