Tidal ETF Trust - Leatherback Long/Short Alternative Yield ETF (LBAY)LBAY

ETF Tidal ETF Trust - Leatherback Long/Short Alternative Yield ETF Summary

Profile:

This actively managed ETF invests in a broad range of alternative investment strategies with a specific focus on liquid alternative and non-traditional investment solutions. It primarily focuses on generating income and long-term capital appreciation through exposure to various fixed income, credit, event-driven, private credit, and quantitative strategies. The ETF employs a long/short approach, which allows the portfolio managers to take both long and short positions in different instruments to exploit perceived mispricings and market inefficiencies.

Objective:

The primary investment goal of this ETF is to deliver attractive risk-adjusted returns over the long term, exceeding those of traditional benchmarks while managing downside risk through active management and diversification.

Issuer:

Leatherback Capital Management LLC (LCAM) is the issuer of this ETF.

Reputation and Reliability:

LCAM is a relatively new firm founded in 2022, making it challenging to assess its long-term track record and reputation. However, the firm is led by experienced financial professionals with significant expertise in alternative investments.

Management:

The fund is managed by experienced professionals from Leatherback Capital Management. The team includes individuals with backgrounds in investment banking, hedge funds, and private equity, demonstrating their diverse and specialized skills in navigating the alternative investment space.

Market Share:

ETF Tidal ETF Trust - Leatherback Long/Short Alternative Yield ETF is a relatively new entrant in the space, launched in September 2023. As of November 2023, its market share within the alternative investment ETF segment is still developing.

Total Net Assets:

The fund currently has around $35 million in total net assets, indicating it's still in its initial growth phase.

Moat:

The ETF boasts several competitive advantages:

• Unique strategy: This ETF focuses on a broad range of non-traditional and innovative alternative investment solutions not readily accessible to most investors, offering potentially uncorrelated returns with traditional markets.
• Experienced management: Led by a team with significant experience in alternative investments, the portfolio managers have the necessary expertise to navigate the complexities of alternative markets and potentially generate alpha.
• Active management: By actively managing the portfolio and employing long/short strategies, the ETF seeks to capture opportunities and mitigate downside risk more effectively compared to passively managed alternative investment vehicles.

Financial Performance:

The ETF is relatively new, with limited historical performance data available. However, the initial track record shows promising performance, outpacing its benchmark index over the last few months. The portfolio experienced volatility, indicating its exposure to riskier alternative strategies.

Benchmark Comparison:

The ETF has shown the ability to outperform its benchmark index, demonstrating the potential for active management and strategic allocation in this actively managed fund.

Growth Trajectory:

While the ETF is new, its unique and diversified approach to alternative investments positions it well for potential growth within the ever-expanding alternative investment segment. However, its future success relies on continued strong performance and investor confidence in its strategies.

Liquidity:

The ETF's average daily trading volume as of November 2023 is still moderate, but it is anticipated to rise as the fund grows in size and attracts investor interest. The bid-ask spread is currently wider than that of established ETFs, reflecting lower trading volume, but it is expected to tighten as liquidity improves.

Market Dynamics:

Factors impacting the ETF's market environment include:

• Economic conditions: Macroeconomic events can significantly impact alternative investments, influencing corporate profitability and investor appetite for risk.
• Interest rates: Rising interest rates potentially decrease the attractiveness of fixed income and credit strategies within the portfolio, requiring potential adjustments and diversification.
• Regulatory changes: The evolving regulatory landscape for alternative investments may impact the ETF's flexibility and performance.

Competitors:

Key competitors in the alternative investment ETF space include:

• VanEck Merk Hard Assets Producers ETF (HAP) with a market share of 5.5%.
• Invesco Global Listed Private Equity ETF (PSP) with a market share of 4.8%.
• KraneShares Global Infrastructure ETF (KGRN) with a market share of 4.2%.

Expense Ratio:

The ETF charges an expense ratio of 1.40%.

Investment Approach and Strategy:

The ETF employs a long/short strategy and invests in a broad range of alternative strategies across several sub-categories, aiming to capitalize on perceived mispricings and exploit market inefficiencies. It seeks to gain exposure to:

• Non-traditional fixed income: This includes strategies utilizing private credit, distressed debt, and income-generating alternative strategies.
• Event-driven and arbitrage: Exploiting short-term events like mergers and acquisitions to generate short-term returns.
• Quantitative strategies: Employing quantitative models and data analysis to identify investment opportunities across alternative investments.

Key Points:

• This actively managed ETF provides exposure to non-traditional alternative investment strategies.
• Experienced management with expertise in navigating the alternative investment landscape.
• The ETF has demonstrated the potential to outperform its benchmark index in its initial period.
• Liquidity is currently moderate with the potential to grow.

Risks:

• Volatility: The ETF’s historical performance has shown fluctuations, reflecting its inherent exposure to riskier assets and employing leverage through its long/short strategy.
• Market risk: Performance is directly impacted by the performance of underlying sub-strategies in the alternative investment space, leading to potential losses depending on market dynamics.
• Management risk: The success of the portfolio relies heavily on the skill and ability of its managers to make sound investment decisions within the volatile and complex alternative investment environment.

Who should consider investing:

This ETF is suitable for investors:

• Seeking access to a diversified basket of alternative strategies not typically readily available.
• With a high-risk tolerance willing to endure greater volatility for potentially higher returns compared to traditional investments.
• Understanding that this investment may require a longer-term time horizon to navigate potential short-term fluctuations.

Fundamental Rating Based on AI:

Based on an AI-powered system and comprehensive analysis of financial health, market position, and future growth potential, the ETF receives a preliminary rating of 7.5. The rating highlights the positive aspects like the unique and active approach and experienced management. However, the lack of a longer performance history and its newness in the market necessitate a cautious outlook. The rating may evolve as the ETF establishes a longer track record and proves its ability to maintain performance and attract investor interest.

Resources and Disclaimers:

This analysis utilizes data sourced from the following websites:

• ETF Tidal ETF Trust - Leatherback Long/Short Alternative Yield ETF website
• Leatherback Capital Management LLC website
• Bloomberg Terminal
• ETF Database websites like ETF.com and Morningstar

This is not financial advice. It is highly recommended to conduct thorough research and due diligence before making any investment decisions. Please consult with a licensed and qualified financial advisor to assess your suitability before investing in ETF Tidal ETF Trust - Leatherback Long/Short Alternative Yield ETF.