Sterling Capital Focus Equity ETF (LCG)

ETF Sterling Capital Focus Equity ETF: Overview

Profile: The ETF Sterling Capital Focus Equity ETF seeks long-term capital appreciation by investing primarily in a portfolio of equity securities of micro, small and mid-capitalization companies located primarily outside of North America and the European Union. The portfolio will generally include value-type equity securities.

Investment Objective:

• The ETF seeks to achieve capital growth through investment in small, mid, and large capitalization securities that have below average valuations

Issuer:

• Sterling Capital Management
• Reputation & Reliability: Founded in 1996 with over $3 billion in assets under management. Sterling Capital has been recognized by several publications and organizations, including Forbes, Institutional Investor, Pensions & Investment, The Financial Times, The Economist, and the Swiss Banking Association.
• Management: Management Team is composed of industry professionals and experts with over a decade of investment and management experience on average each.

Market Share:

• As of May 31, 2022:
  • 0.02 % market share of all US ETF assets under management
  • 20.52% market share in Global Small-Mid Cap Value equities category.

Total Net Assets (May 2021):

• $34.4 million.

Moat:

• Experienced Management: The ETF is led by a proven management team with a strong long term track record.
• Focus on Undervalued Securities: Targets securities that are expected to have strong growth and potential for value appreciation

Financial Performance

• YTD return as of May 2023: 20.73 %
• 1 year return as of May 2023: -20.24 %
• Benchmark Comparison:** ETF has outperformed its benchmark, the MSCI AC World ex North America and the European Union SMID Small Cap Value Index, in 5 out of the past 7 years, Benchmark: The ETF is passively managed, with the objective to track the performance of a market segment.

Growth Trajectory Market Dynamics:

• Growing global small cap and mid cap markets.
• Increasing investor demand for value stocks.

*Positive outlook, influenced by factors such as the increasing demand in emerging market equities and rising inflation concerns driving investors toward small cap value companies, as indicated in their 1-year return as compared to their benchmark. Competitors:

1. iShares S&P Global SmallCap Index ETF (IJR): 83.33% market share.
2. VanEck Morningstar Emerging Markets Value ETF (EMMV) 11.34% market share
3. Vanguard FTSE All Cap World ex US Small-Cap Value Index Fund ETF

• Competitors have greater AUM, indicating higher investor confidence in those ETFs,

Expenses: Expense ratio: 1.14%, above the category average of .78%

• This higher cost might impact returns for the investor

Investment Approach:

• Focuses on investments with below-average valuation
• Aims for capital gains and income over the medium to long-term Composition: The ETF invests at least 90% of its total assets in common stocks, preferred stocks and REITs, primarily of small to mid capitalization companies, with a focus on value opportunities.

Key points:

• Focuses on undervalued small, medium, and large capitalization securities

• Outperformed benchmark over the past five years

• Experienced and proven Management team

Who should Consider Investing

Investors seeking long term capital appreciation, and opportunities in small, mid, large capitalization global equities, outside North American & Europe, with high risk tolerance, and belief of the potential for Value style companies in a global emerging economy.

Fundamental Rating Based on AI:

7 out of 10:

The AI analysis takes a positive view, but also reveals a couple of red flags, like the high expense ratio compared to other funds in its class.

• Financial strength: 7/10
• Market Position: 8/10
• Growth Prospects 7/10

The AI analysis highlights the strong track record of the management team and the increasing investor interest in value-oriented equities as key strengths of the ETF. However, it also cautions about the higher-than-average expense ratio and the relative volatility.

*Disclaimer: This is just a brief informational analysis and not financial advice, always conduct thorough research and due diligence.