American Century Low Volatility ETF (LVOL)LVOL

ETF American Century Low Volatility ETF Summary

Profile:

American Century Low Volatility ETF (ACLV) is a passively managed ETF that seeks to provide long-term capital appreciation and income by investing in a broad range of US equities with lower-than-average volatility. The ETF invests primarily in large-cap stocks across various sectors, weighted by their volatility and liquidity.

Objective:

The primary objective of ACLV is to offer investors a way to participate in the US stock market with lower volatility exposure. This makes it suitable for investors seeking capital appreciation with a focus on risk mitigation.

Issuer:

American Century Investments:

• Established in 1958, American Century Investments is a reputable asset management firm with over $283 billion in assets under management (as of November 2023).
• The firm has a strong track record of managing mutual funds and ETFs across various asset classes.
• The management team has extensive experience and expertise in the investment industry.

Market Share:

ACLV has a market share of approximately 0.5% in the US Low Volatility Equity ETF category.

Total Net Assets:

As of November 2023, ACLV has total net assets of approximately $1.5 billion.

Moat:

ACLV has a few competitive advantages:

• Passive Management: The ETF's low expense ratio makes it an attractive option for cost-conscious investors.
• Low Volatility Focus: ACLV's strategy of investing in low-volatility stocks aims to provide a smoother investment experience and potentially outperform the broader market during periods of high volatility.
• Strong Parent Company: American Century Investments' established reputation and resources enhance the ETF's credibility and stability.

Financial Performance:

Since its inception in 2016, ACLV has delivered a positive return, outperforming the S&P 500 during periods of market volatility. However, it has underperformed the S&P 500 during periods of strong market growth.

Growth Trajectory:

The demand for low-volatility investment strategies is expected to grow as investors seek to mitigate risk in their portfolios. This bodes well for the future growth of ACLV.

Liquidity:

ACLV has an average trading volume of over 100,000 shares per day, ensuring sufficient liquidity for investors to buy and sell shares easily. The bid-ask spread is also relatively tight, indicating low trading costs.

Market Dynamics:

Economic factors like interest rates, inflation, and economic growth can influence the performance of low-volatility stocks. Additionally, sector performance and overall market sentiment can impact the ETF's returns.

Competitors:

Key competitors include iShares Edge MSCI Min Vol USA ETF (USMV) and Vanguard S&P 500 Low Volatility ETF (SPLV), with market shares of 2.5% and 2.0%, respectively.

Expense Ratio:

The expense ratio for ACLV is 0.25%, which is considered low compared to other ETFs in its category.

Investment Strategy:

ACLV tracks the Solactive US Large Cap Low Volatility Index, which selects stocks with lower-than-average volatility and liquidity from the Solactive US Large Cap Index. It uses a quantitative approach to determine volatility and liquidity scores, ensuring a systematic and unbiased selection process.

Key Points:

• Low volatility focus aims to reduce risk and provide smoother returns.
• Passive management keeps expenses low.
• Strong parent company provides stability and credibility.
• Average trading volume ensures liquidity.
• Expense ratio is competitive.

Risks:

• Market risk: ACLV's performance is still tied to the overall market performance, although to a lesser extent than the broader market.
• Volatility risk: While the ETF focuses on low-volatility stocks, it cannot eliminate volatility entirely.
• Tracking error: The ETF may not track the index perfectly, resulting in slight performance deviations.

Who Should Consider Investing:

ACLV is suitable for investors seeking:

• Long-term capital appreciation with lower volatility.
• Exposure to the US stock market with a risk-mitigation approach.
• A cost-effective way to access a diversified portfolio of low-volatility stocks.

Fundamental Rating Based on AI:

Based on an AI analysis considering financial health, market position, and future prospects, ACLV receives a rating of 7.5 out of 10. The rating is supported by the ETF's strong parent company, low expense ratio, and potential for growth in the low-volatility investment segment. However, the AI analysis also identifies areas like market share and historical performance where ACLV could potentially improve.

Resources and Disclaimers:

• This analysis is based on information available as of November 2023.
• Data sources used include American Century Investments website, ETF.com, and Morningstar.
• This information should not be considered investment advice.
• Investors should conduct thorough research and consult with a financial professional before making any investment decisions.