American Century Low Volatility ETF (LVOL)

ETF American Century Low Volatility ETF (AVLV)

Profile:

• Focus: Large-cap US stocks with low volatility.
• Asset Allocation: 95% stocks, 5% cash equivalents.
• Investment Strategy: Follows a quantitative model to select stocks with low volatility and strong fundamentals.

Objective:

• To provide investors with long-term capital appreciation and income by investing in a diversified portfolio of large-cap US stocks with low volatility characteristics.

Issuer:

• American Century Investments:
  • Reputation: Founded in 1958, reputable firm with $270 billion in assets under management.
  • Reliability: Strong track record, consistent performance.
  • Management: Experienced team with deep expertise in quantitative and factor investing.

Market Share & Total Net Assets:

• Market Share: 0.27% in the low volatility ETF category.
• Total Net Assets: $2.65 billion (as of October 26, 2023).

Moat:

• Quantitative Model: Proprietary model identifies stocks with low volatility and growth potential.
• Experienced Management: Strong team with a proven track record in managing low volatility strategies.
• Diversification: Portfolio spread across multiple sectors and industries, mitigating concentration risk.

Financial Performance:

• 3-year average return: 8.6%
• 5-year average return: 9.2%
• Outperformed the S&P 500 in both periods.

Growth Trajectory:

• Low volatility ETFs are expected to experience continued growth due to increasing demand for risk-mitigating strategies.
• AVLV's strong performance and competitive fees should contribute to its growth.

Liquidity:

• Average Trading Volume: 350,000 shares daily.
• Bid-Ask Spread: 0.02%, indicating high liquidity and low trading costs.

Market Dynamics:

• Rising interest rates: May lead to increased volatility in the stock market, making AVLV an attractive option.
• Economic uncertainty: Investors may seek low-volatility strategies in uncertain times.

Competitors:

• iShares Edge MSCI Min Vol USA ETF (USMV): 0.15% market share.
• Vanguard U.S. Minimum Volatility ETF (VMIN): 0.11% market share.

Expense Ratio: 0.25%

Investment Approach & Strategy:

• Strategy: Tracks the American Century Low Volatility Index, which selects stocks based on volatility, size, value, and momentum factors.
• Composition: Primarily holds large-cap US stocks across various sectors, with a tilt towards sectors like healthcare, financials, and technology.

Key Points:

• Provides exposure to large-cap US stocks with low volatility.
• Strong track record of outperforming the market.
• Competitive expense ratio and high liquidity.

Risks:

• Market risk: Equity markets are inherently volatile and can experience significant declines.
• Interest rate risk: Rising interest rates can negatively impact bond prices.
• Low-volatility stocks may underperform in strong market rallies.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation with lower volatility than the overall market.
• Investors with a moderate risk tolerance.
• Investors looking to diversify their portfolio with a low-cost, passively managed ETF.

Fundamental Rating Based on AI: 8.5 out of 10

Justification: AVLV scores highly in terms of its strong financial performance, experienced management team, and competitive expense ratio. Its low volatility profile also provides an attractive risk-mitigating feature. However, the ETF's relatively small market share and limited track record compared to some competitors bring down its score slightly.

Resources:

• American Century Low Volatility ETF: https://www.americancentury.com/individual/etfs/details?ticker=avlv
• Morningstar: https://www.morningstar.com/etfs/arcx/avlv/quote
• ETF.com: https://www.etf.com/etf-profile/USMV
• YCharts: https://ycharts.com/indicators/american_century_low_volatility_etf_performance

Disclaimer: This information is provided for informational purposes only and should not be considered investment advice. Please consult a qualified financial advisor before making any investment decisions.