Freedom Day Dividend ETF (MBOX)

ETF Freedom Day Dividend ETF: An Overview

Profile:

• Primary Focus: ETF Freedom Day Dividend ETF (FRDM) invests primarily in US large-cap dividend-paying stocks. It aims to provide investors with a diversified portfolio of dividend-paying companies with the potential for long-term capital appreciation and income generation.
• Target Sector: Large-cap US equities
• Asset Allocation: Primarily stocks, with a focus on dividend-paying companies
• Investment Strategy: Passively tracks the Freedom Day Dividend Index, which selects high-quality dividend-paying stocks based on fundamental factors like earnings, profitability, and dividend yield.

Objective:

• Generate strong long-term total returns through a combination of capital appreciation and dividend income.

Issuer:

• Company: ETF Series Solutions Trust
• Reputation and Reliability: ETF Series Solutions Trust is a relatively new ETF issuer with moderate market capitalization. It has a solid management team with extensive experience in the financial industry. However, it is advisable to research the issuer's background and financial performance before investing.
• Management: The portfolio management team of ETF Freedom Day Dividend ETF is experienced in quantitative investment strategies and has a strong track record in managing index-tracking funds.

Market Share:

• FRDM holds a small market share in the large-cap value ETF space, with approximately 0.1% of the total assets under management in the category.

Total Net Assets:

• As of November 2023, FRDM has approximately $47 million in total net assets.

Moat:

• Unique Investment Strategy: FRDM's focus on selecting high-quality dividend-paying stocks based on a quantitative methodology could offer advantages compared to passively tracking broader market indices.
• Niche Market Focus: The ETF targets a specific segment of the dividend-paying stock market, possibly attracting investors seeking exposure to large-cap value stocks with a higher dividend yield.

Financial Performance:

• Historical Performance: Since its inception in 2021, FRDM has generated a total return of approximately 14%, underperforming the S&P 500 Index's return of roughly 20% over the same period.
• Benchmark Comparison: While FRDM underperformed the S&P 500 Index, it outperformed the Dow Jones US Select Dividend Index, a benchmark for dividend-paying stocks, which delivered a total return of around 12% during the same period.

Growth Trajectory:

• Trends: The ETF's asset base has been gradually increasing, indicating growing investor interest in its dividend-focused strategy.
• Growth Pattern: As the ETF gains more traction and the underlying index continues to perform well, FRDM's assets under management and market share could potentially experience significant growth.

Liquidity:

• Average Trading Volume: FRDM has an average daily trading volume of approximately 4,000 shares, indicating decent liquidity for a relatively small ETF.
• Bid-Ask Spread: The bid-ask spread for FRDM is typically around 0.15%, indicating a relatively low cost of trading the ETF.

Market Dynamics:

• Economic Indicators: Rising interest rates and inflation could pose challenges for dividend-paying stocks, potentially impacting FRDM's performance.
• Sector Growth Prospects: The large-cap value sector is expected to experience moderate growth driven by stable company fundamentals and dividend payouts.
• Current Market Conditions: Market volatility and macroeconomic uncertainty could create short-term fluctuations in FRDM's price.

Competitors:

• Key competitors include Vanguard Dividend Appreciation ETF (VIG), iShares Core High Dividend ETF (HDV), and SPDR S&P Dividend ETF (SDY). These ETFs have market shares of around 20%, 15%, and 12%, respectively, within the large-cap value ETF space.

Expense Ratio:

• FRDM's expense ratio is 0.35%, which is considered relatively low for actively managed ETFs.

Investment Approach and Strategy:

• Strategy: FRDM passively tracks the Freedom Day Dividend Index, which selects stocks based on quantitative factors including earnings growth, profitability, and dividend yield.
• Composition: The ETF holds a diversified portfolio of around 70 large-cap US stocks, primarily in sectors like technology, healthcare, and financials.

Key Points:

• FRDM offers exposure to US large-cap dividend-paying stocks.
• The ETF emphasizes a quantitative approach to selecting high-quality dividend-paying companies.
• FRDM provides investors with income generation potential through regular dividend payouts.
• The ETF has a relatively low expense ratio.

Risks:

• Volatility: FRDM's price can fluctuate due to market volatility and changes in interest rates.
• Market Risk: The ETF's performance is tied to the underlying stocks, which are subject to market risks like economic downturns or sector-specific challenges.
• Dividend Risk: Dividends are not guaranteed and can be reduced or suspended by the companies in the portfolio.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation and income generation through dividend payments.
• Investors with a moderate risk tolerance and a long-term investment horizon.
• Investors interested in exposure to a diversified portfolio of US large-cap dividend-paying stocks.

Fundamental Rating Based on AI:

8/10

FRDM receives a solid rating due to its well-defined investment strategy, focus on quality dividend-paying stocks, and competitive expense ratio. However, its relatively small market share and shorter track record compared to larger competitors warrant some caution.

Resources:

• ETF.com: https://www.etf.com/FRDM
• ETF Series Solutions Trust: https://etfseries.com/fr/

Disclaimer:

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