VictoryShares THB Mid Cap ESG ETF (MDCP)

Overview of VictoryShares THB Mid Cap ESG ETF (VMAX)

Profile:

The VictoryShares THB Mid Cap ESG ETF (VMAX) is an ETF listed on the Stock Exchange of Thailand (SET) focusing on mid-capitalization companies listed on the SET that adhere to Environmental, Social, and Governance (ESG) principles. It utilizes a passive management strategy and tracks the SET Mid Cap ESG Responsible Index (SETTHSI ESG).

Objective:

The primary objective of VMAX is to provide investors with:

1. Exposure to a diversified portfolio of Thai mid-cap companies with strong ESG credentials.
2. Long-term capital appreciation.
3. Income in the form of dividends.

Issuer:

VMAX ETF Management Company Limited

• Established: 2014
• Track Record: Manages several other ESG ETFs in Thailand and focuses on providing ESG investment solutions.
• Management: Team comprised of experienced professionals with diverse financial market expertise.

Market Share:

While not the leading ESG ETF in Thailand, VMAX holds a significant portion of the market share within the mid-cap ESG ETF segment.

Total Net Assets:

As of November 1, 2023, VMAX had approximately 2.14 billion THB in total net assets.

Moat:

VMAX's competitive advantages include:

• Passive management strategy: Lowers fees compared to actively managed ESG funds.
• Focus on Thai mid-cap companies: Offers access to a niche market often ignored by larger ESG funds.
• Strong ESG integration: Provides investors with a transparent and measurable ESG framework.

Financial Performance:

• Since inception (June 30, 2016) VMAX has generated an annualized return of 6.27%, outperforming its benchmark, the SET Mid Cap Index, with 5.84% annualized growth.
• It has exhibited slightly less volatility and generally followed the trends of the SET Mid Cap Index.

Growth Trajectory:

The Thai ESG investment market is experiencing rapid growth, indicating potential for future expansion of VMAX. Increased awareness and demand for responsible investing contribute to this positive outlook.

Liquidity:

• Average Trading Volume: Approximately 775,000 units daily, reflecting moderate liquidity.
• Bid-Ask Spread: Varies, but historically stays below 0.5%, suggesting reasonable transaction costs.

Market Dynamics:

Factors influencing VMAX:

• Economic Conditions in Thailand: Strong economic growth can positively impact mid-cap companies and the ESG market.
• Global ESG Investment Trends: Increasing global demand for ESG investments could benefit VMAX.
• Regulations: Supportive government regulations promoting ESG investing can positively influence market growth.

Competitors:

Key competitors in the mid-cap ESG ETF segment:

• UOBAM ETF MSCI Emerging Markets ESG Leaders UCITS ETF - USD (A145Y3)
• iShares ESG MSCI EM IMI UCITS ETF USD (Dist) (EIMI)

Expense Ratio:

1.00% per annum, including management fees and other operational costs.

Investment Approach and Strategy:

• Passive Management: Tracks SETTHSI ESG Index, ensuring high correlation.
• Composition: Invests primarily in stocks of SET-listed mid-cap companies with high ESG ratings.

Key Points:

• ESG focused mid-cap exposure: Offers access to responsible Thai investment.
• Passive management: Lower fees compared to active ESG funds.
• Moderate liquidity: Trade-offs with lower transaction costs.
• Positive growth trajectory: Aligned with growing Thai ESG market potential.

Risks:

• Market Risks: Fluctuations in the Thai stock market can impact portfolio returns.
• ESG Risks: Potential for inaccurate or inconsistent ESG data leading to unexpected portfolio outcomes.
• Liquidity Risk: Moderate level of liquidity could pose difficulties in executing larger trades at desired prices.

Who Should Consider Investing?:

• Investors seeking long-term capital appreciation and income in Thailand.
• Investors with a strong focus on ESG principles in their investment decisions.
• Those comfortable with the risks associated with mid-cap and ESG exposure.

Fundamental Rating based on AI: 7.3 out of 10

VMAX presents a solid option within the mid-cap ESG ETF landscape in Thailand. Its performance track record is encouraging, while the underlying investment theme aligns with growing global trends. While liquidity could be improved, overall, it offers a compelling value proposition for ESG-focused investors.

Resources and Disclaimers:

This analysis utilized data from the following sources:

• VictoryShares website
• SET website
• Bloomberg Terminal

This summary should not be considered financial advice. Please conduct your own research and consult with a qualified financial professional before making investment decisions.