Amplify ETF Trust - Amplify Natural Resources Dividend Income ETF (NDIV)NDIV

ETF Amplify ETF Trust - Amplify Natural Resources Dividend Income ETF (NYSEARCA: NERD)

Profile:

Focus: The Amplify Natural Resources Dividend Income ETF (NERD) focuses on providing investors with high dividend income from companies in the natural resources sector. This includes companies involved in energy, metals, mining, and timber. The ETF employs a covered call strategy to generate additional income.

Asset Allocation: The ETF invests primarily in U.S.-listed equities with a focus on large-cap companies. It typically holds around 25-35 stocks.

Investment Strategy: NERD follows a passive management approach, tracking the EQM Natural Resources Enhanced Yield Index. This index selects high-yielding stocks in the natural resources sector and applies a covered call overlay to enhance income generation.

Objective:

The primary objective of NERD is to maximize total return for investors through a combination of dividend income and capital appreciation.

Issuer:

Amplify ETFs is a leading provider of thematic exchange-traded funds (ETFs). The firm is known for its innovative and actively managed ETF offerings.

Reputation and Reliability: Amplify ETFs has a strong reputation in the industry, with high-quality products and a commitment to transparency. The firm has received several awards and recognitions for its innovative ETF strategies.

Management: The ETF is managed by a team of experienced professionals with expertise in the natural resources sector and covered call strategies.

Market Share:

NERD is a relatively small ETF within the natural resources sector, with a market share of around 0.5%. However, it is one of the few ETFs that specifically focuses on high-yielding dividend income in this sector.

Total Net Assets:

As of October 26, 2023, NERD has total net assets of approximately $400 million.

Moat:

NERD's competitive advantages include:

• Unique covered call strategy: This strategy helps generate additional income and potentially enhance returns.
• Focus on high-yielding stocks: The ETF selects companies with a strong track record of dividend payments.
• Active management: The ETF is actively managed to ensure optimal portfolio construction and risk management.
• Experienced management team: The team has a deep understanding of the natural resources sector and covered call strategies.

Financial Performance:

Historical Performance: NERD has a track record of delivering strong returns since its inception in 2017. The ETF has outperformed its benchmark index, the S&P 500 Energy Index, in most periods.

Benchmark Comparison: NERD has consistently outperformed its benchmark index, providing investors with higher total returns.

Growth Trajectory:

The natural resources sector is expected to experience moderate growth in the coming years, driven by increasing demand for energy and raw materials. This bodes well for NERD's future growth prospects.

Liquidity:

Average Trading Volume: NERD has an average daily trading volume of approximately 50,000 shares, which provides investors with good liquidity.

Bid-Ask Spread: The bid-ask spread is typically around 0.10%, which is relatively low for an ETF.

Market Dynamics:

Factors affecting the ETF's market environment:

• Global economic growth: Strong economic growth leads to increased demand for natural resources.
• Commodity prices: NERD's performance is influenced by the prices of commodities such as oil, gas, and metals.
• Interest rates: Rising interest rates can make dividend-paying stocks less attractive.

Competitors:

• VanEck Natural Resources ETF (HAP)
• iShares Global Energy ETF (IXC)
• SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

Expense Ratio:

The expense ratio for NERD is 0.60% per year, which is slightly higher than the average for natural resources ETFs.

Investment approach and strategy:

• Strategy: NERD passively tracks the EQM Natural Resources Enhanced Yield Index.
• Composition: The ETF primarily holds U.S.-listed equities in the natural resources sector. It also uses covered call options to generate additional income.

Key Points:

• Invests in high-yielding stocks in the natural resources sector.
• Employs a covered call strategy to enhance income generation.
• Actively managed by a team of experienced professionals.
• Has a strong track record of delivering returns.
• Offers good liquidity and a relatively low expense ratio.

Risks:

• Volatility: The natural resources sector is known for its volatility, which can impact the ETF's performance.
• Market risk: NERD is exposed to risks associated with the underlying assets, such as changes in commodity prices and economic conditions.
• Covered call strategy: Covered calls can limit the ETF's potential for capital appreciation.
• Expense ratio: The expense ratio is slightly higher than average for natural resources ETFs.

Who Should Consider Investing:

• Investors seeking high dividend income from the natural resources sector.
• Investors with a long-term investment horizon.
• Investors comfortable with moderate volatility.

Fundamental Rating Based on AI:

8.5 out of 10

NERD receives a high rating due to its strong financial performance, experienced management team, and unique covered call strategy. The ETF also benefits from its focus on high-yielding stocks and its relatively low expense ratio. However, investors should be aware of the risks associated with the natural resources sector and the covered call strategy.

Resources and Disclaimers:

• Amplify ETFs website: https://amplifyetfs.com/
• NERD ETF fact sheet: https://amplifyetfs.com/wp-content/uploads/2023/08/NERD-Fact-Sheet.pdf
• Yahoo Finance: https://finance.yahoo.com/quote/NERD/

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.