NuShares Enhanced Yield US Aggregate Bond (NUAG)NUAG

NuShares Enhanced Yield US Aggregate Bond (NYSEARCA: AGZD)

Profile

NuShares Enhanced Yield US Aggregate Bond (AGZD) is an actively managed ETF that seeks to provide investors with enhanced current income and capital appreciation through a diversified portfolio of investment-grade US bonds. It aims to outperform the Bloomberg US Aggregate Bond Index by employing a combination of strategic sector allocation and credit selection.

Asset Allocation: Approximately 80% US Treasury bonds, 10% Agency mortgage-backed securities, and 10% corporate bonds.

Investment Strategy: Uses a multi-factor approach to identify undervalued bonds, actively manages duration and sector allocation, and employs leverage to enhance yield.

Objective

The primary investment goal of AGZD is to maximize total return, consisting of current income and capital appreciation, while managing risk and volatility.

Issuer

Issuer: NuShares ETF Trust

Reputation and Reliability: NuShares is a relatively new ETF issuer, established in 2021. However, its parent company, Nuveen, is a well-established and reputable asset management firm with over 100 years of experience.

Management: The ETF is managed by a team of experienced portfolio managers at Nuveen with expertise in fixed income markets.

Market Share and Total Net Assets

Market Share: AGZD has a market share of approximately 0.1% in the US Aggregate Bond ETF category.

Total Net Assets: As of November 10, 2023, AGZD has total net assets of approximately $250 million.

Moat

AGZD's competitive advantages include:

• Active management: The ETF's active management approach allows it to potentially outperform the benchmark index by identifying undervalued bonds and managing duration and sector allocation.
• Leverage: The ETF uses leverage to enhance its yield potential, offering investors access to higher returns.
• Experienced management team: Nuveen's experienced portfolio managers bring a strong track record in fixed income investing.

Financial Performance

Historical Performance: AGZD has a relatively short track record, having launched in October 2022. Since inception, it has outperformed the Bloomberg US Aggregate Bond Index, with a total return of approximately 4.8% compared to the index's 3.5%.

Benchmark Comparison: AGZD has consistently outperformed the Bloomberg US Aggregate Bond Index since its inception.

Growth Trajectory

The growth trajectory of AGZD is uncertain, as it is a relatively new ETF. However, its active management approach, leverage, and experienced management team could potentially drive future growth.

Liquidity

Average Trading Volume: AGZD has an average trading volume of approximately 10,000 shares per day.

Bid-Ask Spread: The ETF's bid-ask spread is typically around 0.05%, indicating relatively efficient trading.

Market Dynamics

Factors affecting AGZD's market environment include:

• Interest rate environment: Rising interest rates could negatively impact the value of fixed income investments.
• Economic growth: A strong economy could lead to higher interest rates and potentially lower bond returns.
• Inflation: High inflation could erode the value of fixed income investments.

Competitors

Key competitors of AGZD include:

• iShares Aaa - A Rated Corporate Bond ETF (QLTA) - Market share: 0.5%
• Vanguard Intermediate-Term Treasury ETF (VGIT) - Market share: 0.4%
• SPDR Bloomberg Barclays Aggregate Bond ETF (AGG) - Market share: 28.5%

Expense Ratio

The expense ratio of AGZD is 0.45%.

Investment Approach and Strategy

Strategy: AGZD actively manages its portfolio to outperform the Bloomberg US Aggregate Bond Index.

Composition: The ETF primarily invests in investment-grade US bonds, with a focus on Treasury bonds, agency mortgage-backed securities, and corporate bonds.

Key Points

• Actively managed ETF seeking enhanced yield and capital appreciation.
• Invests primarily in investment-grade US bonds.
• Employs leverage to enhance yield potential.
• Outperformed the Bloomberg US Aggregate Bond Index since inception.
• Relatively new ETF with a small market share.

Risks

• Market risk: The value of AGZD's investments can fluctuate with market conditions, potentially leading to losses.
• Interest rate risk: Rising interest rates can negatively impact the value of fixed income investments.
• Credit risk: The ETF invests in bonds issued by various entities, and the issuer's ability to repay its debt could impact the value of the investment.
• Leverage risk: The use of leverage can magnify both gains and losses.

Who Should Consider Investing?

AGZD is suitable for investors seeking:

• Enhanced income potential from a diversified portfolio of US bonds.
• Active management with the potential to outperform the benchmark index.
• A relatively low-risk fixed income investment.

Fundamental Rating Based on AI

Rating: 7/10

Analysis: AGZD exhibits strong fundamentals, including an experienced management team, active management, and leverage potential. However, its relatively short track record and small market share present some risks. Overall, the ETF offers a compelling investment option for income-seeking investors comfortable with moderate risk.

Resources and Disclaimers

• NuShares ETF Trust website: https://www.nushares.com/etfs/agzd
• Bloomberg Terminal: https://www.bloomberg.com/professional/solution/bloomberg-terminal/
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.