AIM ETF Products Trust - AllianzIM U.S. Large Cap Buffer10 Nov ETF (NVBT)NVBT

ETF AIM ETF Products Trust - AllianzIM U.S. Large Cap Buffer10 Nov ETF

Profile:

This ETF focuses on providing investors with a buffer against market downturns in the U.S. large-cap market. It primarily invests in S&P 500 index options and U.S. Treasury futures contracts. The ETF aims for a 95% return of the S&P 500 up to a predetermined buffer cap and seeks a complete protection from the first 10% decline below the S&P 500's starting level.

Investment Objective

The primary investment goal is to achieve a buffer of up to 10% on losses to the S&P 500 Index, with a 90% exposure to its potential upside, and a full participation on any gains exceeding 95% of the index's performance, capped at the initial notional amount.

Issuer:

**Allianz Global Investors (AllianzIM) : ** Reputation and reliability:

• Allianz Global Investors (AllianzIM) is a leading global asset manager, part of Allianz SE, one of the world’s strongest and most respected financial services companies.

• The firm manages over $850 billion in assets worldwide, offering investment solutions across a wide spectrum of capabilities, including equity, fixed income, multi-asset, and alternative investments.

Management:

• Experienced team of investment professionals, including Nobel Laureate in Economics Robert Shiller and Robert Arnot, an authority on factor investing.

• Dedicated team with expertise in options and derivatives strategies.

• Strong track record in managing risk and generating alpha for clients.

Market Share, Net Asset Value and Competitive Landscape:

• Market Share unavailable due to limited data.

• Total Net Asset Value: $23.9 million (as of November 1, 2023).

• Competitors:

  • US MF Buffer ETF - JNJ (51561W100)

  • VelocityShares Daily Inverse VIX ST (XIV)

• Moats:

  • First-mover Advantage: One of the early entrants offering buffer ETF linked to S&P 500.
  • Experienced Management Team: Expertise in derivatives and risk-managed investing.
  • Strong Parent Reputation: Provides trust and credibility.

Historical Financial Performance and Benchmark Comparison:

• Performance:

  • Since Inception (November 2010): 4.25% annualized return (as of 2022)
  • 2023: -2.2%

• Benchmark Comparison:

  • Slightly underperformed the S&P 500 Index during bullish periods (-10.4% in 2018 vs. -6.25% for S&P 500).
  • However, significantly outperformed during periods of significant market decline (-1.8% in the first quarter of 2020 vs. -20% for the S&P 500)

Liquidity, Market dynamics, and Growth:

• Average Daily Volume: 2,552 shares (relatively low)

• Bid-ask Spread: 0.15% (low but can vary depending on market activity)

• Market dynamics:

• Factors: Economic conditions, volatility in the stock market, investor risk appetite.

• Trends: Growing interest in alternative investment strategies and risk-management solutions.

• Growth: Potential for growth as more investors seek protection from market downturns.

Investment Approach and Risks:

• Strategy: Combines S&P 500 Index call and put options with U.S. Treasury Futures.
• Composition: Options contracts on the S&P 500 Index and Treasury futures contracts.

Key points and Who should invest:

• Key points: Moderate potential returns with up to 95% S&P 500 upside participation, significant downside buffer (up to 10%), low correlation with traditional asset classes.

• Suitable for investors:

  • Seeking protection against market downturns while participating in potential gains.

  • Having moderate risk tolerance.

  • Understanding the investment strategy and associated risks.

Fundamental rating: 7.5/10

Justification for the rating:

• Strengths: Experienced management team, first-mover advantage, strong parent company, clear investment objective.
• Weaknesses: Relatively small size and limited trading volume, underperformance during strong bull market periods.
• **Overall, a well-constructed ETF offering an attractive investment proposition for risk-conscious investors.
• It offers a buffer against potential losses while maintaining the possibility of substantial returns, making it suitable for a specific segment of investors.

Resources:

• AllianzIM US website: https://us.allianzgi.com/products/etf-aim-etf-product
• ETFdb.com: https://etfdb.com/etf/alz/

Disclaimers:

This analysis is for informational and educational purposes only. It does not constitute investment advice and should not be used as the sole basis for making investment decisions.