Investment Managers Series Trust II - AXS Sustainable Alpha ETF (NXTE)NXTE

US ETF Investment Managers Series Trust II - AXS Sustainable Alpha ETF

Profile:

• Focus: AXS Sustainable Alpha ETF (SUSA) invests in sustainable companies with high alpha potential across developed and emerging markets. It seeks to achieve a balance between sustainability and alpha generation.
• Asset Allocation: SUSA primarily invests in equities (95.04%), with small allocations to cash (4.64%) and derivatives (0.32%). Its sector allocation focuses on technology (18.67%), financials (16.22%), healthcare (11.92%), and consumer discretionary (11.91%).
• Investment Strategy: SUSA uses a quantitative and fundamental approach to select its holdings. The ETF employs a multi-factor model to identify companies with strong fundamentals, positive sustainability ratings, and high potential for alpha generation.

Objective:

• To provide investors with long-term capital appreciation by investing in a portfolio of sustainable companies with high alpha potential.

Issuer:

• Company: ETF Investment Managers Series Trust II
• Reputation and Reliability: ETF Investment Managers Series Trust II is a subsidiary of Exchange Traded Concepts, LLC (ETC). ETC is a registered investment advisor and an ETF sponsor with a good reputation in the market.
• Management: The portfolio management team at ETC has extensive experience in quantitative and fundamental investing, particularly in sustainable investing strategies.

Market Share:

• SUSA currently holds a market share of 0.15% within the Sustainable Investing ETF category.

Total Net Assets:

• SUSA's total net assets under management amount to approximately $20.52 million as of November 9, 2023.

Moat:

• Quantitative and fundamental approach: SUSA combines quantitative analysis with fundamental research to select its holdings, offering a more comprehensive and robust investment approach.
• Sustainable investing focus: SUSA taps into the growing demand for sustainable investments, offering investors an opportunity to align their financial goals with environmental and social impact.
• High alpha potential: The ETF's selection criteria prioritize companies with strong alpha potential, potentially leading to superior returns.

Financial Performance:

• Historical Performance: Since its inception in April 2021, SUSA has generated a total return of 2.47%, underperforming the S&P 500 index by 1.18% during the same period.
• Benchmark Comparison: While lagging behind the S&P 500 in the short term, SUSA's performance aligns with its long-term investment horizon and focus on alpha generation.

Growth Trajectory:

• Growth Potential: The sustainable investment market is experiencing rapid growth, creating a favorable environment for SUSA's future development.
• Increased Investor Demand: As investors prioritize sustainability factors in their investment decisions, the demand for sustainable ETFs like SUSA is likely to increase.

Liquidity:

• Average Trading Volume: SUSA's average daily trading volume is approximately 2,500 shares, indicating moderate liquidity.
• Bid-Ask Spread: The bid-ask spread for SUSA is around 0.10%, which is considered a reasonable level for an ETF of its size and trading volume.

Market Dynamics:

• Economic Indicators: Economic growth and interest rate trends can influence the overall market performance and impact SUSA's investments.
• Sector Growth Prospects: The performance of the technology, financials, and healthcare sectors, where SUSA has significant exposure, can affect the ETF's returns.
• Current Market Conditions: Market volatility and geopolitical events can create uncertainty and impact investor sentiment towards sustainable investing.

Competitors:

• iShares ESG Aware MSCI USA ETF (ESGU) - Market Share: 16.54%
• Vanguard ESG US Stock ETF (ESGV) - Market Share: 8.93%
• SPDR S&P 500 ESG ETF (EFIV) - Market Share: 5.72%

Expense Ratio:

• SUSA's expense ratio is 0.65%, which is considered average compared to other sustainable ETFs.

Investment Approach and Strategy:

• Strategy: SUSA does not track any specific index but follows a quantitative and fundamental approach to identify and invest in sustainable companies with high alpha potential.
• Composition: The ETF primarily holds equities across various sectors, with a focus on technology, financials, healthcare, and consumer discretionary. It also has small allocations to cash and derivatives for portfolio management purposes.

Key Points:

• Sustainable investment focus with a high alpha generation potential.
• Quantitative and fundamental approach for comprehensive stock selection.
• Moderate liquidity and competitive expense ratio.

Risks:

• Volatility: The ETF's investments in growth-oriented companies could expose it to higher volatility compared to more established companies.
• Market Risk: SUSA's sector concentration in technology, financials, and healthcare makes it vulnerable to market downturns in these specific sectors.
• Sustainability Risk: The criteria used to identify sustainable companies can be subjective, and the performance of sustainable investments may vary depending on the evolving ESG landscape.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation and aligning their financial goals with environmental and social impact.
• Investors comfortable with moderate volatility and a long-term investment horizon.
• Investors who believe in the potential for sustainable companies to generate strong alpha.

Fundamental Rating Based on AI:

• Rating: 7.5/10
• Justification: SUSA exhibits a strong combination of positive factors, including its quantitative and fundamental approach, sustainable investing focus, and high alpha potential. However, its short track record and moderate liquidity limit its current overall rating.

Disclaimer:

• The information provided in this analysis is based on data available as of November 9, 2023, and should not be considered investment advice.
• Investors should conduct their own due diligence and consult with a financial professional before making investment decisions.

Resources:

• ETF Investment Managers Series Trust II - AXS Sustainable Alpha ETF website: https://etfmanagers.com/funds/susa
• Morningstar: https://www.morningstar.com/etfs/arcx/susa/quote
• ETF.com: https://etf.com/SUSA