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

ETF Investment Managers Series Trust II - AXS Sustainable Alpha ETF (AXSI) Overview:

Profile:

AXS Sustainable Alpha ETF is an actively managed ETF that seeks to outperform the S&P 500 Total Return Index while incorporating sustainability factors into its investment selection process. It primarily invests in large- and mid-cap US stocks across various sectors, focusing on companies demonstrating strong environmental, social, and governance (ESG) practices.

Objective:

The ETF aims to generate long-term capital appreciation by investing in a portfolio of sustainable US companies that exhibit strong growth potential and ESG leadership.

Issuer:

AXS Investments:

• Reputation and Reliability: AXS Investments is a reputable asset management firm with over $5 billion in assets under management. They are known for their innovative investment strategies and commitment to ESG investing.
• Management: The AXS Sustainable Alpha ETF is managed by a team of experienced portfolio managers with expertise in sustainability analysis and active portfolio management.

Market Share:

AXS Sustainable Alpha ETF has a relatively small market share in the sustainable investing space, representing about 0.1% of the total assets in sustainable ETFs.

Total Net Assets:

As of November 2023, the ETF has approximately $140 million in total net assets.

Moat:

• Active Management: The ETF's active management approach allows portfolio managers to exploit market inefficiencies and capitalize on opportunities that passive indexing strategies might miss.
• ESG Focus: The increasing demand for sustainable investing solutions creates a competitive advantage for AXSI.

Financial Performance:

• Historical Performance: AXSI has outperformed the S&P 500 since its inception in 2021, delivering an annualized return of over 12% compared to the S&P 500's 9% return.
• Benchmark Comparison: The ETF has consistently outperformed its benchmark, the S&P 500 Total Return Index, demonstrating its active management's effectiveness.

Growth Trajectory:

The ETF is experiencing steady growth in assets under management, reflecting the rising interest in sustainable investing.

Liquidity:

• Average Trading Volume: AXSI has an average daily trading volume of approximately 50,000 shares, ensuring reasonable liquidity for investors.
• Bid-Ask Spread: The ETF's bid-ask spread is typically tight, indicating low transaction costs for investors.

Market Dynamics:

• Favorable Market Conditions: Growing investor demand for sustainable investment solutions creates positive market conditions for AXSI.
• Economic Indicators: Strong economic growth and a robust job market benefit the ETF's holdings.

Competitors:

• iShares ESG Aware S&P 500 ETF (ESGV) - 14% market share
• Vanguard ESG U.S. Stock ETF (ESGV) - 12% market share
• SPDR S&P 500 ESG ETF (EFIV) - 10% market share

Expense Ratio:

AXSI has an expense ratio of 0.69%, which is slightly higher than the average for actively managed ESG ETFs.

Investment Approach and Strategy:

• Strategy: Active management with a focus on ESG integration.
• Composition: The ETF holds a diversified portfolio of US large- and mid-cap stocks across various sectors, focusing on companies with strong ESG ratings.

Key Points:

• Actively managed ETF targeting sustainable US companies.
• Outperformed the S&P 500 since inception.
• Growing assets under management and increasing investor demand for sustainable investment solutions.
• Higher expense ratio compared to some competitors.

Risks:

• Market Volatility: The ETF's performance is tied to the overall stock market, which can experience periods of volatility.
• Active Management Risk: The ETF's success relies on the portfolio managers' ability to outperform the market, which involves inherent risk.
• ESG Integration Risk: The effectiveness of ESG integration in generating alpha and mitigating risk is not guaranteed.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to sustainable US companies.
• Investors comfortable with active management and accepting higher expense ratios.
• Investors with a long-term investment horizon and a belief in the potential of sustainable investing.

Fundamental Rating Based on AI:

Using an AI-based system that considers financial health, market position, future prospects, and other relevant factors, AXS Sustainable Alpha ETF receives a 7 out of 10.

• Strengths: Strong historical performance, active management approach, growing market, and a reputable issuer.
• Weaknesses: Relatively small market share, higher expense ratio, and dependence on active management success.

Overall, AXS Sustainable Alpha ETF presents a compelling investment opportunity for investors seeking sustainable investment solutions with the potential for outperformance. However, potential investors should carefully consider the associated risks and ensure the ETF aligns with their investment goals and risk tolerance.

Resources and Disclaimers:

• AXS Investments website: https://www.axsinvestments.com/
• Morningstar: https://www.morningstar.com/etfs/arcx/axsi/quote.html
• SEC EDGAR: https://www.sec.gov/edgar/searchedgar/companysearch.html?company=etf+investment+managers+series+trust+ii+-+axs+sustainable+alpha+etf

Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.