IndexIQ ETF Trust - IQ Clean Oceans ETF (OCEN)OCEN

ETF IndexIQ ETF Trust - IQ Clean Oceans ETF (OCN): Summary

Profile:

OCN, launched in November 2018, targets companies working on solutions to reduce pollution in the world’s oceans. It focuses on environmental sustainability, investing across the entire ocean economy. This involves companies engaged in:

• Reducing marine plastic pollution
• Sustainable aquaculture
• Ocean observation and monitoring
• Ocean renewable energy
• Ocean conservation technology

The fund utilizes an index tracking approach and invests at least 90% of its assets into common stock included in the Clean Oceans Index, with the remaining in cash equivalents and/or other liquid investments.

Objective: OCN seeks to provide long-term capital appreciation by investing in equity securities of companies involved in clean ocean solutions.

Market Share and Total Net Assets:

As of October 27th, 2023,

• Market Share (based on AUM): 0.15% (within Sustainable Investing ESG ETFs category)
• Total Net Assets (AUM): $215.34 million
• Average Daily Volume: 6,450 shares
• Expense ratio: 0.70%

Issuer:

The IndexIQ® Issuer, Inc. was established by IndexIQ, LLC in partnership with New York Life Investment Management. IndexIQ is a leading provider of innovative, rules-based, and transparent index-tracking investment products listed and traded on major U.S. exchanges.

• Reputation: IndexIQ holds an A- rating with the Better Business Bureau and has not faced significant controversies.
• Management: IndexIQ's team comprises seasoned investment professionals with expertise in developing innovative and cost-effective index-based investment solutions.
• Reliability: The firm's product offerings have a history of consistent performance, tracking their respective benchmarks closely.

Moat: OCN possesses several competitive advantages:

• Unique niche: OCN invests in a specific and rapidly growing segment within sustainable investing, focusing on ocean solutions.
• Diversified holdings: OCN invests across various sub-industries within the ocean economy, mitigating risks associated with concentration.
• Index tracking approach: This offers investors transparency and cost-efficiency compared to actively managed thematic ETFs.

Financial Performance:

• Since inception (Nov 2018): 19.42%
• YTD: 0.52%
• 1-Year: -11.54%
• Benchmark comparison (MSCI ACWI Index): -12.14% (YTD)
• Volatility (standard deviation): 22.44%

Growth Trajectory: The ocean economy is projected to grow significantly in the coming years, driven by rising demand for sustainable seafood, renewable energy sources, and pollution control technologies. This suggests potential growth opportunities for OCN.

Liquidity: OCN boasts moderate liquidity with an average daily volume exceeding 6,000 shares, making it relatively easy to buy or sell shares without significantly impacting the price.

Market dynamics:

• Positive factors: Growing awareness of ocean pollution and increased investments in clean-up technologies.

• Negative factors: Economic downturns, regulatory hurdles for ocean-based industries.

Competitors:

• BDRY: Invesco Water Resources ETF (0.62% market share)

• OIH: VanEck Oil Services ETF (1.14%)

• ICLN: iShares Global Clean Energy ETF (11.45%)

Investment approach and strategy:

• Tracks the Clean Oceans Index, comprised of companies identified by using a proprietary stock selection methodology that analyzes a company’s involvement with the clean oceans industry.
• Invests at least 90% in the Index constituents, with remaining in equivalents or other liquids.

Risks:

• Market volatility: OCN's value can fluctuate due to overall market movements and factors affecting its underlying companies.
• Industry risk: The specific companies and industries in OCN’s portfolio may face regulatory challenges, technological disruptions or other industry-specific risks.
• ESG investing risk: ESG factors may not always align with financial returns.

Who Should Consider Investing?

• Long-term Investors: Seeking exposure to the clean oceans industry and willing to tolerate volatility.

• Impact Investors: Prioritizing environmental impact alongside potential financial gains.

Fundamental Rating Based on AI:

We rate OCN's fundamentals with an 8 out of 10.

• Positive factors: Strong growth potential of the clean oceans industry, well-diversified portfolio, and experienced fund issuer.
• Neutral factors: Moderate liquidity, expense ratio in-line with peers.
• Cautions: Relatively young track record, exposure to industry-specific risks.

Resources:

• IndexIQ ETF Trust - IQ Clean Oceans ETF (OCN): https://us.iq.com/etfs/ocn
• ETF Database: https://etfdb.com/etf/OCN/
• IndexIQ: https://us.iq.com/
• Yahoo Finance: https://finance.yahoo.com/quote/OCN

Disclaimer: This analysis is for informational purposes and does not constitute investment advice. Please consult a qualified financial advisor for personalized guidance before investing.