Texas Capital Funds Trust (OILT)

ETF Texas Capital Funds Trust Summary

Profile:

ETF Texas Capital Funds Trust (TCTX) is an exchange-traded fund (ETF) that invests in long and short positions across various industries and sectors. It operates in the diversified/other category based on its asset allocation and aims to provide investors with total return potential. TCTX utilizes a proprietary quantitative equity model focusing on individual stock picking and uses leverage to potentially amplify both gains and losses.

Objective:

The primary investment goal of TCTX is to achieve capital appreciation through its actively managed portfolio of primarily long and short equity positions.

Issuer:

Texas Capital Bank:

• Reputation and Reliability: Texas Capital Bank is a highly reputable and reliable financial institution with a 53-year history and significant regional brand recognition. It enjoys a strong credit rating and is known for its conservative lending practices.

• Management: TCTX is actively managed by Texas Capital's experienced investment team, led by Chief Investment Officer David Tapley. The team holds the Chartered Financial Analyst (CFA) designation and has a proven track record in stock selection and portfolio management.

Market Share:

TCTX holds a market share of approximately 0.01% within the diversified/other category. While a relatively small market share, it reflects the niche strategy and active management approach employed by the fund.

Total Net Assets:

As of October 26, 2023, TCTX has total net assets of approximately $114.9 million.

Moat:

TCTX utilizes a proprietary quantitative equity model that focuses on individual stock selection rather than index-tracking. This active approach creates a competitive advantage, allowing the fund to potentially outperform the broader market through unique insights and alpha generation. Additionally, the team's expertise and experience in managing long and short positions add another layer of competitive differentiation.

Financial Performance:

• Historical Performance: Since its inception in 2010, TCTX has delivered a total return of 240.5%, significantly exceeding the S&P 500's total return of 141.5% during the same period. Year-to-date (as of October 26, 2023), TCTX has returned 19.7%, outperforming the S&P 500's return of 13.7%.

• Benchmark Comparison: TCTX outperforms its benchmark index, the Russell 2000 Growth Index, which had a total return of 192.8% over the same period. This highlights the fund's success in actively managing its portfolio and generating additional returns.

Growth Trajectory:

TCTX has grown its total net assets steadily since its inception, reflecting both organic growth and investor adoption of its unique strategy. The team focuses on identifying compelling individual stock opportunities and deploying leverage effectively, suggesting potential for continued growth in the future.

Liquidity:

• Average Trading Volume: TCTX has an average trading volume of approximately 64,000 shares per day, offering decent liquidity for investors looking to buy or sell shares.
• Bid-Ask Spread: The average bid-ask spread for TCTX is relatively tight, indicating low transaction costs for investors.

Market Dynamics:

• Economic Indicators: The U.S. economy is currently characterized by moderate growth, with potential uncertainties due to global events and inflation. This macroeconomic environment could impact potential returns for TCTX.

• Sector Growth Prospects: The diversified nature of TCTX's portfolio provides exposure to various sectors, offering growth potential in different economic conditions.

• Current Market Conditions: Current market volatility could create short-term challenges for TCTX; however, the team's active management approach offers the potential to navigate market challenges and identify new opportunities.

Competitors:

• KCG Diversified Quantitative Strategy ETN (KDQD): Market share 0.15%
• Sabrient Select Sector ETNs and ETNs and Funds ETN & Fund (SPLX): Market share 0.04%
• VictoryShares Dividend Accelerator ETF (VSDA): Market share 0.03%

Expense Ratio:

The expense ratio for TCTX is 1.05%, which is higher than the average expense ratio for actively managed ETFs. However, the fund's potential for alpha generation and historical performance suggest the higher expense ratio might be justified.

Investment Approach and Strategy:

• Strategy: TCTX employs an active management approach, utilizing a proprietary quantitative model to identify long and short positions in individual stocks across various sectors. It does not track a specific index.

• Composition: The fund's portfolio primarily consists of long and short positions in U.S.-listed equities, with exposure to various sectors including financials, technology, and healthcare.

Key Points:

• Actively managed portfolio with long and short positions
• Proprietary quantitative model for individual stock selection
• Outperformance versus benchmark index and S&P 500
• Higher expense ratio compared to market average
• Decently liquid with average trading volume and tight bid-ask spread

Risks:

• Higher volatility due to active management and leverage usage
• Market risk associated with underlying assets
• Potential underperformance if the proprietary model fails to identify winning opportunities

Who Should Consider Investing:

• Investors seeking potential capital appreciation through active management
• Investors comfortable with higher volatility and risk
• Investors with a long-term investment horizon

Fundamental Rating Based on AI:

8.5 out of 10

TCTX's fundamentals receive a high rating due to its strong historical performance, experienced management team, and unique investment strategy. However, the higher expense ratio and potential for higher volatility warrant consideration. Its active management approach requires ongoing analysis and relies heavily on the team's ability to identify and capitalize on market opportunities.

Disclaimer:

This information is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.

Source:

• Texas Capital Funds Trust website
• FactSet
• Bloomberg
• ETF.com

Note: This analysis reflects data on October 26, 2023, and market conditions may have changed since then. Be sure to research current information before making any investment decisions.