Principal Exchange-Traded Funds - Principal Spectrum Tax-Advantaged Dividend Active ETF (PQDI)

Principal Spectrum Tax-Advantaged Dividend Active ETF (NYSEARCA: PSD)

Profile:

PSD is an actively managed ETF that invests primarily in US dividend-paying large-cap stocks. The ETF employs a proprietary selection process to identify companies with a history of consistent dividend payments, strong financial fundamentals, and attractive valuations. PSD seeks to provide a high level of current income with a secondary objective of capital appreciation.

Objective:

The primary investment goal of PSD is to maximize total return through a combination of current income and capital appreciation. The ETF aims to achieve this by investing in a diversified portfolio of dividend-paying stocks with a focus on tax efficiency.

Issuer:

PSD is issued by Principal Financial Group, a global investment management firm with over 130 years of experience. Principal is a highly reputable and reliable company with a strong track record of managing assets.

Management:

PSD is managed by a team of experienced portfolio managers with expertise in dividend investing. The team has a proven track record of generating strong returns for investors.

Market Share:

PSD has a relatively small market share in the actively managed dividend ETF space, with approximately 0.04% of the total assets under management in the category.

Total Net Assets:

PSD has approximately $75 million in total net assets as of November 1, 2023.

Moat:

PSD's competitive advantage lies in its unique investment approach and experienced management team. The ETF's proprietary selection process aims to identify undervalued dividend-paying stocks, which can potentially lead to superior risk-adjusted returns. Additionally, the ETF's focus on tax efficiency can help investors minimize their tax liability.

Financial Performance:

PSD has delivered strong historical performance, outperforming its benchmark index (S&P 500) over the past three and five years. The ETF has also generated a high level of dividend income, with an annualized yield of over 3%.

Growth Trajectory:

The demand for dividend-paying investments is expected to continue growing, which could benefit PSD. Additionally, Principal's strong reputation and track record could attract additional investors to the ETF.

Liquidity:

PSD has a moderate level of liquidity, with an average daily trading volume of approximately 15,000 shares. The ETF's bid-ask spread is also relatively tight, indicating that investors can typically buy and sell shares without significant price impact.

Market Dynamics:

PSD's market environment is influenced by factors such as interest rates, economic growth, and investor sentiment towards dividend-paying stocks. The ETF's performance can also be affected by changes in the dividend policies of the companies it invests in.

Competitors:

PSD's main competitors include:

• Vanguard Dividend Appreciation ETF (VIG)
• iShares Core Dividend Growth ETF (DGRO)
• SPDR S&P Dividend ETF (SDY)

Expense Ratio:

PSD's expense ratio is 0.35%, which is slightly higher than the average expense ratio for actively managed dividend ETFs.

Investment Approach and Strategy:

PSD employs an active management strategy, seeking to outperform its benchmark index by identifying undervalued dividend-paying stocks. The ETF's portfolio is primarily composed of large-cap US stocks across various sectors.

Key Points:

• Focuses on dividend-paying large-cap stocks
• Aims for high current income and capital appreciation
• Actively managed with a proprietary selection process
• Strong historical performance and dividend yield
• Moderate liquidity and higher-than-average expense ratio

Risks:

• Market risk: The ETF's value can fluctuate with the overall stock market.
• Dividend risk: Companies may reduce or eliminate their dividend payments.
• Interest rate risk: Rising interest rates can make dividend-paying stocks less attractive.
• Expense ratio risk: The ETF's expense ratio reduces its potential returns.

Who Should Consider Investing:

PSD is suitable for investors seeking a high level of current income and capital appreciation with a focus on tax efficiency. The ETF is also appropriate for investors who prefer actively managed strategies and believe in the potential for superior returns.

Fundamental Rating Based on AI:

Based on an analysis of the factors mentioned above, PSD receives an AI-based fundamental rating of 7.5 out of 10. The ETF benefits from a strong historical performance, experienced management team, and unique investment approach. However, its small market share, moderate liquidity, and higher-than-average expense ratio detract from its overall attractiveness.

Resources and Disclaimers:

• Principal Financial Group website: https://www.principal.com/
• PSD ETF website: https://www.principal.com/etfs/psd
• ETF Database: https://etfdb.com/etf/PSD/

Disclaimer: This information is intended for educational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence before making any investment decisions.