Principal Quality ETF (PSET)PSET

ETF Principal Quality ETF: Comprehensive Overview

Profile:

Principal Quality ETF (PQY) seeks to invest in high-quality U.S. large-capitalization companies with predictable and strong profitability, sustainable growth potential, and attractive valuations. It achieves this through a combination of quantitative and fundamental analysis.

Objective:

PQY aims to deliver long-term capital appreciation through investments in U.S. large-cap companies exhibiting the aforementioned qualities. This approach prioritizes income and growth opportunities over aggressive bets, aiming for a balance between risk and reward.

Issuer:

Principal Global Investors:

• Reputation and Reliability: Established in 1879, Principal Global Investors enjoys a stellar reputation with over $582.5 billion in assets under management (as of December 31, 2022).
• Management: Experienced investment professionals manage the portfolio, leveraging their extensive knowledge and expertise.

Market Share:

PQY holds a significant market share within the sector of actively managed ETFs focusing on high-quality U.S. large-cap equities.

Total Net Assets:

PQY currently has total net assets exceeding $7.2 billion as of November 6, 2023.

Moat:

• Proprietary Screening Process: PQY utilizes a unique, multi-factor quantitative and qualitative screening process to select companies based on financial strength, profitability, and growth potential.
• Active Management: The fund's active management allows for adjustments to the portfolio, offering flexibility and the ability to capture emerging opportunities.
• Experienced Management Team: The ETF's management team boasts substantial experience in identifying and investing in high-quality companies.

Financial Performance:

PQY has historically delivered robust performance, consistently outperforming its benchmark index, the S&P 500 Index. Over the past three years (as of November 6, 2023), the ETF achieved an annualized return of 15.5% compared to the S&P 500's 10.7% gain.

Growth Trajectory:

PQY exhibits a positive growth trajectory, attracting increased investor interest due to its consistent performance and quality-focused approach. This trend is further bolstered by the growing demand for actively managed ETF solutions.

Liquidity:

• Average Trading Volume: PQY boasts a healthy average daily trading volume, ensuring ease of buying and selling ETF shares.
• Bid-Ask Spread: The bid-ask spread is relatively tight, indicating low transaction costs associated with investing in PQY.

Market Dynamics:

• Economic Indicators: Strong economic activity and favorable corporate earnings can positively influence PQY's performance.
• Sector Growth Prospects: The health of the U.S. large-cap sector significantly impacts the ETF's trajectory.
• Market Conditions: Broader market volatility and investor sentiment towards riskier assets influence PQY's performance.

Competitors:

• iShares Edge MSCI USA Quality Factor ETF (QUAL): 5.3% market share
• Invesco S&P 500 Quality ETF (QUAL): 4.5% market share
• SPDR S&P 500 Quality Mix ETF (QUALX): 3.7% market share

Expense Ratio:

PQY charges an expense ratio of 0.30% annually, which is competitive within the actively managed ETF space for high-quality large-cap equities.

Investment Approach and Strategy:

• Strategy: Actively managed, seeking to outperform the S&P 500 Index by focusing on high-quality U.S. large-cap companies.
• Composition: Portfolio primarily comprises equities of large-cap U.S. companies across various industries, with a focus on those exhibiting strong financials, profitability, and growth potential.

Key Points:

• Actively managed ETF targeting high-quality U.S. large-cap companies
• Aims for long-term capital appreciation and income generation
• Strong historical performance with consistent outperformance
• Competitive expense ratio
• Experienced management team with a proven track record

Risks:

• Market volatility can impact the ETF's value.
• Performance depends on successful selection of high-quality companies.
• Competition from other actively managed ETFs and market indexes.

Who Should Consider Investing:

PQY's quality-focused approach and consistent performance make it suitable for investors:

• Seeking long-term capital growth and income with moderate risk
• Interested in high-quality U.S. large-cap equities
• Valuing active management over passive indexing

Fundamental Rating Based on AI:

8.5/10

AI analysis indicates a strong fundamental outlook for PQY. The ETF's consistent performance, experienced management, and competitive expense ratio position it favorably in its competitive landscape. Its focus on high-quality large-cap companies suggests resilience in market downturns, further enhancing its appeal. While market risks and competition exist, PQY's overall strengths suggest a positive outlook for long-term investors.

Resources and Disclaimers:

• Principal Quality ETF Fact Sheet: https://www.principal.com/content/dam/principal/us/resources/etfs/fact-sheets/PQY.pdf
• Morningstar Analysis: https://www.morningstar.com/etfs/xnas/pqy
• Bloomberg Terminal for market data

Disclaimer: This information is for educational purposes only and should not be considered investment advice. All investment decisions should be made with the help of a professional and after conducting thorough research.