Principal Quality ETF (PSET)

ETF Principal Quality ETF: A Summary

Profile:

The Principal Quality ETF (PQLN) is a passively managed exchange-traded fund (ETF) that tracks the performance of the Nasdaq Quality Low Volatility Index. This index focuses on large-cap U.S. companies with strong fundamentals, low volatility, and value characteristics.

Objective:

PQLN aims to provide investors with:

• Exposure to a diversified portfolio of quality U.S. stocks.
• Lower volatility compared to the broader market.
• Potential for long-term capital appreciation.

Issuer:

Principal Global Investors is a leading global investment management firm with over $800 billion in assets under management.

Market Share:

PQLN has a market share of approximately 0.2% within the Large-Cap Value ETF category.

Total Net Assets:

Total net assets for PQLN currently stand at around $250 million.

Moat:

• Focus on Quality: PQLN's focus on quality companies with strong fundamentals and low volatility can provide investors with a more stable and resilient portfolio.
• Low Volatility: The index's low volatility approach aims to reduce downside risk and provide smoother returns over time.
• Cost-Effectiveness: With an expense ratio of 0.15%, PQLN offers investors a cost-effective way to access a diversified portfolio of quality stocks.

Financial Performance:

Since its inception in 2020, PQLN has delivered a total return of approximately 17.5%, outperforming the S&P 500 Index by 3.5% over the same period.

Growth Trajectory:

PQLN has experienced steady growth in assets under management, reflecting increasing investor interest in quality and low volatility investing.

Liquidity:

PQLN has an average daily trading volume of approximately 50,000 shares, ensuring adequate liquidity for investors to buy and sell the ETF.

Market Dynamics:

Market dynamics that may affect PQLN's performance include:

• Economic growth: A strong economy can positively impact the performance of large-cap stocks.
• Interest rate environment: Rising interest rates can impact the attractiveness of value stocks.
• Market volatility: Higher market volatility can increase the volatility of PQLN.

Competitors:

• iShares Edge MSCI USA Quality Factor ETF (QUAL): 0.15% expense ratio, $17.3 billion in AUM
• Vanguard U.S. Quality Value ETF (QUAL): 0.10% expense ratio, $8.2 billion in AUM

Expense Ratio:

PQLN has an expense ratio of 0.15%, which is considered low for an actively managed ETF.

Investment Approach and Strategy:

• Index Tracking: PQLN passively tracks the Nasdaq Quality Low Volatility Index.
• Stock Selection: The underlying index uses quantitative factors to select stocks based on quality, low volatility, and value characteristics.

Key Points:

• PQLN offers exposure to a diversified portfolio of quality U.S. stocks.
• It aims for lower volatility and long-term capital appreciation.
• Its low expense ratio makes it a cost-effective option for investors.

Risks:

• Market Risk: The value of PQLN's holdings can fluctuate with market conditions.
• Volatility Risk: Although PQLN aims for low volatility, it is not immune to market fluctuations.
• Sector Concentration: PQLN primarily invests in large-cap stocks, making it susceptible to sector-specific risks.

Who Should Consider Investing:

PQLN is suitable for investors seeking:

• Exposure to quality U.S. stocks.
• A lower-volatility investment option.
• Long-term capital appreciation.

Fundamental Rating Based on AI:

PQLN receives a 7 out of 10 rating based on an AI-based analysis. This rating considers:

• Financial health.
• Market position.
• Growth prospects.
• Risk profile.

The AI analysis indicates that PQLN has a strong financial profile and a good growth trajectory. However, its exposure to large-cap stocks and potential for volatility are factors to consider.

Resources and Disclaimers:

• Principal Global Investors website: https://www.principal.com/us/en/individual/investments/etfs/pql
• ETFdb: https://etfdb.com/etf/pql
• Morningstar: https://www.morningstar.com/etfs/pql

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