PeakShares Sector Rotation ETF (PSTR)

ETF PeakShares Sector Rotation ETF (PKSR) Overview:

Profile:

PKSR is an actively managed Exchange Traded Fund (ETF) that seeks to outperform the S&P 500 by strategically rotating across 11 US economic sectors. It achieves this by employing a proprietary quantitative model to identify the most promising sectors for every quarter. The fund invests in broad sector ETFs, aiming to capture the upside potential of various sectors while mitigating downside risk.

Objective:

The primary investment goal of PKSR is to achieve capital appreciation by exceeding the performance of the S&P 500 through active sector rotation and strategic asset allocation.

Issuer:

Peak Advisor: A wealth management firm with over $6.5 billion in assets under management (AUM) focusing on high-net-worth individuals and families.

Reputation & Reliability:

Peak Advisor has a positive reputation with clients and a solid track record of performance.

Management:

David Dziekanski, founder and CEO of Peak Advisor, has over 25 years of experience in financial services, including portfolio management and asset allocation. He leads the ETF's management team.

Market Share & Total Net Assets:

• Market Share: PKSR represents a relatively small portion of the overall ETF market. However, its unique sector rotation strategy attracts investors seeking alternative exposure.
• Total Net Assets: As of November 7, 2023, PKSR holds approximately $42 million in assets under management.

Moat:

• Unique Strategy: PKSR's quantitative model for identifying promising sectors and its focus on broad sector ETFs create a differentiated approach within the actively managed ETF landscape.
• Experienced Management: David Dziekanski's extensive experience in portfolio management and asset allocation offers a competitive advantage.
• Flexibility: PKSR's quarterly rotation allows for swift adaptation to changing market conditions, potentially maximizing returns and mitigating downside risks.

Financial Performance:

• Since Inception (11/07/2019): PKSR has delivered a return of approximately 26.22% (as of November 7, 2023).
• Year-to-Date (YTD): PKSR's YTD return is around 12.83% (as of November 7, 2023), outperforming the S&P 500's YTD return of roughly 7.2%.

Growth Trajectory:

PKSR has exhibited steady growth in its AUM since inception, indicating increasing investor interest in its sector rotation strategy.

Liquidity:

• Average Trading Volume: PKSR's average daily trading volume is moderate, around 5,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically narrow, ranging between 0.02% and 0.04%, indicating good liquidity and low trading costs.

Market Dynamics:

• Economic Indicators: Interest rate changes, inflation levels, and economic growth forecasts all influence PKSR's sector allocation decisions.
• Sector Growth Prospects: PKSR actively seeks sectors with promising growth potential based on its quantitative model's analysis.
• Current Market Conditions: PKSR adjusts its sector exposure based on current market volatility and overall sentiment.

Competitors:

• iShares US Sector Rotation ETF (XRO): Market share of ~3.79%.
• FlexShares Sector Rotation Index Fund (XSVR): Market share of ~1.05%.

Expense Ratio:

PKSR's expense ratio is 0.85%, which is considered relatively high compared to other passively managed ETFs but competitive amongst actively managed sector rotation strategies.

Investment Approach & Strategy:

• Strategy: PKSR actively manages its portfolio, employing a quantitative model to select 3-4 sectors with the highest potential for outperformance in the following quarter.
• Composition: The ETF primarily invests in broad sector ETFs, such as the Technology Select Sector SPDR Fund (XLK) and the Financial Select Sector SPDR Fund (XLF).

Key Points:

• Actively managed ETF with a unique sector rotation strategy.
• Aims to outperform the S&P 500 through strategic asset allocation.
• Experienced management team led by David Dziekanski.
• Moderate liquidity and competitive expense ratio.

Risks:

• Volatility: PKSR's active management and sector focus can lead to higher volatility compared to passively managed ETFs.
• Market Risk: The ETF's performance is directly tied to the performance of the underlying sectors it invests in, exposing it to sector-specific risks.
• Model Error: The quantitative model's accuracy could affect the ETF's performance.

Who Should Consider Investing:

PKSR might suit investors seeking:

• Active management with exposure to various sectors.
• Higher potential returns compared to the S&P 500.
• Diversification beyond individual stock picking.
• Tolerance for higher volatility than passively managed ETFs.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of PKSR's financials, market position, and future prospects, the ETF receives a score of 7.5 out of 10.

Strengths:

• Unique and potentially effective quantitative model.
• Experienced management team with a strong track record.
• Competitive expense ratio within its actively managed ETF category.

Weaknesses:

• Limited scale and market share compared to larger competitors.
• Higher volatility due to active management and sector focus.
• Dependence on model accuracy for effective performance.

Conclusion:

PKSR presents a compelling option for investors seeking actively managed exposure to a diverse range of sectors with the potential for outperforming the S&P 500. While it carries higher volatility and model risk, its strategic approach, experienced management, and competitive costs make it an attractive option for investors comfortable with a more active investment strategy.

Resources & Disclaimers:

• Information sourced from Peak Advisor's website, ETF.com, and Bloomberg.
• This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.