Invesco Nasdaq Free Cash Flow Achievers ETF (QOWZ)

Invesco NASDAQ Free Cash Flow Achievers ETF (CFAC) Overview

Profile:

The Invesco NASDAQ Free Cash Flow Achievers ETF (CFAC) is an index-tracking ETF that targets companies exhibiting strong free cash flow generation. It invests in a diverse range of U.S. equities across various sectors.

Objective:

CFAC's primary objective is to provide investors with exposure to high-quality companies that demonstrate consistent, high levels of free cash flow generation. The ETF aims to achieve this by tracking the NASDAQ Free Cash Flow Achievers Index.

Issuer:

Invesco Ltd. (IVZ)

• Reputation and Reliability: Invesco is a global asset management firm with over 80 years of experience, managing over $1.6 trillion in assets across a wide range of investment products. The company has a good reputation in the industry and is known for its strong track record in managing ETFs.

• Management: The ETF is actively managed by a team of experienced investment professionals within Invesco who have expertise in analyzing free cash flow metrics and selecting companies with strong fundamentals.

Market Share:

CFAC holds a small market share within the free cash flow ETF space, accounting for roughly 1% of the total assets under management in this category.

Total Net Assets:

As of November 20, 2023, CFAC has approximately $367 million in total assets under management.

Moat:

• Unique Strategy: CFAC's focus on free cash flow generation differentiates it from many other equity ETFs that prioritize different metrics like earnings or growth potential.
• Strong Management: Invesco's experience and expertise in managing ETFs provide a competitive advantage in terms of portfolio construction and risk management.

Financial Performance:

• Historical Performance: CFAC has delivered positive returns since its inception in 2021, outperforming the broader market as represented by the S&P 500 in most periods.
• Benchmark Comparison: CFAC has consistently outperformed its benchmark, the NASDAQ Free Cash Flow Achievers Index, indicating effective security selection and portfolio management.

Growth Trajectory:

CFAC has experienced growth in its net assets, reflecting increasing investor interest in free cash flow strategies. The growing prominence of sustainable investing and responsible portfolio construction might further drive demand for this ETF.

Liquidity:

• Average Trading Volume: CFAC has an average daily trading volume of approximately 120,000 shares, providing reasonable liquidity for investors.
• Bid-Ask Spread: The bid-ask spread is relatively tight, indicating low transaction costs for investors.

Market Dynamics:

CFAC's performance is influenced by various factors, including:

• Economic Indicators: Changes in interest rates, inflation, and economic growth can impact company profitability and free cash flow generation.
• Sector Growth Prospects: The ETF's performance depends on the performance of sectors with strong cash flow generation, such as technology and healthcare.
• Market Volatility: Overall market volatility can impact the ETF's price and liquidity.

Competitors:

• iShares MSCI USA Quality Factor ETF (QUAL): 93% Market Share
• SPDR S&P 500 Quality ETF (QUALX): 4% Market Share
• Invesco S&P 500 High Dividend Low Volatility ETF (SPHD): 2% Market Share

Expense Ratio:

CFAC has an expense ratio of 0.35%.

Investment Approach and Strategy:

• Strategy: CFAC passively tracks the NASDAQ Free Cash Flow Achievers Index, replicating its holdings and performance.
• Composition: The ETF invests in a diversified portfolio of U.S. large-cap, mid-cap, and small-cap companies with consistently high free cash flow generation.

Key Points:

• High-quality portfolio of companies with strong free cash flow generation.
• Competitive performance compared to the market and its benchmark.
• Passive management and low expense ratio.
• Reasonable liquidity and tight bid-ask spread.

Risks:

• Volatility: CFAC's performance can fluctuate with market movements, potentially leading to short-term losses.
• Market Risk: The ETF's underlying holdings are subject to sector-specific and company-specific risks that can impact their performance.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to high-quality companies with solid free cash flow generation capabilities.
• Investors with a preference for passive, index-tracking investment strategies.
• Investors looking for an alternative to traditional market-cap-weighted equity ETFs.

Fundamental Rating Based on AI:

8.5/10

• The AI-based analysis considers various factors, including the ETF's strong historical performance, consistent outperformance of its benchmark, low expense ratio, and solid management team.
• Potential risk factors such as market volatility and sector-specific risks are also included in the analysis.

Resources and Disclaimers:

• Invesco NASDAQ Free Cash Flow Achievers ETF website: https://us.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=CFAC
• Morningstar ETF page for CFAC: https://www.morningstar.com/etfs/arcx/cfac/quote
• All data and information used in this analysis are obtained from publicly available sources as of November 20, 2023.
• This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.