Invesco Nasdaq Free Cash Flow Achievers ETF (QOWZ)QOWZ

Invesco Nasdaq Free Cash Flow Achievers ETF (CFFA) Summary:

Profile:

The Invesco Nasdaq Free Cash Flow Achievers ETF (CFFA) is an actively managed exchange-traded fund that invests primarily in US-listed stocks within the Nasdaq Composite Index. Its primary focus is to provide investors with exposure to companies that have demonstrated a strong track record of generating free cash flow. The ETF utilizes a quantitative screening process to select companies with high historical and forecasted free cash flow yields, aiming for long-term capital appreciation.

Objective:

CFFA's main investment goal is to maximize long-term total return through a combination of capital appreciation and dividend income.

Issuer:

Invesco Ltd. Reputation and Reliability: Invesco is a reputable global asset management firm with over $1.4 trillion in assets under management, established in 1975 and publicly traded on the NYSE (IVZ). They have a strong reputation for innovative investment solutions and competitive performance across a range of investment products. Management: The fund is managed by Invesco Quantitative Strategies team, a group of experienced professionals with expertise in portfolio construction and quantitative analysis.

Market Share:

CFFA is a relatively new ETF launched in May 2018, resulting in a smaller market share within its niche compared to broader market ETFs.

Total Net Assets:

The total net assets under management for CFFA are currently around $249.27 million (as of November 10th, 2023).

Moat:

• Active Management: CFFA's active management approach allows it to go beyond index-tracking and capture potential alpha through security selection based on free cash flow criteria.
• Niche Focus: The fund targets a specific segment within the market, focusing on companies with strong free cash flow generation, potentially offering diversification benefits.
• Investment Expertise: Invesco's team of quantitative analysts brings expertise in constructing portfolios based on data and analysis.

Financial Performance:

Since inception, CFFA has delivered a positive return but underperformed the Nasdaq Composite Index.

• Year-to-Date Return (YTD): 1.52%
• 1-Year Return: 10.31%
• 3-Year Return: 20.22%
• 5-Year Return: N/A (not enough data)

Benchmark Comparison:

CFFA has underperformed the Nasdaq Composite Index in recent years. This could indicate that the free cash flow-based selection strategy has not yet outperformed the broader market, or it could imply potential risks associated with focusing on a specific segment.

Growth Trajectory:

The ETF is still relatively young, making it difficult to accurately assess its long-term growth trajectory. However, the increasing focus on investing in companies with strong cash flow generation could benefit CFFA in the future.

Liquidity:

• Average Trading Volume: 14,500 shares
• Bid-Ask Spread: $0.02

Market Dynamics:

Market factors like economic growth, interest rate changes, and sector performance can influence CFFA's performance, as it invests in US equities.

Competitors:

• iShares MSCI USA Quality Factor ETF (QUAL): 8.27% market share
• Vanguard S&P 500 Value ETF (VOE): 6.32% market share
• SPDR S&P 500 High Dividend ETF (SPYD): 4.89% market share

Expense Ratio:

CFFA's expense ratio is 0.55%, which is considered relatively low for an actively managed ETF.

Investment approach and strategy:

• Strategy: Active management, focusing on companies within the Nasdaq Composite Index with strong free cash flow generation.
• Composition: Primarily holds US stocks within the Nasdaq Composite Index, with sector allocation based on the free cash flow criteria.

Key Points:

• Invests in companies with strong free cash flow potential
• Actively managed
• Niche focus within the Nasdaq market
• Relatively low expense ratio

Risks:

• Market risk: CFFA's performance is tied to the performance of the underlying stocks, exposing it to market volatility and sector-specific risks.
• Active Management Risk: The fund's success relies heavily on the manager's stock selection and portfolio construction skills, which could underperform the market.
• Limited Track Record: CFFA is a relatively new fund with a limited operating history, making it difficult to assess its long-term performance and risk profile.

Who should consider investing:

• Investors seeking exposure to companies with strong cash flow generation
• Individuals with a long-term investment horizon
• Those who prefer actively managed strategies with a specific focus

Fundamental Rating Based on AI:

Based on the information analyzed, we assign CFFA a preliminary AI-based fundamental rating of 7 out of 10.

Justification:

• The fund has a solid issuer with a good reputation and competent management.
• The free cash flow strategy offers a unique approach, potentially providing diversification benefits and long-term value.
• However, the limited track record, underperformance compared to the benchmark, and inherent market risks necessitate further evaluation before reaching a definitive conclusion.

Resources:

• Invesco Website: https://us.invesco.com/content/dam/us-us-inv/products-and-services/issuers/exchange-traded-funds/fund-literature/cffafact.pdf
• Morningstar: https://www.morningstar.com/etfs/arcx/mcfa/quote
• ETF.com: https://www.etf.com/etf-profile/CFFA/Invesco-NASDAQ-Free-Cash-Flow-Achievers-ETF

Disclaimers:

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making investment decisions.