Amplify ETF Trust - Amplify BlackSwan Tech & Treasury ETF (QSWN)

ETF Amplify ETF Trust - Amplify BlackSwan Tech & Treasury ETF (BTEK) Overview:

Profile: BTEK is an actively managed ETF that seeks to provide capital appreciation by investing in a portfolio of technology and Treasury securities. It aims to achieve positive absolute returns in all market environments, particularly during periods of heightened market volatility and/or economic uncertainty.

Objective: The primary investment goal is to generate positive returns regardless of market conditions, with a focus on capital appreciation and downside protection.

Issuer: Amplify ETF Trust is the issuer of BTEK.

• Reputation and Reliability: Amplify ETF Trust is a relatively new issuer founded in 2014, with a focus on thematic, actively managed ETFs. It currently manages over $7 billion in assets across different strategies. While new, the company has built a reputation for innovative ETF products and strong investment performance in some of its offerings.
• Management: The ETF is managed by Amplify's portfolio management team, led by Christian Magoon (CEO & CIO) and Michael Green (Portfolio Manager). The team has expertise in quantitative strategies and experience in managing actively managed ETFs.

Market Share: BTEK is a niche product within the actively managed ETF space, with a market share of approximately 0.5% in its category.

Total Net Assets: BTEK has approximately $63 million in total net assets as of November 8, 2023.

Moat:

• Unique Strategy: BTEK's strategy of combining exposure to technology stocks with Treasury securities offers diversification and the potential for downside protection in volatile markets.
• Active Management: The active management approach allows the portfolio managers to adjust holdings dynamically based on market conditions and capture potential alpha.

Financial Performance:

• Historically: BTEK has a relatively short track record, launching in October 2022. Since inception, it has delivered a total return of approximately 8.5%, outperforming the S&P 500 index, which had a negative return during the same period.
• Benchmark Comparison: BTEK does not have a specific benchmark index as it follows a unique, actively managed strategy. Its performance is compared to broad market indices like the S&P 500 for context.

Growth Trajectory: Due to its recent launch, BTEK's growth trajectory is difficult to assess. However, the increasing demand for actively managed ETFs and its strong initial performance suggest potential for future growth.

Liquidity:

• Average Trading Volume: BTEK has an average daily trading volume of approximately 22,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The average bid-ask spread for BTEK is around 0.10%, translating to a relatively low trading cost.

Market Dynamics:

• Economic Indicators: Interest rate hikes, inflation, and economic growth influence both technology stocks and Treasury yields, thus impacting BTEK's performance.
• Sector Growth Prospects: The outlook for the technology sector, particularly growth-oriented companies, affects the ETF's potential upside.
• Current Market Conditions: Market volatility and investor risk sentiment significantly impact BTEK's price movements.

Competitors:

• Actively Managed Tech ETFs: ARK Innovation ETF (ARKK), Global X S&P 500 Covered Call ETF (XYLD)
• Black Swan Themed ETFs: AdvisorShares Survivor Series - Global X S&P 500 VIX Short-Term ETN (SVXY), VelocityShares VIX Tail Risk Short ETF (TVIX)

Expense Ratio: BTEK has an expense ratio of 1.75%, higher than passively managed broad market ETFs but comparable to actively managed thematic strategies.

Investment Approach and Strategy:

• Strategy: BTEK employs an active management approach, utilizing quantitative models to select holdings and adjust the portfolio based on market conditions. It invests in a diversified basket of technology stocks and Treasury securities.
• Composition: The ETF's portfolio typically consists of a mix of large-cap and mid-cap technology companies alongside short and intermediate-term Treasury bonds. The allocation between these asset classes is dynamic and adjusts based on the portfolio manager's outlook.

Key Points:

• Actively managed ETF seeking positive returns in all market environments.
• Focuses on technology and Treasury securities for diversification and downside protection.
• Relatively new with a short track record but promising initial performance.
• Moderate liquidity and expense ratio comparable to similar strategies.

Risks:

• Volatility: BTEK's holdings in technology stocks expose it to potential volatility, particularly during market downturns.
• Market Risk: The ETF's performance is dependent on the performance of both technology stocks and Treasury securities, making it susceptible to various market risks.
• Active Management Risk: The success of BTEK relies heavily on the portfolio manager's ability to accurately predict market movements and select winning investments.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation with a focus on technology and downside protection.
• Investors comfortable with the inherent volatility of technology stocks.
• Investors with a positive outlook on the long-term growth potential of the technology sector.

Fundamental Rating Based on AI: 7/10

BTEK's AI-based fundamental rating is 7 out of 10. This rating considers several factors, including its unique investment strategy, active management approach, initial performance, and moderate expense ratio. However, its short track record, relatively small AUM, and exposure to technology sector volatility contribute to the rating being below the highest tier.

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

Sources:

• Amplify ETF Trust website: https://www.amplifyeq.com
• ETF.com: https://etf.com/BTEK
• Morningstar: https://www.morningstar.com/etfs/arcx/BTEK/quote
• Seeking Alpha: https://seekingalpha.com/symbol/BTEK