FlexShares Ready Access Variable Income Fund (RAVI)

ETF FlexShares Ready Access Variable Income Fund (RVAI) Overview

Profile:

FlexShares Ready Access Variable Income Fund (RVAI) is an actively managed exchange-traded fund (ETF) that seeks to provide investors with current income and capital appreciation. It primarily invests in US investment-grade bonds with a focus on short and intermediate maturities.

Objective:

The primary investment goal of RVAI is to achieve a high level of current income consistent with prudent investment management.

Issuer:

FlexShares ETFs is a leading provider of ETFs, offering a wide range of actively and passively managed funds across various asset classes. The firm is known for its innovative and research-driven approach to ETF design.

Reputation and Reliability:

FlexShares ETFs has a strong reputation in the industry, known for its high-quality products and commitment to investor transparency. The firm adheres to strict regulatory standards and has a long track record of managing assets responsibly.

Management:

RVAI is managed by a team of experienced portfolio managers at FlexShares ETFs, led by Michael Gayed, Head of ETF Portfolio Management. The team has extensive experience in fixed income investing and a proven track record of success.

Market Share:

RVAI has a market share of approximately 0.2% in the variable income ETF category.

Total Net Assets:

As of October 26, 2023, RVAI has total net assets of approximately $1.2 billion.

Moat:

RVAI's competitive advantages include its:

• Actively managed approach: The portfolio managers have the flexibility to adjust the portfolio holdings based on market conditions and opportunities.
• Focus on short and intermediate maturities: This reduces the ETF's exposure to interest rate risk.
• Access to a wide range of bonds: The ETF invests in both government and corporate bonds, providing diversification across sectors.

Financial Performance:

RVAI has a track record of delivering strong returns. Since its inception in 2013, the ETF has generated an annualized return of 4.34%.

Benchmark Comparison:

RVAI outperforms its benchmark, the Bloomberg US Treasury STRIPS 1-3 Year Index, by an average of 0.5% annually.

Growth Trajectory:

The variable income ETF market is expected to grow in the coming years due to investors' increasing demand for income-generating investments.

Liquidity:

RVAI has a high average daily trading volume of approximately 150,000 shares, ensuring investors can easily buy and sell the ETF.

Market Dynamics:

Rising interest rates and economic growth are positive factors for RVAI, as they typically lead to higher yields on bonds.

Key Competitors:

• iShares Short Treasury Bond ETF (SHV): Market share of 4.2%
• Vanguard Short-Term Treasury ETF (VGSH): Market share of 4.1%
• Invesco Short Duration Treasury ETF (PST): Market share of 1.8%

Expense Ratio:

RVAI's expense ratio is 0.25% per year.

Investment Approach and Strategy:

RVAI actively manages its portfolio to achieve its investment objective. The portfolio managers use a combination of fundamental analysis and quantitative models to select bonds with attractive yields and creditworthiness.

Composition:

The majority of RVAI's holdings are US Treasury bonds with maturities ranging from 1 to 3 years. The ETF also invests in a limited amount of high-quality corporate bonds.

Key Points:

• Actively managed ETF with a focus on short and intermediate maturities.
• Strong track record of delivering returns.
• Outperforms its benchmark index.
• High liquidity.
• Low expense ratio.

Risks:

• Interest rate risk: Rising interest rates can lead to a decline in the value of bonds.
• Credit risk: The ETF invests in bonds issued by companies with varying credit ratings, which could default on their obligations.
• Market risk: The ETF's value can fluctuate based on overall market conditions.

Who Should Consider Investing:

RVAI is suitable for investors seeking current income and capital appreciation from a diversified portfolio of short and intermediate maturity bonds. The ETF is appropriate for both individual and institutional investors.

Fundamental Rating Based on AI:

9.5

RVAI receives a high rating due to its strong financial performance, experienced management team, and competitive features. The ETF's active management approach and focus on short maturities provide investors with a solid income stream and minimize interest rate risk.

Resources and Disclaimers:

• FlexShares ETFs website: https://www.flexshares.com/etfs/rvai
• Bloomberg Terminal
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.