Rayliant Quantamental China Equity ETF (RAYC)

Rayliant Quantamental China Equity ETF (RYAAY)

Profile

The Rayliant Quantamental China Equity ETF is a passively managed ETF that seeks to track the Solactive China Alpha Tilt Index. This index focuses on large and mid-cap Chinese A-shares, with a quantitative analysis approach that aims to identify stocks with growth potential and value characteristics. The ETF primarily invests in sectors such as consumer discretionary, financials, and technology.

Objective

The primary objective of RYAAY is to provide long-term capital appreciation through exposure to the Chinese A-share market. It aims to achieve this by investing in companies with strong growth potential and attractive valuations.

Issuer

Rayliant Global Advisors:

• Reputation and Reliability: Rayliant is a relatively new asset management firm founded in 2016. However, the team behind RYAAY has extensive experience in quantitative investing and the Chinese market.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in quantitative analysis and China equities.

Market Share

RYAAY is a relatively small ETF in the Chinese equity space. As of October 26, 2023, it has approximately $70 million in assets under management, representing a market share of less than 1% in the China A-share ETF category.

Total Net Assets

As of October 26, 2023, RYAAY has total net assets of approximately $70 million.

Moat

The ETF's competitive advantages include:

• Unique Investment Strategy: RYAAY utilizes a quantitative approach to identify undervalued stocks with strong growth potential, potentially providing an edge over traditional index-tracking funds.
• Experienced Management Team: The team behind the ETF has extensive experience in quantitative investing and the Chinese market.

Financial Performance

Historical Performance: Since its inception in 2021, RYAAY has delivered a total return of approximately 15%. However, it's important to note that this is a short track record, and past performance is not indicative of future results.

Benchmark Comparison: RYAAY has outperformed the Solactive China A-Share Index, its benchmark, over the same period.

Growth Trajectory

The Chinese A-share market is expected to experience continued growth in the coming years. This growth will be driven by factors such as China's rising middle class, increasing consumer spending, and technological innovation.

Liquidity

Average Trading Volume: RYAAY has an average daily trading volume of approximately 10,000 shares. Bid-Ask Spread: The bid-ask spread for RYAAY is typically around 0.1%.

Market Dynamics

Factors affecting RYAAY's market environment include:

• Chinese Economic Growth: The Chinese economy is expected to continue growing, albeit at a slower pace than in the past.
• US-China Trade Relations: Trade tensions between the US and China could impact market sentiment and volatility.
• Regulatory Environment: Changes in Chinese government regulations could affect the A-share market.

Competitors

Key competitors of RYAAY include:

• KraneShares CSI China Internet ETF (KWEB) - Market share: 15%
• iShares China Large-Cap ETF (FXI) - Market share: 12%
• Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) - Market share: 8%

Expense Ratio

The expense ratio for RYAAY is 0.75%.

Investment Approach and Strategy

Strategy: RYAAY passively tracks the Solactive China Alpha Tilt Index, which utilizes a quantitative approach to identify undervalued stocks with strong growth potential. Composition: The ETF primarily invests in large and mid-cap Chinese A-shares across various sectors, including consumer discretionary, financials, and technology.

Key Points

• RYAAY provides exposure to the growing Chinese A-share market.
• The ETF utilizes a quantitative approach to identify undervalued stocks with strong growth potential.
• RYAAY has a relatively low expense ratio and competitive performance.
• The Chinese A-share market is expected to experience continued growth in the coming years.

Risks

• Market Volatility: The Chinese A-share market can be volatile, potentially leading to significant fluctuations in the ETF's value.
• Geopolitical Risks: Political and economic tensions between China and other countries could impact market sentiment and negatively affect the ETF's performance.
• Currency Risk: RYAAY is exposed to fluctuations in the Chinese Yuan, which could impact the ETF's value for investors holding other currencies.

Who Should Consider Investing

RYAAY is suitable for investors seeking:

• Long-term capital appreciation through exposure to the Chinese A-share market.
• Exposure to a diversified portfolio of Chinese equities with a focus on undervalued and high-growth companies.
• A passively managed ETF with a low expense ratio.

Fundamental Rating Based on AI

Rating: 7/10

Justification: RYAAY demonstrates strong fundamentals, including a well-defined investment strategy, experienced management team, and competitive performance compared to its benchmark. However, the ETF's relatively small size and short track record warrant some caution. Additionally, the Chinese A-share market faces various risks, including political and economic uncertainty, which investors should carefully consider.

Resources and Disclaimers

Resources:

• Rayliant Global Advisors website: https://rayliant.com/
• Solactive Index Information: https://www.solactive.com/indices/?index=DE000SLA89Y3

Disclaimers:

This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions. Past performance is not indicative of future results.