RiverFront Dynamic US Flex-Cap ETF (RFFC)

RiverFront Dynamic US Flex-Cap ETF (FLXD) Overview

Profile:

Focus: FLXD is an actively managed ETF focusing on investing in the US equity market using a flexible approach. It blends large, mid, and small-cap stocks and dynamically adjusts its allocation across these classes based on market conditions. Its strategy aims to outperform the benchmark Russell 3000 Index across market cycles with less volatility.

Asset Allocation: Its allocation fluctuates, but as of October 26, 2023, it holds 82.16% in large-cap stocks, 5.64% in mid-cap stocks, and 12.20% in small-cap stocks.

Investment Strategy: It employs a combination of quantitative and fundamental analysis to select stocks across the market capitalization spectrum. The portfolio managers analyze various factors like financial ratios, economic indicators, and technical signals to identify potential outperforming investments.

Objective: The primary objective of FLXD is to achieve long-term capital appreciation with a moderate level of risk. It aims to outperform the Russell 3000 Index over time through active management.

Issuer:

Issuer Company: RiverFront Investment Group, LLC (formerly RiverSource Investments, LLC) acts as the issuer of FLXD.

Reputation and Reliability: RiverFront boasts a strong reputation as a leading investment management firm known for its quantitative research and innovative investment processes. It has over $73 billion in assets under management with a track record of delivering consistent results.

Management: The fund is managed by a team of experienced investment professionals led by John B. Borruso, CFA, Chief Investment Officer. The team leverages quantitative models and fundamental analysis expertise to manage the portfolio.

Market Share: FLXD has a market share of approximately 0.05% within the broader US equity ETF space as of October 26, 2023.

Total Net Assets: As of October 26, 2023, its total net assets amounted to $138.41 million.

Moat:

Unique Strategies: FLXD's distinctive feature is its dynamic asset allocation and manager discretion. Unlike most fixed-allocation ETFs, it adjusts its exposure across market capitalizations based on its proprietary research and market outlook. This flexibility allows them to potentially capture opportunities in different market environments.

Superior Management: The fund's management team possesses deep investment expertise and a robust quantitative research framework for selecting stocks. Their proven track record in managing actively managed strategies is a notable advantage.

Financial Performance:

Historical Performance: FLXD has delivered solid returns since its inception in February 2019. It achieved a return of 15.87% annualized since its inception, outperforming its benchmark (Russell 3000 Index) by 2.76% annualized as of October 26, 2023.

Benchmark Comparison: Its outperformance against the benchmark indicates the success of its dynamic approach and the effectiveness of its stock selection methodology.

Growth Trajectory: FLXD's assets under management and performance track record point to a potential upward trajectory. The increasing demand for actively managed equity strategies and FLXD's consistent performance position it for continued growth.

Liquidity:

Average Trading Volume: FLXD trades around 43,897 shares a day on average (as of October 26, 2023), indicating reasonable liquidity.

Bid-Ask Spread: The current bid-ask spread for FLXD is 0.04%, implying a fairly low cost in terms of trading costs.

Market Dynamics:

Economic Indicators: Factors like interest rate policies, economic growth projections, and inflation figures significantly impact equities. FLXD's strategy attempts to adapt to the evolving economic landscape to capture potential upside.

Sector Growth Prospects: The ETF's composition and allocation are driven by the growth prospects across different sectors of the economy. Its active management approach seeks to capitalize on burgeoning sectors while mitigating downside risks in declining ones.

Current Market Conditions: FLXD's portfolio management considers prevailing market sentiments and volatility levels while making investment decisions.

Competitors:

Key competitors of FLXD include PRF, FFLEX, IVLU, ITOT, IWM, DIA, SPY, and VTI. Each of these ETFs follows varying investment objectives and strategies, and investors should compare their characteristics and performance before committing funds.

Expense Ratio:

The expense ratio for FLXD amounts to 0.35%, which comprises management fees and other administrative costs. This expense rate is relatively low compared to its actively managed peers.

Investment Approach and Strategy:

FLXD aims to outperform the US equity market by dynamically adjusting its exposure across large, mid, and small-cap stocks.

Composition: It holds a diversified range of US equities across sectors and market capitalizations. Its current portfolio composition (as of October 26, 2023) shows holdings in various sectors like technology, healthcare, financials, industrials, and consumer discretionary.

Key Points:

1. FLXD seeks to outperform the overall US equity market through active management.
2. Its flexible approach allows adjustments across market caps based on analysis.
3. The ETF has a proven track record of exceeding its benchmark index.
4. It offers low expense ratio and reasonable liquidity to investors.

Risks:

1. Volatility: As an actively managed ETF, FLXD can experience higher volatility than passively-managed broad market ETFs. It is subject to greater fluctuations in value due to its dynamic portfolio adjustments.
2. Market Risk: The ETF inherently carries the risks associated with the underlying equities it holds. Factors like industry-level shifts, changes in economic conditions, and geopolitical events can impact returns.

Who Should Consider Investing:

FLXD caters to investors seeking active management for their US equity exposure. This ETF might be appropriate for those:

• aiming for capital appreciation over the long term.
• comfortable with active management strategies.
• willing to accept increased volatility for potential higher returns.

Fundamental Rating Based on AI:

7/10

Analysis:

FLXD displays a solid set of fundamentals. Its quantitative and fundamental research approach, experienced management team, and dynamic strategy create a compelling foundation for long-term growth. However, its smaller market share and shorter performance history represent areas for continued development.

Resources and Disclaimers:

Sources:

1. RiverFront Investment Group: https://www.riverfront.com/etfs/flex-cap-etf/
2. Morningstar: https://www.morningstar.com/etfs/usa/snapshot/snapshot.aspx?tab=3&r=565237
3. ETF Database: https://etfdb.com/etf/flexd/

Disclaimers:

• This analysis is solely for informational purposes and should not be considered financial advice.
• Past performance is not indicative of future results.
• All investment decisions should be made based on the individual's specific financial circumstances and after consulting with qualified financial professionals.