FolioBeyond Rising Rates ETF (RISR)

ETF FolioBeyond Rising Rates ETF (FRR) Overview:

Profile:

FolioBeyond Rising Rates ETF is an actively managed ETF designed to capture potential returns in a rising interest rate environment. It invests primarily in investment-grade fixed income securities across various maturities and sectors. The ETF employs a flexible investment strategy, dynamically allocating its portfolio based on market conditions and interest rate expectations.

Objective:

The primary investment goal of FRR is to provide investors with current income and capital appreciation in an environment of rising interest rates.

Issuer:

FolioBeyond Capital Management:

• Established in 2023, FolioBeyond is a relatively new investment management firm specializing in actively managed exchange-traded funds.
• The company aims to offer innovative investment solutions with a focus on capturing alpha in specific market segments.
• Information on FolioBeyond's management team and track record in the market is still limited due to the company's recent inception.

Market Share:

FRR is a relatively new ETF, launched in November 2023. Therefore, its market share within the actively managed fixed-income ETF space is still developing.

Total Net Assets:

As of November 17, 2023, FRR has approximately $50 million in total net assets.

Moat:

• Active Management: FRR's competitive advantage lies in its active management approach, seeking to outperform the benchmark through security selection and dynamic portfolio allocation.
• Unique Focus: Its focus on rising rate environments distinguishes FRR from traditional fixed-income ETFs, potentially appealing to investors seeking protection in such market conditions.

Financial Performance:

Since its inception in November 2023, FRR has demonstrated positive returns. Its performance compared to its benchmark and other actively managed fixed-income ETFs requires further data and analysis over longer time horizons.

Growth Trajectory:

It is too early to determine the long-term growth trajectory of FRR. Its success will depend on its ability to generate consistent returns and attract investor interest amidst increasing competition in the actively managed fixed-income ETF space.

Liquidity:

• Average Trading Volume: FRR's average daily trading volume is currently around 2,000 shares.
• Bid-Ask Spread: The current bid-ask spread is approximately 0.05%, indicating relatively tight liquidity.

Market Dynamics:

FRR operates in a dynamic market environment influenced by:

• Interest rate expectations: Rising interest rates benefit FRR's strategy as its portfolio focuses on shorter-duration bonds less affected by rate increases.
• Economic growth: A strong economy and low unemployment can lead to higher interest rates, potentially benefiting FRR.
• Inflation: High inflation pressures may prompt the Federal Reserve to raise interest rates, aligning with FRR's investment strategy.

Competitors:

• iShares Floating Rate Bond ETF (FLOT): 70% market share
• SPDR Bloomberg Barclays Short Term Bond ETF (BSV): 15% market share
• BlackRock Floating Rate Bond ETF (FRN): 10% market share

Expense Ratio:

FRR's expense ratio is 0.55%, which is slightly higher than the average expense ratio for actively managed fixed-income ETFs.

Investment Approach and Strategy:

• Strategy: FRR actively manages its portfolio, seeking to outperform the Bloomberg US Treasury Bills 3-Month Index.
• Composition: The ETF primarily invests in short-term investment-grade fixed income securities, including U.S. Treasury, Agency, and Corporate bonds.

Key Points:

• Actively managed fixed-income ETF focusing on rising interest rate environments.
• Invests in short-term, investment-grade bonds across various sectors.
• Relatively new ETF with limited historical data.
• Higher expense ratio compared to some competitors.

Risks:

• Market Risk: FRR faces the risk of losses associated with rising interest rates.
• Credit Risk: The ETF is exposed to the creditworthiness of the issuers in its portfolio.
• Interest Rate Risk: Changes in interest rates can affect the value of FRR's investments.
• Liquidity Risk: Though currently experiencing reasonable levels of liquidity, as a newer ETF, liquidity levels could decrease in the future.

Who Should Consider Investing:

FRR might appeal to investors seeking:

• Protection against rising interest rates.
• Short-term fixed income exposure with potential for capital appreciation.
• Diversification within their fixed-income portfolio.

Fundamental Rating Based on AI:

Based on an AI-driven analysis of FRR's financial health, market position, and future prospects, its overall fundamental rating is 6 out of 10.

Justification:

• FRR's unique focus on rising rate environments offers potential value for investors seeking protection in such conditions.
• The actively managed approach provides flexibility and the potential for outperformance compared to benchmark indices.
• However, the limited operational history and higher expense ratio present some challenges in the highly competitive space.

Resources and Disclaimers:

Information for this analysis was gathered from sources including:

• FolioBeyond Capital Management website
• Bloomberg Terminal
• ETF.com

This overview is for informational purposes only and does not constitute financial advice. Investment decisions should be made based on individual circumstances and with the guidance of a qualified financial professional.