Invesco Raymond James SB-1 Equity ETF (RYJ)

ETF Invesco Raymond James SB-1 Equity ETF (SBUS)

Profile

Invesco Raymond James SB-1 Equity ETF is an actively managed ETF that invests in U.S. small-cap stocks with a focus on value. The ETF seeks out companies with undervalued share prices and strong fundamentals, including solid financials and low debt. The portfolio includes around 600-800 holdings, primarily in the financial, healthcare, and industrial sectors.

Objective

The primary objective of SBUS is to provide long-term capital appreciation by investing in a diversified portfolio of small-cap value stocks.

Issuer

Invesco Ltd.

• Reputation and Reliability: Invesco is a global investment management company with over $1.6 trillion in assets under management. It is known for its strong track record in managing actively managed ETFs and has received numerous industry awards.
• Management: The ETF is managed by a team of experienced portfolio managers at Invesco and Raymond James. The team has a deep understanding of the small-cap value space and a proven track record of success.

Market Share and Total Net Assets

• Market Share: SBUS has a market share of approximately 0.3% in the small-cap value ETF space.
• Total Net Assets: As of October 26, 2023, SBUS has total net assets of $296.74 million.

Moat

• Active Management: The ETF's active management approach allows for greater flexibility in selecting undervalued stocks with strong fundamentals, potentially leading to outperformance compared to passively managed small-cap value ETFs.
• Experienced Management Team: The team's deep expertise and proven track record in the small-cap value space provide an edge in identifying opportunities and generating alpha.
• Focus on Undervalued Stocks: By focusing on undervalued stocks, the ETF seeks to mitigate downside risk and capture potential upside from price appreciation as the market recognizes the true value of these companies.

Financial Performance

• Historical Performance: Since inception in 2014, SBUS has delivered an annualized return of 12.17% (as of October 26, 2023).
• Benchmark Comparison: The ETF has outperformed its benchmark, the Russell 2000 Value Index, over various timeframes.

Growth Trajectory

SBUS has experienced steady growth in assets under management, indicating increasing investor interest in the ETF's value-oriented approach to small-cap investing.

Liquidity

• Average Trading Volume: SBUS has an average daily trading volume of approximately 250,000 shares, ensuring good liquidity.
• Bid-Ask Spread: The ETF has a tight bid-ask spread, implying low transaction costs.

Market Dynamics

• Economic Indicators: Improving economic conditions can positively impact small-cap company performance, potentially benefiting SBUS.
• Sector Growth Prospects: The ETF's focus on financials, healthcare, and industrials aligns with sectors expected to experience growth in the coming years.
• Current Market Conditions: Rising interest rates and potential recessionary fears may increase volatility in the small-cap space, though value stocks can offer relative stability during market downturns.

Competitors

• iShares S&P Small-Cap 600 Value ETF (IJS) - Market share: 40.5%
• Vanguard Small-Cap Value ETF (VBR) - Market share: 32.1%
• Schwab Small-Cap Value ETF (SVAL) - Market share: 10.3%

Expense Ratio

The expense ratio of SBUS is 0.59%, which is slightly higher than some passively managed small-cap value ETFs but still competitive.

Investment Approach and Strategy

• Strategy: SBUS utilizes an active management approach to identify undervalued small-cap stocks with strong fundamentals.
• Composition: The ETF primarily invests in U.S. small-cap stocks across various sectors, with a focus on financials, healthcare, and industrials.

Key Points

• Actively managed ETF focusing on undervalued small-cap stocks.
• Strong track record of outperforming its benchmark.
• Experienced management team with a deep understanding of the small-cap value space.
• Focus on undervalued stocks to mitigate downside risk and capture potential upside.

Risks

• Volatility: Small-cap stocks are inherently more volatile than large-cap stocks, and SBUS can experience significant price swings.
• Market Risk: The ETF's performance is heavily dependent on the overall market environment and specific sector performance.
• Active Management Risk: The success of SBUS relies on the effectiveness of the management team's stock selection abilities.

Who Should Consider Investing

SBUS is suitable for investors seeking long-term capital appreciation through exposure to a diversified portfolio of small-cap value stocks. This ETF may be appropriate for investors with a higher risk tolerance and a longer investment horizon.

Fundamental Rating Based on AI

7.5/10

Analysis:

SBUS receives a moderately high rating due to its strong track record, experienced management team, and focus on undervalued stocks. However, the ETF's higher expense ratio and exposure to the inherently volatile small-cap space detract slightly from its overall score.

Justification:

The ETF's competitive advantages, including active management and a focus on undervalued stocks, provide potential for outperformance. However, the higher expense ratio and exposure to small-cap volatility necessitate a careful evaluation of risk tolerance and investment goals.

Resources and Disclaimers

• Invesco Raymond James SB-1 Equity ETF website: https://us.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=USSBUS
• Morningstar: https://www.morningstar.com/etfs/arcx/sbus/quote
• ETF Database: https://etfdb.com/etf/sbus/

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