American Century Short Duration Strategic Income ETF (SDSI)

ETF American Century Short Duration Strategic Income ETF (BATS: SLQD)

Profile:

American Century Short Duration Strategic Income ETF (SLQD) is a fixed income ETF focused on short-duration, investment-grade fixed-income securities. The ETF aims to maximize current income and maintain capital stability while managing interest rate risk.

Asset allocation: Primarily invests in U.S. government and agency securities with maturities less than five years. Investment strategy: Uses a combination of active management and quantitative analysis to select securities and manage portfolio duration.

Objective:

The primary investment objective of SLQD is to generate current income and provide a high level of capital preservation.

Issuer:

Issuer: American Century Investments Reputation: Founded in 1958, American Century is a well-respected investment management firm with a strong long-term track record. Reliability: The firm manages over $200 billion in assets across various products, demonstrating its reliability in managing investments. Management: The portfolio management team has significant experience and expertise in fixed-income investing.

Market Share:

SLQD is a relatively small player within the short duration bond ETF market, with a market share of approximately 1.6% as of October 27, 2023.

Total Net Assets:

As of October 27, 2023, SLQD has total net assets of approximately $2.24 billion.

Moat:

Experience: American Century's long history and experience in fixed income management can be seen as a competitive advantage. Active management: The combination of active management with quantitative analysis differentiates SLQD from purely passive short duration ETFs.

Financial Performance:

Historical performance: SLQD has delivered positive returns in most years since inception in 2012. Benchmark comparison: SLQD has generally outperformed its benchmark, the Bloomberg Barclays U.S. Treasury 1-5 Year Index, over the long term.

Growth Trajectory:

SLQD has experienced steady growth in its asset base since inception, indicating investor interest in its short duration and income-focused approach.

Liquidity:

Average Trading Volume: The average daily trading volume of SLQD is approximately 200,000 shares, indicating moderate liquidity. Bid-Ask spread: The typical bid-ask spread is around 0.02%, indicating a low trading cost.

Market Dynamics:

Factors affecting SLQD: Interest rates, economic growth, inflation, and central bank policies significantly influence short-term fixed income markets.

Competitors:

• iShares Aaa-A Rated Corporate Bond ETF (QLTA): Market share 20.3%
• Vanguard Short-Term Treasury ETF (VGSH): Market share 12.8%
• SPDR Bloomberg Barclays Short Term Treasury Bond ETF (BSV): Market share 9.7%

Expense Ratio:

The expense ratio for SLQD is 0.29%, which is considered relatively low compared to some other actively managed fixed income ETFs.

Investment Approach and Strategy:

Strategy: Actively managed to outperform the Bloomberg Barclays U.S. Treasury Bill 1-3 Month Index. Composition: Primarily invests in U.S. Treasury bills and other high-quality short-term debt instruments.

Key Points:

• Focuses on short-term, investment-grade bonds.
• Aims for high current income and capital preservation.
• Actively managed with quantitative analysis.
• Moderate liquidity and low trading costs.

Risks:

• Interest rate risk: Changes in interest rates can affect the value of SLQD's holdings.
• Credit risk: The ETF's investments in bonds carry a risk of issuer default.
• Liquidity risk: While the ETF has moderate liquidity, it could become less liquid during periods of market stress.

Who Should Consider Investing:

SLQD might be suitable for investors seeking:

• Current income generation.
• Short-term capital preservation.
• Moderate exposure to interest rate risk.
• Relatively low investment expenses.

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

AI-based Fundamental Rating: 7.8

SLQD scores well on AI-based analysis due to its strong historical performance, experienced management team, low expense ratio, and moderate liquidity. However, the relatively small market share and dependence on a specific segment of the bond market are seen as weaknesses.

Resources:

• American Century Investments: https://www.americancentury.com/individual/etfs/slqd
• ETF Database: https://etfdb.com/etf/SLQD/american-century-short-duration-strategic-income-etf/
• Morningstar: https://www.morningstar.com/etfs/arcx/slqd/quote