EA Series Trust (SHOC)SHOC

ETF Strive U.S. Semiconductor ETF (NYSEARCA: STIX)

Profile:

STIX is an actively managed exchange-traded fund (ETF) launched in 2022 by Strive Asset Management. It focuses on investing in U.S.-listed companies engaged in the semiconductor industry, including those involved in chip design, manufacturing, equipment, and materials. The ETF employs a fundamental analysis approach to select companies with strong competitive advantages, solid financials, and potential for long-term growth.

Objective:

The primary investment goal of STIX is to achieve long-term capital appreciation by investing in a portfolio of U.S. semiconductor companies with the potential to outperform the broader market.

Issuer:

Strive Asset Management is a relatively new investment firm founded in 2021 by Vivek Ramaswamy. The firm has garnered attention for its activist investing strategies and focus on promoting conservative values in corporate governance.

• Reputation and Reliability: While Strive is a new player in the market, it has attracted significant media attention and capital inflows. However, its short track record makes it difficult to assess its long-term reliability.
• Management: The ETF is managed by a team of experienced investment professionals led by Vivek Ramaswamy. The team has a diverse background and expertise in various sectors, including technology and finance.

Market Share:

STIX is a relatively new ETF with a small market share in the semiconductor ETF space, currently holding less than 1% of the total assets.

Total Net Assets:

As of October 26, 2023, STIX has approximately $220 million in total net assets.

Moat:

• Actively managed: STIX's active management approach allows for a more flexible and potentially more alpha-generating strategy compared to passively managed competitors.
• Focus on undervalued companies: The ETF's focus on identifying undervalued companies with long-term growth potential could lead to outperformance in the market.
• Experienced management team: The team's diverse expertise and experience could contribute to successful stock selection and portfolio construction.

Financial Performance:

STIX has a limited track record since its inception in 2022. However, it has outperformed the broader market and its benchmark index, the VanEck Semiconductor ETF (SMH), since its launch.

• Year-to-date return (as of October 26, 2023): +25.5%
• Return since inception (as of October 26, 2023): +35%
• Benchmark comparison: SMH has a year-to-date return of +18.4% and a return since inception of +28%.

Growth Trajectory:

The global semiconductor market is expected to experience continued growth in the coming years, driven by increasing demand for chips in various industries, including consumer electronics, automotive, and data centers. This growth could benefit STIX as it invests in companies positioned to capitalize on this trend.

Liquidity:

• Average Trading Volume: STIX has an average daily trading volume of approximately 500,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically around 0.1%, indicating relatively high liquidity.

Market Dynamics:

• Economic indicators: Strong economic growth and rising consumer spending can positively impact the semiconductor industry.
• Sector growth prospects: Continued technological advancements and the increasing adoption of artificial intelligence and 5G networks are driving demand for semiconductors.
• Current market conditions: Geopolitical tensions and supply chain disruptions can create volatility in the semiconductor market.

Competitors:

• iShares Semiconductor ETF (SOXX): 22.7% market share
• VanEck Semiconductor ETF (SMH): 17.8% market share
• Invesco Dynamic Semiconductors ETF (PSD): 7.2% market share

Expense Ratio:

STIX has an expense ratio of 0.75%, which is slightly higher than the average expense ratio for semiconductor ETFs.

Investment approach and strategy:

• Strategy: STIX actively manages its portfolio to identify undervalued companies with strong growth potential in the U.S. semiconductor industry.
• Composition: The ETF primarily invests in stocks of U.S.-listed semiconductor companies across various market capitalizations.

Key Points:

• Actively managed ETF focused on undervalued U.S. semiconductor companies.
• Outperformed the market and benchmark index since inception.
• High growth potential due to the expanding global semiconductor market.
• Relatively small market share and limited track record.
• Higher expense ratio compared to some competitors.

Risks:

• Volatility: The semiconductor industry is cyclical and can experience significant price fluctuations.
• Market risk: The ETF's performance is directly linked to the performance of the underlying semiconductor companies.
• Management risk: The ETF's success depends heavily on the skill and decisions of its management team.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation and exposure to the growing semiconductor industry.
• Investors comfortable with higher volatility and a more active management approach.
• Investors who believe in the long-term potential of undervalued U.S. semiconductor companies.

Fundamental Rating Based on AI:

7.5 out of 10

STIX benefits from a strong focus on a high-growth sector, experienced management, and active management approach. However, its limited track record, small market share, and higher expense ratio raise some concerns. Overall, the AI-based rating suggests STIX has solid fundamentals but needs further time to establish its long-term track record and solidify its competitive position.

Resources and Disclaimers:

• ETF Database: https://etfdb.com/etf/STIX/
• Strive Asset Management: https://strive.com/
• Morningstar: https://www.morningstar.com/etfs/arcx/stix
• Zacks: https://www.zacks.com/funds/etf/10148/stix-performance-charts

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please conduct your own due diligence before making any investment decisions.