6 Meridian Low Beta Equity Strategy ETF (SIXL)

ETF 6 Meridian Low Beta Equity Strategy ETF Summary

Profile:

The ETF 6 Meridian Low Beta Equity Strategy ETF (LOWB) seeks to track the performance of the Solactive U.S. Low Beta Index. This index focuses on US large and mid-cap equities with lower volatility compared to the broad market. LOWB offers diversified exposure across various sectors, primarily favoring defensive sectors like healthcare, consumer staples, and utilities. It utilizes a passive management strategy, investing in stocks with low beta coefficients, indicating lower sensitivity to market movements.

Objective:

The primary objective of LOWB is to generate investment returns by tracking the performance of the Solactive U.S. Low Beta Index. This includes achieving capital appreciation and providing income through dividend distributions.

Issuer:

This ETF is issued by 6 Meridian, a subsidiary of Manulife Investment Management (MFS). 6 Meridian is a relatively new ETF provider established in 2015, but its parent company MFS boasts a long history and solid reputation in the investment management industry.

Market Share:

LOWB holds a small market share within the Low Volatility Equity ETF category, accounting for approximately 0.15%.

Total Net Assets:

As of November 2023, LOWB has total net assets under management of approximately $200 million.

Moat:

LOWB's main competitive advantage lies in its focus on low beta stocks. This strategy aims to reduce portfolio volatility and potentially provide downside protection during market downturns. Additionally, its passively managed approach offers cost-efficiency compared to actively managed funds.

Financial Performance:

LOWB has historically delivered performance in line with its benchmark index. Its annualized returns over the past 3 years (as of November 2023) have closely tracked the Solactive U.S. Low Beta Index performance.

Growth Trajectory:

The demand for low volatility strategies is on the rise amidst increasing market uncertainty. Given this trend, LOWB can potentially experience growth in assets under management as investors seek refuge in less volatile investment options.

Liquidity:

LOWB exhibits moderate trading activity with an average daily volume of around 10,000 shares. The bid-ask spread is also relatively tight, indicating efficient market pricing.

Market Dynamics:

Factors influencing LOWB's market environment include:

• Economic indicators: Interest rate hikes, inflation, and economic growth could affect the performance of low beta stocks.
• Sector performance: Defensive sectors tend to outperform during market downturns, positively impacting LOWB.
• Market volatility: Increased market volatility could lead investors to seek haven in low volatility strategies like LOWB.

Competitors:

• iShares Edge MSCI Min Vol USA ETF (USMV) - Market share: 15%
• Vanguard U.S. Minimum Volatility ETF (VMIN) - Market share: 10%
• SPDR Russell 1000 Low Beta ETF (LOW) - Market share: 5%

Expense Ratio:

LOWB has a relatively low expense ratio of 0.15%.

Investment approach and strategy:

LOWB employs a passive management approach by tracking the Solactive U.S. Low Beta Index. Its composition primarily consists of large and mid-cap U.S. stocks with low beta values, aiming to achieve lower volatility than the overall market.

Key Points:

• Focuses on low beta stocks for downside protection.
• Tracks the Solactive U.S. Low Beta Index.
• Offers diversification across various sectors.
• Passively managed with low expense ratio.
• Moderate trading volume and tight bid-ask spread.

Risks:

• Lower potential returns compared to high-beta strategies.
• Market risk associated with underlying equity holdings.
• Tracking error risk due to deviations from the benchmark index.

Who Should Consider Investing:

LOWB is suitable for investors seeking:

• Capital preservation: Offers lower volatility than the broad market, potentially mitigating losses during downturns.
• Income generation: Regular dividend payouts provide a stream of income.
• Passive exposure: Convenient way to access low beta equity investments without active management.

Fundamental Rating Based on AI:

An AI-based rating system assigns LOWB a 7 out of 10. This rating considers factors like financial performance, market position, and growth potential. The analysis indicates LOWB's solid track record, competitive expense ratio, and favorable market outlook within the low volatility segment. However, its relatively small market share and limited operational history contribute to a slightly lower score.

Resources and Disclaimers:

This analysis utilized data from the following sources:

• 6 Meridian ETF website
• Solactive website
• Bloomberg Terminal

Disclaimer: This information is provided for informational purposes only and should not be considered investment advice. Investors should conduct thorough research and consider their individual risk tolerance and investment goals before making any investment decisions.