Themes US Small Cap Cash Flow Champions ETF (SMCF)

Overview

The Themes US Small Cap Cash Flow Champions ETF (FOUS) focuses on investing in US small-cap companies that exhibit strong and consistent free cash flow generation. The ETF aims to outperform traditional small-cap indices by selecting companies demonstrating financial health and growth potential through cash flow analysis. It seeks long-term capital appreciation by targeting fundamentally sound small-cap stocks.

Reputation and Reliability

Themes ETFs are relatively new but are gaining recognition for their thematic investment strategies. They are backed by a team with experience in ETF management, focused on innovative investment approaches.

Management Expertise

The management team has expertise in quantitative analysis and thematic investing, utilizing data-driven strategies to select and manage the portfolio.

Goal

The primary investment goal is to provide long-term capital appreciation by investing in a portfolio of US small-cap companies demonstrating strong free cash flow generation.

Investment Approach and Strategy

Strategy: The ETF employs a quantitative methodology to identify and select US small-cap companies with consistent and robust free cash flow. It does not track a specific index but rather follows a proprietary cash flow-based selection process.

Composition The ETF primarily holds common stocks of US small-cap companies across various sectors that meet the fund's cash flow criteria.

Market Share: The ETF has a relatively small market share compared to broad-based small-cap ETFs due to its specialized investment strategy.

Total Net Assets (AUM): 45000000

Key Competitors

• IWM
• VBR
• SJR

Competitive Landscape

The small-cap ETF market is highly competitive, dominated by broad-based ETFs like IWM and VBR. FOUS distinguishes itself through its focus on cash flow, offering a potentially more selective and fundamentally driven approach. However, its smaller size and specialized strategy mean lower liquidity compared to larger competitors.

Historical Performance: Historical performance data is necessary to accurately assess the ETF's track record. Assuming its inception, data needs to be pulled for 1yr, 3yr, 5yr, and 10yr returns.

Benchmark Comparison: To assess FOUSu2019s effectiveness, its performance must be compared to the Russell 2000 Index (IWM) and similar small-cap value benchmarks over various periods.

Expense Ratio: 0.69

Average Trading Volume

The ETF's average trading volume provides insight into how easily shares can be bought and sold without significantly impacting the price.

Bid-Ask Spread

The bid-ask spread represents the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept.

Market Environment Factors

Economic growth, interest rates, and investor sentiment towards small-cap stocks influence the ETF's performance. Strong economic conditions and positive small-cap sentiment typically benefit the fund.

Growth Trajectory

The ETF's growth depends on its ability to attract assets by demonstrating superior risk-adjusted returns compared to traditional small-cap ETFs. Any changes to the fund's investment strategy or holdings will impact this trajectory.

Competitive Edge

FOUS possesses a competitive advantage through its rigorous focus on free cash flow generation, which provides a more selective filter than traditional market-cap weighted indices. This quantitative approach targets companies that are financially healthy and have the potential for sustainable growth. The ETF's strategy may appeal to investors seeking a fundamentally sound approach to small-cap investing. This is differentiating it from the majority of the small cap market which are passive tracking index funds.

Volatility

The ETF's historical volatility reflects its price fluctuations and should be assessed relative to its benchmark and peers. Small-cap stocks, in general, tend to exhibit higher volatility than large-cap stocks.

Market Risk

The ETF is subject to market risk, including the risk of a decline in the overall stock market. Additionally, small-cap stocks carry specific risks, such as lower trading volume and higher sensitivity to economic conditions.

Ideal Investor Profile

The ideal investor is one seeking long-term capital appreciation, has a moderate risk tolerance, and believes in the importance of strong cash flow generation. This investor should understand the risks associated with small-cap investing.

Market Risk

The ETF is best suited for long-term investors who are willing to accept some volatility in exchange for potentially higher returns. It is less suitable for active traders seeking short-term gains or passive index followers looking for broad market exposure.

The Themes US Small Cap Cash Flow Champions ETF provides access to small-cap companies exhibiting strong cash flow. Its selective approach differentiates it from broad-based small-cap ETFs. The fundu2019s success depends on its ability to identify and hold companies that generate consistent cash flow over the long term. Investors should consider its expense ratio and liquidity when evaluating the fund. Despite its focused strategy, it might present limited diversification and market risk.

Data Sources:

• Themes ETFs Website
• ETF.com
• Morningstar

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor before making any investment decisions. ETF performance is not indicative of future results. Market share data may be approximate.