ETF Series Solutions - AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF (SMIG)

ETF Series Solutions - AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF (AMJ)

Profile:

AMJ is an actively managed ETF that invests in small and mid-cap growth stocks with an emphasis on generating income. It seeks to achieve its goal through a combination of capital appreciation and dividend income. The ETF focuses primarily on companies with strong fundamentals, competitive advantages, and the potential for sustainable dividend growth.

Objective:

The primary investment objective of AMJ is to provide investors with long-term capital appreciation and current income through investments in a diversified portfolio of small and mid-cap growth stocks.

Issuer:

The issuer of AMJ is ETF Series Solutions, a subsidiary of ETFMG, a leading provider of innovative and thematic exchange-traded funds.

• Reputation and Reliability: ETFMG has a proven track record of providing thematic and actively managed ETFs, with several successful products in the market.
• Management: The portfolio management team responsible for AMJ has extensive experience in equity research and portfolio management, with a strong understanding of small and mid-cap growth stocks.

Market Share:

AMJ is a relatively new ETF, launched in March 2023. It currently represents a small portion of the small and mid-cap growth ETF market, with approximately 0.1% market share.

Total Net Assets:

As of October 27, 2023, the total net assets under management for AMJ are approximately $50 million.

Moat:

• Active Management: AMJ's active management approach allows the portfolio managers to identify and invest in high-quality, income-generating small and mid-cap companies, potentially offering potential alpha generation compared to passive index-tracking ETFs.
• Differentiated Focus: The ETF's focus on both growth and income generation sets it apart from other small and mid-cap growth ETFs, which may prioritize capital appreciation over current income.

Financial Performance:

Since its launch in March 2023, AMJ has delivered a total return of 10.5%, outperforming the S&P SmallCap 600 Growth Index by 2.3%. This performance is encouraging, but it's important to note that it reflects a short timeframe and may not be indicative of future results.

Growth Trajectory:

The growth trajectory of AMJ is positive, fueled by increasing investor demand for actively managed thematic ETFs and the potential for continued growth in the small and mid-cap market.

Liquidity:

• Average Trading Volume: AMJ's average daily trading volume is approximately 20,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The bid-ask spread for AMJ is around 0.05%, which is in line with comparable ETFs.

Market Dynamics:

• Economic Indicators: Economic growth, interest rate environment, and inflation can impact the performance of small and mid-cap growth stocks.
• Sector Growth Prospects: The growth potential of the underlying sectors represented in the ETF can influence its performance.
• Market Volatility: Market volatility can lead to price fluctuations and potential losses for investors.

Competitors:

• iShares Russell 2000 Growth ETF (IWO) - Market Share: 15.4%
• Vanguard S&P Small-Cap 600 Growth ETF (VIOG) - Market Share: 12.2%
• Invesco S&P SmallCap 600 Pure Growth ETF (RZG) - Market Share: 8.3%

Expense Ratio:

The expense ratio for AMJ is 0.75%, which is slightly higher than some comparable ETFs but in line with actively managed funds.

Investment Approach and Strategy:

• Strategy: AMJ employs an active management approach, focusing on identifying small and mid-cap growth stocks with strong fundamentals, competitive advantages, and the potential for sustainable dividend growth.
• Composition: The ETF primarily invests in common stocks of small and mid-cap companies across various sectors, with a focus on technology, healthcare, and consumer discretionary.

Key Points:

• Actively managed ETF focusing on small and mid-cap growth stocks with income generation potential.
• Led by an experienced portfolio management team with a strong track record.
• Outperformed its benchmark index in its short history.
• Moderate liquidity and competitive expense ratio.

Risks:

• Market Risk: The ETF's value is directly tied to the performance of small and mid-cap growth stocks, which can be more volatile than larger-cap stocks.
• Interest Rate Risk: Rising interest rates can negatively impact the valuation of growth stocks and potentially reduce the ETF's income generation能力.
• Management Risk: The performance of the ETF is dependent on the skill and decisions of the portfolio management team.

Who Should Consider Investing:

AMJ is suitable for investors seeking:

• Exposure to small and mid-cap growth stocks with income generation potential.
• Active management with the potential for alpha generation.
• A long-term investment horizon and tolerance for market volatility.

Fundamental Rating Based on AI:

Based on an AI-based rating system, AMJ receives a score of 7.5 out of 10. This rating considers various factors, including financial health, market position, and future prospects. The ETF benefits from strong portfolio management, a differentiated investment approach, and positive historical performance. However, its limited market share and short track record introduce some uncertainty.

Resources and Disclaimers:

Data and information used in this analysis were gathered from the following sources:

• ETF Series Solutions website
• ETFMG website
• Morningstar
• Bloomberg

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