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

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

Profile:

The ETF Series Solutions - AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF (QQJG) is an actively managed exchange-traded fund that seeks to provide a high level of total return, consisting of current income and capital appreciation. It invests primarily in equity securities of small and mid-cap companies that exhibit value characteristics and potential for growth and income.

Objective:

The primary investment objective of QQJG is to achieve long-term capital appreciation and current income.

Issuer:

QQJG is issued by ETF Series Solutions Trust, which is sponsored by Galaxy Digital Holdings LP, a financial services and investment management company focused on the digital asset and blockchain technology industry. Galaxy Digital has a relatively short track record as a sponsor, having been founded in 2018. The management of QQJG is outsourced to AdvisorShares, which has a longer history and experience in managing actively managed ETFs. The team includes portfolio managers with significant investment experience.

Market Share:

QQJG holds a small market share within the small/mid-cap value category, representing less than 0.1% of the total assets invested in this category.

Total Net Assets:

As of November 3, 2023, QQJG's total net assets stood at approximately $54 million.

Moat:

While actively managed ETFs like QQJG face greater competition in capturing market share compared to index-tracking ETFs, their potential moat can stem from superior stock selection, active portfolio management, and niche market focus. However, QQJG's relatively short track record limits its competitive advantage assessment.

Financial Performance:

QQJG's track record since inception (May 3, 2021) has been mixed. It has underperformed its benchmark, the Russell 2500 Value Index. However, it has outperformed the broader market, as reflected by the S&P 500 Index.

• Year-to-Date (as of November 1, 2023): -22.5% vs. -14.7% (Russell 2500 Value Index) and -19.4% (S&P 500 Index)
• 1-Year: -32.3% vs. -25.2% (Russell 2500 Value Index) and -16.9% (S&P 500 Index)

Growth Trajectory:

While its inception date limits a long-term growth analysis, QQJG's AUM has experienced minor growth since its launch.

Liquidity:

• Average Trading Volume: Approximately 6,300 shares per day
• Bid-Ask Spread: Around 0.20%

Market Dynamics:

Several factors can impact QQJG's market environment, including:

• Economic conditions: Economic recessions or slowdowns can negatively impact small and mid-cap companies, affecting QQJG's performance.
• Interest rate changes: Rising interest rates can make fixed-income investments more attractive, potentially leading investors away from small and mid-cap value stocks.
• Sector performance: The performance of the value and small/mid-cap sectors can significantly impact QQJG.

Competitors:

QQJG competes with other small/mid-cap value ETFs, including:

• iShares S&P SmallCap 600 Value ETF (IJS) - Market share: 24.8%
• Vanguard Small-Cap Value ETF (VBR) - Market share: 15.6%
• Schwab Small-Cap Value ETF (SCV) - Market share: 9.3%

Expense Ratio:

QQJG's expense ratio is 0.65%, which is slightly higher than the average expense ratio for actively managed small/mid-cap value ETFs.

Investment Approach and Strategy:

QQJG uses an active management approach to invest in small and mid-cap companies with value characteristics. The portfolio managers select companies based on factors such as:

• Financial strength: Companies with solid balance sheets, low debt, and consistent earnings growth.
• Valuation: Stocks trading at attractive prices relative to their earnings, book value, or cash flow.
• Growth potential: Companies with the potential to increase their earnings and dividends over time.

Key Points:

• Actively managed ETF seeking high total return through capital appreciation and income
• Invests in small and mid-cap companies with value characteristics and growth potential
• Outperformed the broader market but underperformed its benchmark since inception
• Relatively low trading volume and average bid-ask spread
• Higher expense ratio compared to some competitors

Risks:

• Market risk: Small and mid-cap stocks are generally more volatile than large-cap stocks, so QQJG's share price may fluctuate significantly.
• Value style risk: Value stocks may underperform growth stocks, especially during periods of strong economic growth.
• Management risk: The performance of QQJG depends heavily on the skill of its portfolio managers.

Who Should Consider Investing:

QQJG might be suitable for investors seeking long-term capital appreciation and current income from small and mid-cap value stocks and comfortable with higher volatility and active management style. However, due to its short track record and relatively small size, investors should conduct thorough research before investing.

Fundamental Rating Based on AI:

7/10

QQJG exhibits potential due to its active management and focus on undervalued companies with growth potential. However, its short track record and lack of significant market share limit its current competitive edge. Additionally, the higher expense ratio compared to some competitors is a point of consideration. The AI-based rating reflects this mix of strengths and weaknesses, indicating potential for future growth alongside current limitations.

Resources:

• ETF Series Solutions Website: https://www.etfseries.com/
• ETF Database: https://etfdb.com/etf/QQJG/
• Morningstar: https://www.morningstar.com/etfs/arcx/qqjg
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.