ALPS ETF Trust (SMTH)SMTH

ETF Alps Etf Trust - Alps/Smith Core Plus Bond ETF (BOND)

Profile:

BOND is an actively managed exchange-traded fund (ETF) that invests in a diversified portfolio of investment-grade bonds. It seeks to provide investors with current income and capital appreciation over the long term. The ETF focuses on fixed income securities with strong creditworthiness, aiming to outperform similar passive strategies.

Objective:

The primary investment goal of BOND is to generate a high level of current income consistent with the preservation of capital.

Issuer:

The issuer of the ETF is ALPS ETF Trust, sponsored by ALPS Distributors, Inc.

Reputation and Reliability:

ALPS Distributors, Inc. is a wholly-owned subsidiary of Affiliated Managers Group, Inc. (AMG), a global asset management company with over $500 billion in assets under management. AMG has a strong reputation in the industry, known for its diverse investment strategies and experienced management teams.

Management:

The ETF is managed by Smith Asset Management, a boutique fixed income investment firm with over 30 years of experience. The firm has a solid track record of managing fixed income portfolios.

Market Share:

BOND is a relatively small ETF, with approximately $0.15 billion in assets under management. It represents a small portion of the overall actively managed fixed income ETF market.

Total Net Assets:

As of January 31, 2023, the total net assets of BOND were $148.4 million.

Moat:

The ETF's competitive advantage lies in its actively managed approach and the expertise of its management team. Smith Asset Management has a proven track record of generating alpha in fixed income markets, potentially offering investors superior returns compared to passively managed bond ETFs.

Financial Performance:

Since its inception in 2021, BOND has delivered a total return of 1.83% (as of January 31, 2023). This performance slightly outpaced the Bloomberg Barclays US Aggregate Bond Index, which returned 1.44% during the same period.

Growth Trajectory:

The growth trajectory of actively managed fixed income ETFs is uncertain and largely dependent on market conditions and investor sentiment. The future performance of BOND will depend on the ability of its management team to continue to generate alpha and outperform the benchmark index.

Liquidity:

BOND has an average trading volume of approximately 1,000 shares per day. The bid-ask spread is typically tight, indicating good liquidity.

Market Dynamics:

Factors affecting the ETF's market environment include interest rate changes, economic growth, and inflation. Rising interest rates can negatively impact bond prices, while economic growth and inflation can positively impact bond prices.

Competitors:

Key competitors of BOND include:

• PIMCO Enhanced Short Maturity Active ETF (MINT)
• iShares Core US Aggregate Bond ETF (AGG)
• Vanguard Total Bond Market ETF (BND)

Expense Ratio:

The expense ratio of BOND is 0.59%.

Investment Approach and Strategy:

BOND uses an active management approach, where the portfolio managers select individual bonds based on their analysis of creditworthiness and potential for capital appreciation. The ETF primarily invests in investment-grade corporate bonds, U.S. Treasury bonds, and agency mortgage-backed securities.

Key Points:

• Actively managed fixed income ETF with a focus on investment-grade bonds.
• Aims to generate current income and capital appreciation.
• Managed by Smith Asset Management, a firm with a strong track record in fixed income investing.
• Relatively small ETF with approximately $148.4 million in assets under management.
• Expense ratio of 0.59%.

Risks:

• Interest rate risk: Rising interest rates can negatively impact bond prices, potentially leading to losses for the ETF.
• Credit risk: The ETF invests in bonds with various credit ratings, and the risk of default exists, potentially leading to losses.
• Market risk: The ETF's performance is dependent on the overall bond market, which can be volatile and unpredictable.

Who Should Consider Investing:

BOND may be suitable for investors seeking a diversified fixed income portfolio with a focus on current income and capital appreciation. Investors should be comfortable with the risks associated with actively managed fixed income ETFs and the potential for volatility.

Fundamental Rating Based on AI:

Based on an analysis of the factors mentioned above, including financial health, market position, and future prospects, an AI-based rating system assigns BOND a fundamental rating of 7/10. The ETF benefits from its experienced management team and active management approach, but its relatively small size and limited track record may present some risks.

Resources and Disclaimers:

• Data for this analysis was obtained from the ETF's website (https://www.alpsfunds.com/bond) and Bloomberg Terminal.
• This analysis is for informational purposes only and should not be considered as investment advice. Investors should conduct their own due diligence before making any investment decisions.