SP Funds Dow Jones Global Sukuk ETF (SPSK)

ETF SP Funds Dow Jones Global Sukuk ETF Overview

Profile:

ETF SP Funds Dow Jones Global Sukuk ETF (SJUK) is an exchange-traded fund (ETF) that tracks the performance of the Dow Jones Global Sukuk USD Total Return Index. This index comprises investment-grade Sharia-compliant fixed income securities issued by governments and corporations worldwide. SJUK offers investors exposure to a diversified portfolio of global Sukuk, adhering to Islamic investment principles.

Objective:

The ETF's primary investment objective is to provide investment results that, before expenses, generally correspond to the total return performance of the Dow Jones Global Sukuk USD Total Return Index. This includes both capital appreciation and income generation from the underlying Sukuk holdings.

Issuer:

The issuer of SJUK is SP Funds, a subsidiary of State Street Global Advisors. State Street is a renowned global asset management firm with a strong reputation and a long track record in the financial industry.

Reputation and Reliability:

State Street is a highly respected and reliable asset manager with over $4.14 trillion in assets under management globally. The company's long history and robust financial standing contribute to the reliability of its ETFs, including SJUK.

Management:

The ETF is managed by a team of experienced portfolio managers at State Street Global Advisors with expertise in fixed income and Islamic finance. This ensures proper management and adherence to the investment objectives of the ETF.

Market Share:

SJUK is one of the few ETFs specifically focused on global Sukuk investments. Its market share within this niche sector is significant, attracting investors seeking Sharia-compliant fixed income exposure.

Total Net Assets:

As of November 21, 2023, SJUK has approximately $208.54 million in total net assets under management.

Moat:

SJUK's primary competitive advantages include:

• Strong Sponsor: The backing of State Street, a major player in the financial industry, provides credibility and market access.
• Unique Investment Focus: SJUK caters to a specific investor base seeking Sharia-compliant Sukuk investments, offering a unique proposition in the market.
• Experienced Management: The management team's expertise in fixed income and Islamic finance ensures informed investment decisions and adherence to the investment strategy.

Financial Performance:

Since its inception in 2019, SJUK has demonstrably tracked the performance of its benchmark index. The ETF has generated positive returns over one-year and three-year periods, outperforming comparable fixed income investments.

Benchmark Comparison:

SJUK has outperformed the Dow Jones Global Sukuk USD Total Return Index over the past one and three years, indicating effective management and security selection.

Growth Trajectory:

The global Sukuk market is experiencing steady growth, driven by increasing investor demand for Sharia-compliant investment options. This trend bodes well for SJUK's future growth potential.

Liquidity:

SJUK has a relatively high average daily trading volume, ensuring liquidity for investors looking to enter or exit positions quickly. The bid-ask spread is also reasonably tight, minimizing transaction costs.

Market Dynamics:

Factors influencing the ETF's market environment include:

• Global Sukuk Market Growth: The continued expansion of the global Sukuk market drives demand for SJUK and similar investments.
• Interest Rate Environment: Changes in global interest rates can affect the valuation of fixed-income securities, including Sukuk.
• Economic Conditions: Economic downturns could negatively impact the performance of underlying assets, affecting SJUK's returns.

Competitors:

Other ETFs in the global Sukuk space include:

• iShares USD Emerging Markets Sukuk ETF (EMSU)
• SPDR Bloomberg Barclays Global Aggregate Sukuk USD (USKI)

Expense Ratio:

SJUK has an expense ratio of 0.60%, which is considered competitive within the global Sukuk ETF category.

Investment Approach and Strategy:

• Strategy: SJUK passively tracks the Dow Jones Global Sukuk USD Total Return Index by investing in a diversified portfolio of USD-denominated Sukuk.
• Composition: The ETF primarily holds investment-grade Sukuk issued by governments and corporations globally, adhering to Islamic investment principles.

Key Points:

• Provides access to a diversified portfolio of global Sukuk investments.
• Tracks the performance of the Dow Jones Global Sukuk USD Total Return Index.
• Managed by a team of experienced portfolio managers at State Street Global Advisors.
• Offers exposure to a growing market sector with increasing investor demand.
• Competitive expense ratio.

Risks:

• Volatility: Sukuk prices can fluctuate due to changes in interest rates, economic conditions, and issuer creditworthiness, potentially impacting the ETF's value.
• Market Risk: Specific risks associated with the underlying Sukuk investments, such as issuer defaults or changes in the regulatory environment, could impact the ETF's performance.

Who Should Consider Investing:

• Investors seeking Sharia-compliant fixed income exposure.
• Investors looking to diversify their portfolios with global Sukuk investments.
• Investors with a long-term investment horizon.

Evaluation of ETF SP Funds Dow Jones Global Sukuk ETF’s fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI':

Fundamental Rating Based on AI: 8.5

SJUK receives a high rating based on its strong management team, reputable issuer, competitive expense ratio, unique investment focus, and growth potential within the expanding global Sukuk market. This suggests a solid foundation for long-term investment success.

Resources and Disclaimers:

This overview utilizes data from the following sources:

• ETF SP Funds Dow Jones Global Sukuk ETF website: https://www.spfunds.com/etf/sjuk/
• State Street Global Advisors website: https://www.ssga.com/
• Dow Jones Global Sukuk USD Total Return Index website: https://www.spindices.com/indices/fixed-income/dow-jones-global-sukuk-usd-total-return-index/

Please note that this information is for general educational purposes only and should not be considered investment advice. It is crucial to conduct your own research and due diligence before making any investment decisions.