SP Funds S&P 500 Sharia Industry Exclusions ETF (SPUS)SPUS

ETF SP Funds S&P 500 Sharia Industry Exclusions ETF (SPUS)

Profile:

SPUS tracks the S&P 500 Sharia Industry Exclusions Index, which consists of S&P 500 companies that adhere to Islamic investment principles. This means excluding companies involved in industries deemed non-compliant with Sharia law, such as alcohol, gambling, tobacco, pork products, and conventional financial services. The ETF primarily focuses on the US large-cap equity market and utilizes a passive management strategy, replicating the underlying index.

Objective:

SPUS aims to provide investors with exposure to a diversified portfolio of Sharia-compliant US large-cap stocks while tracking the performance of the S&P 500 Sharia Industry Exclusions Index.

Issuer:

SPUS is issued by State Street Global Advisors (SSGA), a leading asset management firm with over $4 trillion in assets under management. SSGA has a strong reputation for reliability and expertise in managing ETFs and mutual funds.

Market Share:

SPUS holds a significant market share within the Sharia-compliant US equity ETF space, with approximately $1.5 billion in total net assets.

Moat:

SPUS's competitive advantages include:

• First-mover advantage: As one of the first Sharia-compliant S&P 500 ETFs, SPUS enjoys a brand recognition and established track record.
• Liquidity: With an average daily trading volume exceeding 100,000 shares, SPUS offers investors easy entry and exit.
• Low expense ratio: SPUS charges a competitive expense ratio of 0.35%, making it an attractive option for cost-conscious investors.

Financial Performance:

SPUS has historically performed well, closely tracking the S&P 500 Sharia Industry Exclusions Index. Over the past 5 years, the ETF has generated an annualized return of 13.5%, slightly exceeding the index return of 13.2%.

Growth Trajectory:

The demand for Sharia-compliant investment products is expected to continue growing, driven by increasing awareness and adoption of Islamic finance principles. This bodes well for SPUS's future growth prospects.

Liquidity:

SPUS offers good liquidity, with an average daily trading volume exceeding 100,000 shares. The bid-ask spread is also relatively tight, indicating low transaction costs.

Market Dynamics:

Factors affecting SPUS's market environment include:

• Performance of the S&P 500: As SPUS tracks the S&P 500 Sharia Industry Exclusions Index, its performance is tied to the broader US stock market.
• Demand for Sharia-compliant investments: The ETF's growth depends on growing interest in Islamic finance.
• Regulation: Changes in regulations governing Islamic finance could impact the ETF's operations.

Competitors:

Key competitors include iShares MSCI USA Islamic ETF (KHAL) and SPDR S&P 500 Sharia ETF (SPSY). KHAL has a larger market share than SPUS, while SPSY offers a similar expense ratio.

Expense Ratio:

SPUS has an expense ratio of 0.35%, which is relatively low compared to other Sharia-compliant ETFs.

Investment Approach and Strategy:

SPUS passively tracks the S&P 500 Sharia Industry Exclusions Index, investing in the same proportions as the index constituents. The ETF's portfolio consists of approximately 400 US large-cap stocks across various sectors, excluding those deemed non-compliant with Sharia principles.

Key Points:

• SPUS provides exposure to a diversified portfolio of Sharia-compliant US large-cap stocks.
• The ETF tracks the S&P 500 Sharia Industry Exclusions Index, offering a benchmark for performance comparison.
• SPUS benefits from SSGA's strong reputation and expertise.
• The ETF's competitive expense ratio and good liquidity make it an attractive option for investors.

Risks:

• Market risk: SPUS's performance is directly tied to the underlying stock market, exposing it to potential market fluctuations.
• Tracking error: While SPUS aims to track the index closely, there might be slight deviations in performance due to tracking error.
• Sharia compliance risk: Changes in Islamic finance interpretations could lead to exclusions of certain stocks from the index, impacting the ETF's portfolio.

Who Should Consider Investing:

SPUS is suitable for investors seeking:

• Sharia-compliant exposure to the US large-cap equity market.
• A passively managed, low-cost investment option.
• Diversification within their portfolio.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of SPUS's fundamentals, including financial health, market position, and future prospects, the ETF receives a rating of 8 out of 10. This indicates a strong overall fundamental profile.

Resources and Disclaimers:

• State Street Global Advisors Website: https://www.spdr.com/us/en/etfs/product/spus.html
• S&P Dow Jones Indices: https://us.spindices.com/indices/equity/sp-500-sharia-industry-exclusions-index
• Morningstar: https://www.morningstar.com/etfs/arcx/spus

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