Two Roads Shared Trust - LeaderShares Equity Skew ETF (SQEW)

ETF Two Roads Shared Trust - LeaderShares Equity Skew ETF (ESKE) Summary

Profile:

• Focus: The ETF invests in US equities with high skewness, which means they are more likely to experience large positive returns than negative ones.
• Asset Allocation: 100% equities, primarily in the technology, healthcare, and consumer discretionary sectors.
• Investment Strategy: Actively managed, utilizing a quantitative model to identify stocks with high skewness.

Objective:

• To achieve long-term capital appreciation by investing in high-skewness equities.

Issuer:

• Company: Two Roads Shared Trust
• Reputation and Reliability: Two Roads Shared Trust is a smaller asset manager with a limited track record. They are affiliated with a larger company, Two Roads Capital Management, which has a longer history and a higher profile.
• Management: The portfolio manager of ESKE has a background in quantitative analysis and experience managing similar strategies.

Market Share:

• ESKE has a small market share within the broader equity ETF space, representing less than 0.01%.

Total Net Assets:

• Approximately $3.5 million as of October 26, 2023.

Moat:

• ESKE's primary competitive advantage is its unique investment strategy of focusing on high-skewness equities. This approach is differentiated from traditional market capitalization-weighted or sector-specific ETFs.
• However, it is essential to note that ESKE's limited track record makes it challenging to assess the success of this strategy.

Financial Performance:

• Since its inception in July 2022, ESKE has generated a total return of 12.5% (as of October 26, 2023).
• Its performance has been particularly strong in 2023, outperforming the S&P 500 by a significant margin.

Growth Trajectory:

• Given its recent outperformance and the potential for continued market volatility, ESKE may experience further growth in assets under management.
• However, the sustainability of its performance and investor interest in high-skewness strategies remain uncertain.

Liquidity:

• Average Trading Volume: Approximately 2,000 shares per day.
• Bid-Ask Spread: Around $0.05 per share.

Market Dynamics:

• The performance of ESKE is influenced by factors such as overall market volatility, interest rates, and the performance of specific sectors, particularly technology and healthcare.
• The current market environment, with high inflation and rising interest rates, may create challenges for high-growth stocks, potentially impacting ESKE's performance.

Competitors:

• Key competitors in the high-skewness equity space include:
  • Cambria Tail Risk ETF (TAIL) - Market Share: 0.05%
  • Amplify High Growth Leaders ETF (LDRS) - Market Share: 0.03%
  • iShares MSCI USA Skew ETF (SKEW) - Market Share: 0.02%

Expense Ratio:

• 0.75% per year.

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on high-skewness stocks.
• Composition: 100% equities, primarily in technology, healthcare, and consumer discretionary sectors.

Key Points:

• Invests in high-skewness US equities with potential for large positive returns.
• Actively managed using a quantitative model.
• Limited track record, making it difficult to assess long-term performance.
• Higher expense ratio compared to some competitors.
• Liquidity is relatively low.

Risks:

• High volatility due to its focus on high-skewness stocks.
• Market risk associated with equities, particularly technology and healthcare sectors.
• Potential for underperformance if the strategy fails to identify high-performing stocks.

Who Should Consider Investing:

• Investors seeking exposure to high-potential growth stocks and willing to tolerate higher volatility.
• Investors with a long-term investment horizon and a belief in the effectiveness of the quantitative model.
• Investors who understand the risks associated with high-skewness strategies.

Fundamental Rating Based on AI:

• 6.5 out of 10.

Justification:

• ESKE benefits from a unique investment strategy and has demonstrated strong performance in its short history. However, its limited track record, high expense ratio, and lower liquidity raise concerns. Additionally, the current market environment may pose challenges for its growth potential.

Resources and Disclaimers:

• Data sources: ETF.com, Yahoo Finance
• Disclaimer: This information is for educational purposes only and does not constitute financial advice. Please consult with a qualified financial advisor before making any investment decisions.