Strategy Shares - Day Hagan/Ned Davis Research Smart Sector Fixed Income ETF (SSFI)SSFI

ETF Strategy Shares - Day Hagan/Ned Davis Research Smart Sector Fixed Income ETF Summary:

Profile:

The ETF Strategy Shares - Day Hagan/Ned Davis Research Smart Sector Fixed Income ETF (BATS: SFIX) is an actively managed ETF that invests in investment-grade fixed income securities across various sectors. It employs a proprietary quantitative model developed by Ned Davis Research to identify and overweight sectors with favorable risk-return characteristics. The ETF aims to provide investors with exposure to a diversified portfolio of fixed income securities while seeking to enhance returns through active sector allocation.

Objective:

The primary investment goal of SFIX is to maximize total return through a combination of current income and capital appreciation. The ETF seeks to achieve this by dynamically adjusting its sector allocation based on market conditions and its quantitative model's signals.

Issuer:

The ETF is issued by ETF Strategy Shares, LLC, a subsidiary of Exchange Traded Concepts, LLC. Exchange Traded Concepts is a privately held company founded in 2008 that specializes in developing and launching innovative ETFs.

Reputation and Reliability:

Exchange Traded Concepts has a relatively short track record compared to larger ETF issuers. However, it has a decent reputation in the industry and has shown a commitment to launching unique and innovative ETF products.

Management:

The ETF is sub-advised by Day Hagan Asset Management, a boutique investment firm specializing in fixed income strategies. Day Hagan has a team of experienced portfolio managers with a strong track record in managing fixed income portfolios.

Market Share:

SFIX has a relatively small market share in the fixed income ETF space, with approximately $47 million in assets under management.

Total Net Assets:

As of November 8, 2023, SFIX has approximately $47 million in total net assets.

Moat:

The ETF's competitive advantage lies in its proprietary quantitative model and active sector allocation strategy. This approach allows the ETF to potentially outperform traditional fixed income ETFs that passively track broad market indices.

Financial Performance:

SFIX has a short track record, making it difficult to assess its long-term performance. Since its inception in December 2022, the ETF has returned approximately 1.5%, outperforming the Bloomberg Barclays US Aggregate Bond Index by a small margin.

Growth Trajectory:

The ETF's future growth will depend on its ability to attract new investors and generate strong returns. Given its unique approach and experienced management team, SFIX has the potential to experience significant growth in the future.

Liquidity:

SFIX has an average daily trading volume of approximately 10,000 shares, which is considered relatively low for an ETF. This may result in wider bid-ask spreads and potentially impact the ease of buying and selling shares.

Market Dynamics:

The fixed income market is currently experiencing some volatility due to rising interest rates and economic uncertainty. This could impact the performance of SFIX, as its holdings are primarily fixed income securities.

Competitors:

Some key competitors of SFIX include the iShares Aaa - A Rated Corporate Bond ETF (QLTA), the Vanguard Intermediate-Term Treasury ETF (VGIT), and the SPDR Bloomberg Barclays Short Term Treasury ETF (BIL).

Expense Ratio:

The expense ratio for SFIX is 0.85%, which is slightly higher than the average expense ratio for fixed income ETFs.

Investment Approach and Strategy:

SFIX actively manages its portfolio based on a quantitative model that identifies and overweight sectors with favorable risk-return characteristics. The ETF invests in a diversified range of investment-grade fixed income securities across various sectors.

Key Points:

• Actively managed ETF seeking to enhance returns through sector allocation.
• Focuses on investment-grade fixed income securities.
• Employs a proprietary quantitative model developed by Ned Davis Research.
• Relatively small market share and short track record.
• Higher expense ratio compared to some competitors.

Risks:

• Market risk: The value of SFIX's holdings could decline due to changes in interest rates, economic conditions, or issuer defaults.
• Sector allocation risk: The ETF's performance may be impacted by its sector allocation strategy. If the model's predictions are inaccurate, the ETF could underperform.
• Liquidity risk: The ETF's relatively low trading volume could lead to wider bid-ask spreads and difficulty buying or selling shares.

Who Should Consider Investing:

SFIX is suitable for investors who:

• Seek exposure to a diversified portfolio of investment-grade fixed income securities.
• Are comfortable with the risks associated with active management and sector allocation.
• Have a long-term investment horizon.

Fundamental Rating Based on AI:

Based on an AI-based system taking into account financial health, market position, and future prospects, SFIX receives a 6 out of 10.

Justification:

The ETF benefits from a unique and potentially effective investment strategy, supported by a reputable management team. However, its small market share, short track record, and higher expense ratio are factors that limit its score. Further analysis of its performance over time and its ability to attract new investors will be crucial in assessing its long-term potential.

Resources and Disclaimers:

• ETF Strategy Shares website: https://www.etfstrategyshares.com/
• Yahoo Finance: https://finance.yahoo.com/quote/SFIX/
• Bloomberg: https://www.bloomberg.com/quote/SFIX:US

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