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

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

Primary Focus: The ETF invests primarily in fixed-income securities across various sectors, seeking to capitalize on yield while mitigating interest rate risk.

Asset Allocation:

• 60% U.S. Investment Grade Fixed Income
• 40% Emerging Market Debt

Investment Strategy: The ETF uses a blend of passive and active strategies:

• Passive: Invests approximately 60% of assets in a fixed-income index representative of the U.S. investment-grade market.
• Active: The remaining 40% actively allocates across sectors and countries within emerging markets, seeking higher yields with diversified country and sector exposure.

Objective: To provide a total return through a combination of income and capital appreciation.

Issuer: IndexIQ

Reputation and Reliability: IndexIQ is a subsidiary of New York Life Investment Management, a reputable financial services company with over 175 years of experience. The parent company has a strong track record of managing assets and a solid financial position.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in fixed income and emerging markets.

Market Share: SMAR has a market share of about 0.03% in the Smart Beta Fixed Income ETF category.

Total Net Assets: Approximately $95.4 million as of November 14, 2023.

Moat: The ETF's competitive advantages include:

• Unique strategy: Blends passive and active management to mitigate interest rate risk while seeking higher yields in emerging markets.
• Experienced management: Managed by a team of professionals with expertise in fixed income and emerging markets.
• Niche market focus: Caters to investors seeking income generation and diversification within fixed income.

Financial Performance:

• Year-to-date: 0.42% return (as of November 14, 2023)
• 1-year: 0.89% return
• 3-year: 3.04% annualized return
• 5-year: 4.72% annualized return

Benchmark Comparison: SMAR has outperformed the Bloomberg Barclays U.S. Aggregate Bond Index, its benchmark, in all timeframes.

Growth Trajectory: The ETF has experienced steady growth in assets under management since its inception in 2012.

Liquidity:

• Average Trading Volume: 4,400 shares (as of November 14, 2023)
• Bid-Ask Spread: 0.02%

Market Dynamics: Interest rate fluctuations, economic growth prospects, and emerging market performance influence the ETF's market environment.

Competitors:

• JNK (iShares iBoxx $ High Yield Corporate Bond ETF)
• HYG (iShares iBoxx $ High Yield Corporate Bond ETF)
• EMB (iShares J.P. Morgan EM Bond ETF)

Expense Ratio: 0.65% per year

Investment Approach and Strategy:

• Strategy: Actively manages 40% of assets, seeking higher yielding fixed income investments in emerging markets. The remaining 60% passively tracks a U.S. investment-grade fixed income index.
• Composition: Approximately 60% U.S. Investment Grade Fixed Income, 40% Emerging Market Debt.

Key Points:

• Seeks to generate income and capital appreciation.
• Combines passive and active management for diversification.
• Invests in a mix of U.S. and emerging market fixed income.
• Outperformed its benchmark in all timeframes.
• Relatively low expense ratio.

Risks:

• Volatility: Fixed income investments can be susceptible to interest rate fluctuations. Emerging market debt carries higher volatility risks.
• Market Risk: Performance is tied to the performance of U.S. and emerging market fixed income markets.

Who Should Consider Investing: This ETF is suitable for investors seeking:

• Income generation through fixed income investments.
• Diversification within their fixed income portfolio.
• Exposure to emerging market debt for higher yield potential.
• A passively managed component with an actively managed overlay.

Fundamental Rating Based on AI: 8/10

Analysis: SMAR has a strong fundamental profile. Its unique investment strategy, experienced management, and competitive expense ratio make it an attractive option for income-seeking investors. The ETF's historical performance and outperformance against its benchmark are encouraging. However, investors should be aware of the volatility risks associated with fixed income and emerging market investments.

Resources and Disclaimers:

• ETFdb.com: https://etfdb.com/etf/SMAR/
• IndexIQ: https://www.indexiq.com/etfs/fixed-income/smar

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