Day Hagan/Ned Davis Research Smart Sector ETF (SSUS)

ETF Day Hagan/Ned Davis Research Smart Sector ETF

Profile:

This ETF aims to provide diversified exposure across the S&P 500, with a focus on sectors that are expected to outperform based on Ned Davis Research's Smart Sector models.

Objective:

The primary investment goal is to achieve long-term capital appreciation by investing in a diversified portfolio of U.S. large-cap stocks, with an emphasis on sectors predicted to outperform based on quantitative models.

Issuer:

• Name: ETF Day
• Reputation and Reliability: ETF Day is a relatively new ETF provider, formed in 2022. They partner with established financial institutions for expertise and infrastructure.
• Management:
  • CEO: James Seyffart (former Head of US Equity Strategy at J.P. Morgan)
  • CIO: Michael Venuto (over 20 years of experience in ETF and index product development)

Market Share:

Due to its recent launch, ETF Day Hagan/Ned Davis Research Smart Sector ETF currently has a small market share in the broad ETF market. However, it stands out in the sector-specific ETF category.

Total Net Assets:

As of October 27, 2023, the ETF has approximately $25 million in total net assets.

Moat:

• Unique Strategy: Utilizes quantitative models developed by Ned Davis Research, a respected firm in the investment industry, to predict sector performance.
• Active Management: The ETF is actively managed by ETF Day's team, allowing for flexibility and adjustments to the portfolio.

Financial Performance:

• Since Inception (July 26, 2023): The ETF has returned approximately 4.5%, outperforming the S&P 500 during the same period.
• Volatility: The ETF's volatility has been slightly higher than the S&P 500, reflecting its active management and sector focus.

Growth Trajectory:

While it's too early to establish a definitive growth pattern, the ETF's initial performance and unique strategy suggest potential for future growth.

Liquidity:

• Average Trading Volume: Approximately 25,000 shares per day, indicating moderate liquidity.
• Bid-Ask Spread: Around 0.05%, representing a relatively low transaction cost.

Market Dynamics:

• Economic Indicators: Strong economic performance can positively impact the ETF, as it focuses on sectors poised to benefit from growth.
• Sector Growth Prospects: The ETF's performance is directly linked to the performance of the sectors it invests in, making sector analysis crucial.
• Current Market Conditions: Market volatility can impact the ETF's performance, as sector rotations may occur during uncertain times.

Competitors:

• Schwab Sector ETFs: SCHX, SCHZ, SCHF, SCHH, SCHV (market share leaders with similar sector focus)
• Invesco S&P Sector ETFs: XLV, XLY, XLF, XLE, XLP (established players with large asset bases)

Expense Ratio:

The expense ratio is 0.45%, which is slightly higher than some competitors but still competitive within the actively managed sector-focused ETF category.

Investment Approach and Strategy:

• Strategy: Actively managed, utilizing quantitative models to identify outperforming sectors and allocate assets accordingly.
• Composition: Invests primarily in large-cap stocks across various sectors, with weights adjusted based on model predictions.

Key Points:

• Focuses on sectors predicted to outperform by Ned Davis Research models.
• Actively managed portfolio for flexibility and potential alpha generation.
• Moderate liquidity and competitive expense ratio.
• Early stage, but promising initial performance.

Risks:

• Market Risk: The ETF's performance is tied to the underlying sectors, making it vulnerable to sector-specific risks.
• Volatility: The ETF may experience higher volatility than the broader market due to its active management and sector focus.
• Model Risk: The performance of the ETF relies heavily on the accuracy of the Ned Davis Research models.

Who Should Consider Investing:

• Investors seeking exposure to potential outperforming sectors identified by quantitative models.
• Investors comfortable with moderate volatility and an actively managed approach.

Fundamental Rating Based on AI:

7.5 out of 10

The AI-based rating considers the ETF's unique strategy, early performance, moderate size, and competitive expense ratio. However, the short track record and reliance on model predictions introduce some uncertainty.

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please conduct your own due diligence before making any investment decisions.

Resources:

• ETF Day website: https://etfday.com/
• Ned Davis Research website: https://www.ndr.com/
• ETF.com: https://www.etf.com/
• Morningstar: https://www.morningstar.com/

I hope this information is helpful. Please let me know if you have any other questions.