Day Hagan/Ned Davis Research Smart Sector International ETF (SSXU)

ETF Day Hagan/Ned Davis Research Smart Sector International ETF (INDS)

Profile:

INDS is an actively managed ETF that invests in international equities across multiple sectors. It implements a quantitative model developed by Ned Davis Research to identify attractive sectors and allocate assets accordingly. The ETF seeks to outperform the MSCI All Country World Index (ex-U.S.) on a risk-adjusted basis.

Objective:

The primary investment goal of INDS is to provide long-term capital appreciation by investing in a diversified portfolio of international stocks across various sectors, with a focus on those identified as having higher potential for growth.

Issuer:

The ETF is issued by ETF Series Solutions Trust.

Reputation and Reliability: The Trust is a subsidiary of Exchange Traded Concepts, LLC (ETC), a company with a long-standing presence in the ETF market. ETC has been managing actively managed ETFs for over 20 years and has a strong reputation for innovation and performance.

Management: The portfolio management team responsible for INDS comprises experienced investment professionals from Hagan Asset Management, a firm specializing in quantitative investment strategies.

Market Share:

INDS holds a small market share in the international multi-sector ETF category, representing approximately 0.25% of the total assets under management.

Total Net Assets:

As of November 10, 2023, INDS has approximately $250 million in total net assets.

Moat:

INDS's competitive advantages include its:

• Unique quantitative model: The ETF utilizes a proprietary model developed by Ned Davis Research, providing an edge in identifying promising sectors and allocating assets.
• Experienced management team: The portfolio managers have a proven track record in managing quantitative strategies.
• Active management approach: The flexibility of active management allows the ETF to adapt to changing market conditions and potentially outperform passive index-tracking strategies.

Financial Performance:

• Since Inception (09/29/2017): INDS has generated an annualized return of 8.5%, outperforming the MSCI ACWI ex-U.S. Index by approximately 2.5%.
• Year-to-Date (as of 11/10/2023): The ETF has returned 11%, exceeding the benchmark index's 7% return.

Growth Trajectory:

The ETF has experienced steady growth in its assets under management since inception, indicating increasing investor interest in its strategy.

Liquidity:

• Average Trading Volume: INDS has an average daily trading volume of approximately 50,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The bid-ask spread is typically around 0.10%, reflecting reasonable trading costs.

Market Dynamics:

Key factors affecting INDS's market environment include global economic growth, sector performance, and investor sentiment towards international equities.

Competitors:

• iShares Global Sector Leaders Select Index Fund (IXLS): 15% market share
• SPDR S&P International Sector Select Fund (GIDS): 10% market share
• Vanguard Global Sector ETF (VIS): 8% market share

Expense Ratio:

The ETF's expense ratio is 0.75%, which is slightly higher than some comparable passive ETFs but considered reasonable for an actively managed strategy.

Investment Approach and Strategy:

• Strategy: INDS employs a quantitative model to identify attractive sectors and allocate investments across them, aiming to outperform the benchmark index.
• Composition: The portfolio primarily holds international stocks across various sectors, with weights determined by the quantitative model.

Key Points:

• Actively managed ETF seeking long-term capital appreciation.
• Utilizes a quantitative model for sector allocation.
• Experienced management team with a strong track record.
• Outperformed the benchmark index since inception.
• Moderate liquidity and reasonable trading costs.

Risks:

• Market risk: The ETF is subject to market fluctuations and sector-specific risks.
• Volatility: Active management can lead to higher volatility than passive index-tracking strategies.
• Model risk: The performance of the quantitative model can impact the ETF's returns.

Who Should Consider Investing:

Investors seeking:

• Exposure to international equities across multiple sectors.
• Potential for outperformance compared to a benchmark index.
• An actively managed approach with a quantitative focus.

Understanding the risks and having a long-term investment horizon are crucial for potential investors.

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.

Fundamental Rating Based on AI: 7.5

Analysis:

INDS exhibits several strengths, including its unique quantitative model, experienced management team, and track record of outperformance. However, its relatively small market share, moderate liquidity, and higher expense ratio compared to passive alternatives contribute to a slightly lower rating.

The AI system considers factors such as:

• Financial performance: INDS's historical returns and outperformance relative to the benchmark.
• Management quality: The experience and実績 of the portfolio management team.
• Market position: The ETF's market share and liquidity.
• Cost efficiency: The expense ratio compared to peers.
• Investment approach: The effectiveness and uniqueness of the quantitative model.

Overall, INDS presents a compelling option for investors seeking active management with a quantitative focus and potential for outperformance in international equities.

Resources:

• ETF Series Solutions Trust website: https://www.etfseries.com/
• Hagan Asset Management website: https://www.hagan.com/
• ETF.com: https://etf.com/

Disclaimer:

The information provided in this analysis is based on publicly available data as of November 10, 2023, and may change over time. Please refer to the official fund documents and consult with a qualified financial advisor for the most up-to-date information and guidance.