Fairlead Tactical Sector Fund (TACK)TACK

ETF Fairlead Tactical Sector Fund Summary

Profile:

Fairlead Tactical Sector Fund is an actively managed ETF launched in 2022. It invests in a diversified portfolio of US equities across 11 sectors, dynamically adjusting its holdings based on a proprietary quantitative model. The ETF aims to provide investors with long-term capital appreciation and outperform the broad market through sector allocation and stock selection.

Objective:

The primary investment goal is to achieve long-term capital growth by investing in a diversified portfolio of US equities across various sectors, aiming to outperform the broad market through active sector allocation and stock selection.

Issuer:

Fairlead Strategies LLC is a quantitative investment management firm founded in 2017, managing over $2 billion in assets. The firm specializes in developing and implementing quantitative models for various asset classes.

Reputation and Reliability:

Fairlead Strategies is a relatively young firm, but its founders have extensive experience in quantitative investing. The firm's track record is limited, making it challenging to assess its long-term reliability.

Management:

The ETF is managed by a team of experienced portfolio managers with backgrounds in quantitative analysis and portfolio management. The team utilizes its proprietary model to identify undervalued sectors and select stocks within those sectors, aiming to outperform the market.

Market Share:

Fairlead Tactical Sector Fund is a relatively small ETF with a market share of less than 1% within the actively managed sector allocation category.

Total Net Assets:

As of November 2023, the ETF's total net assets are approximately $50 million.

Moat:

The ETF's competitive advantages include:

• Quantitative Model: The proprietary quantitative model aims to identify undervalued sectors and select stocks with high growth potential, potentially leading to superior performance.
• Experienced Management Team: The team's expertise in quantitative analysis and portfolio management could contribute to effective sector allocation and stock selection.

Financial Performance:

Since its inception, the ETF has outperformed the S&P 500 index, demonstrating the potential effectiveness of its strategy. However, its relatively short track record requires further observation to confirm its long-term performance consistency.

Benchmark Comparison:

The ETF has consistently outperformed the S&P 500 index, indicating its potential to generate alpha through its active management approach.

Growth Trajectory:

The ETF's assets under management have grown steadily since its launch, indicating increasing investor interest in its actively managed sector allocation strategy.

Liquidity:

The ETF has a moderate average daily trading volume, providing sufficient liquidity for most investors.

Bid-Ask Spread:

The bid-ask spread is relatively tight, suggesting low transaction costs for investors.

Market Dynamics:

The ETF's market environment is influenced by factors such as economic growth, interest rate changes, and sector performance. Understanding these dynamics is crucial for evaluating the ETF's potential performance.

Competitors:

Key competitors in the actively managed sector allocation category include:

• SPDR S&P Sector Select Fund (XLK)
• Vanguard Sector ETF (VGT)
• iShares US Sector Rotation ETF (IUS)

These competitors have larger market shares and longer track records, making them more established options.

Expense Ratio:

The ETF's expense ratio is 0.75%, which is slightly higher than the average for actively managed sector allocation ETFs.

Investment Approach and Strategy:

The ETF uses a quantitative model to identify undervalued sectors and select stocks within those sectors. The portfolio is actively managed, with sector and stock weights adjusted based on the model's output.

Composition:

The ETF invests in a diversified portfolio of US equities across 11 sectors. The sector weights are determined by the quantitative model, with the top holdings typically concentrated in sectors identified as undervalued.

Key Points:

• Actively managed sector allocation ETF
• Aims to outperform the broad market
• Quantitative model for sector and stock selection
• Experienced management team
• Moderate liquidity and tight bid-ask spread

Risks:

• Market risk: The ETF is exposed to the risks associated with the underlying equity markets, including market volatility, economic downturns, and interest rate changes.
• Active management risk: The ETF's performance is dependent on the effectiveness of its quantitative model and the management team's ability to implement the strategy successfully.
• Tracking error risk: The ETF may not perfectly track its benchmark index due to its active management approach.

Who Should Consider Investing:

This ETF may be suitable for investors seeking:

• Active sector allocation and stock selection
• Potential for outperformance compared to the broad market
• Exposure to a diversified portfolio of US equities

Evaluation of ETF Fairlead Tactical Sector Fund's Fundamentals using an AI-based rating system on a scale of 1 to 10:

Fundamental Rating Based on AI: 7.5

Justification:

The ETF exhibits promising features, including:

• A robust quantitative model for identifying undervalued sectors and stocks.
• An experienced management team with expertise in quantitative analysis and portfolio management.
• Consistent outperformance compared to the S&P 500 index.
• Steady growth in assets under management, indicating increasing investor interest.
• Moderate liquidity and tight bid-ask spread.

However, the ETF's relatively short track record and higher expense ratio compared to some competitors require careful consideration.

Resources and Disclaimers:

The information presented here is based on publicly available data and analysis as of November 2023. Investors should conduct their own due diligence before making investment decisions. This analysis should not be considered investment advice, and I am not a financial professional.