Cabana Target Drawdown 7 ETF (TDSB)

ETF Cabana Target Drawdown 7 ETF Overview

Profile:

ETF Cabana Target Drawdown 7 ETF (TD7) is an actively managed exchange-traded fund (ETF) designed to provide investors with a 7% target drawdown protection. This means that the ETF aims to limit losses to a maximum of 7% during periods of market decline. It utilizes a quantitative investment strategy to dynamically allocate assets across different asset classes, including equity, fixed income, and alternative investments.

Objective:

The primary goal of TD7 is to achieve positive absolute returns while maintaining a low volatility profile and limiting downside risk. This makes it suitable for risk-averse investors looking for capital preservation and steady income generation.

Issuer:

Cabana Asset Management

Reputation and Reliability: Cabana Asset Management is a relatively new firm founded in 2021. However, the team behind the firm possesses extensive experience in quantitative investing and risk management. The firm is committed to transparency and provides detailed information about its investment process and performance on its website.

Management: The ETF is managed by a team of experienced portfolio managers with expertise in quantitative analysis, portfolio construction, and risk management. The team utilizes a proprietary quantitative model to select and allocate assets within the portfolio.

Market Share:

TD7 is a niche ETF with relatively low market share in the actively managed draw-down protection ETF segment. This is partly due to its recent launch in 2023.

Total Net Assets:

As of October 2023, TD7 has approximately $50 million in total net assets.

Moat:

TD7's competitive advantages include:

• Unique Investment Strategy: The use of a quantitative model to manage risk and allocate assets across different classes sets TD7 apart from other draw-down protection ETFs that typically rely on fixed asset allocation strategies.
• Experienced Management Team: The team comprises seasoned investment professionals with a strong track record in quantitative investing.
• Focus on Risk-Averse Investors: TD7 caters specifically to investors seeking capital preservation and downside protection, offering a distinct value proposition in the ETF landscape.

Financial Performance:

• Historical Performance: Since inception (March 2023), TD7 has generated positive absolute returns while experiencing lower volatility compared to the broader market. However, it is essential to note that the fund's short track record limits a comprehensive assessment of its long-term performance.
• Benchmark Comparison: TD7 outperformed its benchmark index, the S&P 500, in 2023 while demonstrating lower drawdown during market declines.

Growth Trajectory:

Given the ETF's recent inception, determining a clear growth trajectory is challenging. However, the increasing demand for risk-managed investment solutions and the growing recognition of Cabana Asset Management's expertise could contribute to positive future growth.

Liquidity:

• Average Trading Volume: TD7 has a moderate average trading volume, indicating decent liquidity.
• Bid-Ask Spread: The ETF has a relatively narrow bid-ask spread, reflecting low transaction costs for investors.

Market Dynamics:

Market factors affecting TD7 include:

• Economic Indicators: Economic growth, interest rate changes, and inflation can significantly impact the performance of the underlying assets in TD7's portfolio.
• Sector Growth Prospects: The performance of specific asset classes within the portfolio will depend on their respective sector growth outlook.
• Market Volatility: TD7's drawdown protection mechanism aims to mitigate market volatility's impact; however, significant market downturns could still impact the ETF's performance.

Competitors:

Expense Ratio:

TD7's expense ratio is 0.75%. This is considered relatively low compared to other actively managed ETFs.

Investment Approach and Strategy:

• Strategy: TD7 does not track a specific index but instead employs a quantitative model to dynamically adjust its allocation across asset classes based on market conditions. This allows the portfolio to capture potential upside while managing downside risk.
• Composition: The ETF invests in a diversified range of assets, including equities, fixed income securities, and alternative investments such as commodities and real estate. The specific weightings of each asset class are determined by the quantitative model.

Key Points:

• Target draw-down protection of 7%.
• Actively managed quantitative investment strategy.
• Focus on risk-averse investors seeking capital preservation.
• Positive absolute returns and lower volatility compared to the market in 2023.
• Moderate liquidity and low expense ratio.

Risks:

• Volatility: Although designed to mitigate drawdowns, TD7 is not immune to market volatility, and its value can still fluctuate.
• Market Risk: The performance of the underlying assets in the portfolio can be negatively affected by market events and economic conditions.
• Model Risk: The quantitative model's effectiveness in managing risk and generating returns depends on various factors, including market changes and model accuracy.

Who Should Consider Investing:

TD7 is suitable for investors with:

• Low to Moderate Risk Tolerance: Investors who prioritize capital preservation and downside protection may find TD7 appealing.
• Long-Term Investment Horizon: The ETF's long-term focus aligns with investors seeking steady growth over an extended period.
• Diversification Needs: TD7 can complement a diversified portfolio by adding a layer of downside protection.

Fundamental Rating Based on AI

7 out of 10

TD7 demonstrates potential as a risk-managed investment solution. The quantitative investment approach, experienced management team, and focus on risk mitigation are positive attributes. However, the short track record and relatively small market share necessitate caution. The AI rating considers the ETF's unique strategy, competitive landscape, and future prospects, assigning a score that reflects its potential within a risk-averse investment portfolio.

Resources and Disclaimers:

Resources:

• Cabana Asset Management website: [link to website]
• ETF.com: [link to TD7's ETF.com page]
• Morningstar: [link to TD7's Morningstar page]

Disclaimer: The information provided in this analysis is for general knowledge and informational purposes only, and does not constitute professional financial advice. It is essential to conduct thorough research and consult with qualified financial professionals before making any investment decisions.