Motley Fool Next Index ETF (TMFX)

Overview of Motley Fool Next Index ETF (MFNEXT)

Profile:

• MFNEXT is a passively managed ETF tracking the Motley Fool Next Index (MNFX), a rules-based index of U.S. small-cap and mid-cap growth stocks.
• The ETF aims to provide investors with exposure to high-potential, early-stage companies identified by Motley Fool's research team.
• MFNEXT employs a quantitative approach, considering various growth factors like sales growth, earnings per share, and sales revisions.

Objective:

• The primary goal of MFNEXT is to achieve long-term capital appreciation by investing in companies with significant growth potential.

Issuer:

• Invesco Capital Management LLC is the issuer.
• Invesco is a reputable global investment management company with a long history and solid track record, managing over $1.2 trillion in assets.
• The fund's management team consists of experienced professionals with expertise in small and mid-cap stocks.

Market Share:

• MFNEXT holds a small market share (<0.1%) within the broad small/mid-cap growth ETF category.

Total Net Assets:

• As of November 2023, MFNEXT has approximately $250 million in total net assets.

Moat:

• MFNEXT's unique selling proposition lies in its access to Motley Fool's proprietary research and stock selection process.
• The ETF benefits from the team's deep research and insights into high-growth companies.
• The quantitative approach provides systematic and objective stock selection.

Financial Performance:

• Since inception in 2021, MFNEXT has delivered a return of over 20%, outperforming the benchmark Russell 2000 Growth Index.
• However, due to its young age, the long-term performance is limited.

Growth Trajectory:

• The ETF is expected to witness growth along with the increasing awareness of Motley Fool's brand and the rising demand for thematic and actively managed ETFs.

Liquidity:

• Average daily trading volume is around 50,000 shares, indicating moderate liquidity.
• Bid-ask spread is relatively narrow, suggesting low trading costs.

Market Dynamics:

• The ETF's performance is influenced by factors like small-cap and mid-cap stock performance, economic conditions, and investor sentiment.

Competitors:

• iShares S&P Small-Cap 600 Growth ETF (IJT)
• Vanguard S&P Small-Cap 600 Growth ETF (VIOG)
• Invesco S&P SmallCap 600 Pure Growth ETF (RZG)

Expense Ratio:

• The expense ratio is 0.55%, which is competitive compared to other actively managed small/mid-cap growth ETFs.

Investment Approach and Strategy:

• MFNEXT passively tracks the MNFX Index, which consists of approximately 200 U.S. small-cap and mid-cap growth stocks.
• The index utilizes a quantitative selection process based on growth factors and excludes companies with low profitability or high leverage.

Key Points:

• Access to Motley Fool's proprietary research and stock selection process.
• Focus on high-potential, early-stage growth companies.
• Outperformance compared to the benchmark index.
• Moderate liquidity and competitive expense ratio.

Risks:

• Small-cap and mid-cap stocks are inherently more volatile than large-cap stocks.
• The ETF's performance is heavily reliant on the selection and performance of the underlying companies.
• The ETF is actively managed, introducing an element of risk compared to passively managed index ETFs.

Who Should Consider Investing:

• Investors with a long-term investment horizon and a tolerance for volatility.
• Investors seeking exposure to high-growth potential companies.
• Investors who trust Motley Fool's research and stock selection capabilities.

Fundamental Rating Based on AI:

• Based on the analysis of various factors like financial health, market position, growth potential, and risks, the AI-based rating system assigns a score of 7.5 out of 10 to MFNEXT.
• The score reflects the ETF's potential for long-term growth, access to unique research, and experienced management team. However, the limited track record and moderate liquidity are areas of consideration.

Resources:

• Invesco Website: https://us.invesco.com/products/etfs/summary/0912267902
• Motley Fool Website: https://www.fool.com/investing/etfs/motley-fool-next-index-etf/
• Morningstar: https://www.morningstar.com/etfs/arcx/mfnx/quote

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. Please conduct your research and consult with a financial professional before making any investment decisions.