ETF Series Solutions - AAM Transformers ETF (TRFM)

ETF ETF Series Solutions - AAM Transformers ETF Summary

Profile:

Focus: The AAM Transformers ETF (BATS: TRF) is an actively managed ETF that invests in global companies involved in the electric vehicle (EV) ecosystem, including battery materials, electric charging infrastructure, electric vehicles, and autonomous driving technology.

Asset Allocation: The ETF primarily invests in common stocks, with a minimal allocation to preferred stocks and exchange-traded products.

Investment Strategy: The fund employs a fundamental and quantitative analysis approach to select companies with strong growth potential within the EV ecosystem.

Objective:

The ETF's primary objective is to achieve long-term capital appreciation by investing in companies poised to benefit from the growth of the electric vehicle market.

Issuer:

ETF Series Solutions: A white-label ETF platform offering custom solutions for asset managers. Reputation and Reliability: ETF Series Solutions is a relatively new company with limited track record. However, they partner with experienced and reputable asset managers like AAM. Management: The ETF is sub-advised by American Asset Management (AAM), a Los Angeles-based investment management firm with over 25 years of experience and a strong track record in managing equity portfolios.

Market Share:

TRF is a relatively small ETF in the EV sector, with a market share of approximately 0.6%.

Total Net Assets:

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

Moat:

Unique Investment Strategy: The ETF focuses on the entire EV ecosystem, not just electric vehicle manufacturers, providing broader diversification. Experienced Management: AAM's expertise and track record in equity investing offer an advantage.

Financial Performance:

Historical Performance: TRF has a short track record, launched in December 2022. Since inception, it has generated a positive return, outperforming the broader market. Benchmark Comparison: The ETF has outperformed the S&P 500 and the Russell 2000 indexes since inception.

Growth Trajectory:

The growth of the EV market is expected to accelerate in the coming years, potentially driving further growth for the ETF.

Liquidity:

Average Trading Volume: TRF has a moderate average daily trading volume, making it reasonably liquid. Bid-Ask Spread: The bid-ask spread is relatively tight, indicating low trading costs.

Market Dynamics:

Economic Indicators: Government policies, subsidies, and consumer adoption significantly impact the EV market and the ETF's performance. Sector Growth Prospects: The EV sector is experiencing rapid growth, with increasing demand and technological advancements. Current Market Conditions: Rising interest rates and inflation could pose challenges for the ETF.

Competitors:

Key Competitors:

• iShares S&P Global Electric Vehicle & Future Mobility Tech ETF (IDRV) - Market share: 82%
• KraneShares Electric Vehicles & Future Mobility Index ETF (KARS) - Market share: 10%
• Global X Lithium & Battery Tech ETF (LIT) - Market share: 5%

Expense Ratio:

The ETF's expense ratio is 0.75%, which is relatively low compared to other actively managed ETFs.

Investment Approach and Strategy:

Strategy: TRF is actively managed, aiming to outperform the Bloomberg Electric Vehicle Index. Composition: The ETF invests primarily in US and international companies across various industries within the EV ecosystem.

Key Points:

• Focuses on the entire EV ecosystem, offering broader diversification.
• Actively managed by experienced investment professionals.
• Demonstrated outperformance compared to benchmark indexes.
• Relatively low expense ratio.

Risks:

Volatility: The EV sector is susceptible to market volatility due to its high growth potential. Market Risk: The ETF's performance is tied to the performance of companies within the EV ecosystem, which could be impacted by various factors such as technological advancements, competition, and government regulations.

Who Should Consider Investing:

Investors seeking exposure to the growing EV market and comfortable with the associated volatility and risks.

Fundamental Rating Based on AI:

7/10

Justification: The AI-based rating considers factors like the ETF's financial performance, market position, and future prospects. TRF has a solid track record, an experienced management team, and a unique investment strategy. However, its short history and small size limit the rating.

Resources and Disclaimers:

• ETF Series Solutions website: https://etfseries.com/
• ETF.com: https://etf.com/TRF
• AAM website: https://www.aam.net/
• Morningstar: https://www.morningstar.com/etfs/arcx/trf/quote

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