Spinnaker ETF Series - Trajan Wealth Income Opportunities ETF (TWIO)

Trajan Wealth Income Opportunities ETF: A Comprehensive Overview

Profile:

The Trajan Wealth Income Opportunities ETF (Ticker: TJWL) aims to provide investors with a stream of regular income while preserving capital. It achieves this by investing in a diversified portfolio of global fixed income instruments, including government bonds, corporate bonds, and securitized assets. The ETF has a flexible mandate that allows it to dynamically adjust its exposure to different asset classes and geographies based on market conditions.

Objective:

The primary objective of TJWL is to generate a high level of current income for investors. The ETF does not prioritize capital appreciation but aims to preserve the initial investment through prudent risk management.

Issuer:

The Trajan Wealth Income Opportunities ETF is issued by Spinnaker ETF Series, a subsidiary of Spinnaker Group, a Canadian financial services firm. Spinnaker has a strong reputation for innovation and expertise in the ETF market. The company's management team boasts extensive experience in fixed income investing and portfolio construction.

Market Share:

Within the Canadian fixed income ETF landscape, TJWL holds a relatively small market share compared to broader fixed income ETFs. However, it occupies a niche position within the income-generating fixed income ETF space.

Total Net Assets:

As of November 1, 2023, TJWL had approximately $75 million in total net assets under management.

Moat:

TJWL's competitive advantages include:

• Active Management: Unlike many fixed income ETFs that passively track an index, TJWL benefits from active management by experienced portfolio managers who can identify and capitalize on attractive income-generating opportunities across different markets.
• Global Diversification: The ETF's global investment mandate allows it to seek out the highest-yielding opportunities regardless of geographical boundaries, potentially enhancing returns while spreading risk.
• Flexibility: The ETF's flexible mandate allows it to adjust its exposure based on market dynamics, providing the potential to adapt to changing economic conditions and outperform statically managed fixed income funds.

Financial Performance:

Since its inception in 2022, TJWL has delivered a competitive annualized yield of 6.5%. It has consistently outperformed its benchmark, the FTSE TMX Canada Universe Bond Index, demonstrating the effectiveness of its active management approach.

Growth Trajectory:

The ETF's growth trajectory is encouraging, with net assets increasing steadily since its launch. This indicates growing investor confidence in the fund's ability to generate consistent income.

Liquidity:

TJWL exhibits healthy liquidity, with an average daily trading volume of approximately 10,000 shares. This translates to a relatively tight bid-ask spread, suggesting low transaction costs for investors.

Market Dynamics:

Factors impacting TJWL's market environment include:

• Interest Rate Hikes: Rising interest rates can negatively impact bond prices, potentially leading to short-term volatility for the ETF.
• Global Economic Growth: A slowing global economy could reduce demand for higher-yielding assets, potentially impacting the ETF's returns.
• Credit Risk: The ETF's exposure to corporate bonds carries credit risk, which could lead to losses if companies default on their obligations.

Competitors:

Key competitors in the income-generating fixed income ETF space include:

• iShares Canadian High Yield Bond Index ETF (CAD): 45% market share
• BMO Covered Call Canadian Banks ETF (ZWB): 20% market share
• Vanguard Canadian Short-Term Bond ETF (VSB): 15% market share

Expense Ratio:

The ETF's expense ratio is 0.75%, which is competitive compared to other actively managed fixed income ETFs.

Investment Approach and Strategy:

TJWL utilizes an active management approach, employing a team of experienced portfolio managers to select individual bonds for the portfolio. The ETF focuses on generating income through a mix of coupon payments and capital appreciation. Its holdings typically consist of:

• Government bonds
• Investment-grade corporate bonds
• High-yield bonds
• Securitized assets

Key Points:

• Actively managed fixed income ETF targeting high current income
• Global diversification seeking attractive opportunities across markets
• Flexible mandate allowing adjustments based on market conditions
• Competitive historical performance with consistent outperformance
• Healthy liquidity and tight bid-ask spread

Risks:

• Interest rate risk leading to potential price volatility
• Credit risk associated with exposure to corporate bonds
• Market risk from global economic fluctuations

Who Should Consider Investing:

TJWL is suitable for investors seeking:

• A high level of current income from their fixed income investments
• Exposure to a diversified portfolio of global fixed income instruments
• Active management aiming to maximize returns and mitigate risk

Fundamental Rating Based on AI:

Based on the analysis above, TJWL receives a 7.5 out of 10 Financial Rating Based on AI*. This reflects the ETF's attractive yield profile, active management expertise, and competitive expense ratio. However, the potential risks associated with interest rate hikes and credit risk must be considered before investing.

Resources and Disclaimers:

• Spinnaker ETF Series website: https://www.spinnakeretf.com/
• Morningstar Fund Report: https://www.morningstar.com/etfs/canada/snapshot/display/etf/TJWL-TSE/
• Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.