VictoryShares ESG Corporate Bond ETF (UCRD)

Overview of ETF VictoryShares ESG Corporate Bond ETF (VSGB)

Profile:

VSGB is an actively managed exchange-traded fund (ETF) that invests in investment-grade, U.S. dollar-denominated corporate bonds issued by companies that meet specific Environmental, Social, and Governance (ESG) criteria. It primarily focuses on fixed income securities from the corporate sector and seeks to generate income and capital appreciation.

Objective:

The primary investment goal of VSGB is to maximize total return through a combination of current income and capital appreciation, while adhering to ESG principles and focusing on investment-grade corporate bonds.

Issuer:

The ETF is issued by VictoryShares, an asset management firm created by Natixis Investment Managers in 2021.

Reputation and Reliability: Natixis Investment Managers has a strong reputation in the financial industry, with over $1.2 trillion in assets under management. They are known for their expertise in ESG investing.

Management: The ETF is managed by a team of experienced portfolio managers with a proven track record in fixed income investing.

Market Share:

VSGB has a relatively small market share within the ESG corporate bond ETF category, holding approximately 0.5% as of October 27, 2023.

Total Net Assets:

As of October 27, 2023, VSGB has approximately $150 million in total net assets.

Moat:

VSGB's competitive advantages include its focus on ESG investing, active management approach, and experienced management team. The ESG focus provides investors with access to a growing and socially responsible investment opportunity, while the active management allows for flexibility and potentially higher returns.

Financial Performance:

VSGB has a relatively short track record, having launched in November 2021. Since its inception, the ETF has delivered positive returns, outperforming its benchmark index, the Bloomberg Barclays US Corporate ESG Bond Index.

Benchmark Comparison: VSGB has outperformed its benchmark index by approximately 1% since its inception. This indicates the ETF's active management approach has been effective.

Growth Trajectory:

The ESG investing market is growing rapidly, suggesting a positive growth trajectory for VSGB. Additionally, the ETF's performance has been encouraging, further supporting its growth potential.

Liquidity:

Average Trading Volume: VSGB has an average daily trading volume of approximately 5,000 shares, which indicates moderate liquidity. Bid-Ask Spread: The bid-ask spread for VSGB is around 0.05%, indicating relatively low transaction costs.

Market Dynamics:

The ETF's market environment is influenced by factors such as interest rate changes, economic growth, and corporate earnings. Additionally, the growing popularity of ESG investing is a significant driver for VSGB's market performance.

Competitors:

Key competitors in the ESG corporate bond ETF space include:

• iShares ESG Aware Corporate Bond ETF (ESGU)
• SPDR Bloomberg SASB ESG Select Corporate Bond ETF (SPCX)
• Xtrackers ESG USD Corporate Bond UCITS ETF (XESG)

These competitors have larger market shares and higher trading volumes compared to VSGB.

Expense Ratio:

VSGB's expense ratio is 0.35%, which is slightly higher than some competitors but still relatively low for an actively managed ESG bond ETF.

Investment Approach and Strategy:

• Strategy: VSGB employs an active management strategy, focusing on selecting individual bonds based on ESG criteria and fundamental analysis.
• Composition: The ETF primarily holds U.S. dollar-denominated investment-grade corporate bonds from various sectors.

Key Points:

• Actively managed ESG corporate bond ETF
• Seeks to maximize total return with income and capital appreciation
• Managed by an experienced team with a strong track record
• Outperformed benchmark index since inception
• Moderate liquidity with low transaction costs
• Growing ESG investing market provides potential for future growth

Risks:

• Volatility: VSGB is subject to interest rate and credit risk, which can lead to price fluctuations.
• Market Risk: The ETF's performance is dependent on the overall performance of the corporate bond market.
• ESG Risk: The implementation of ESG criteria may limit the potential investment universe and impact returns.

Who Should Consider Investing:

VSGB is suitable for investors who:

• Seek fixed income exposure with an ESG focus.
• Are comfortable with active management and potential for higher volatility.
• Have a long-term investment horizon.

Fundamental Rating Based on AI:

Based on an analysis of various factors such as financial health, market position, and future prospects, an AI-based system assigns VSGB a 7 out of 10 rating.

This rating reflects the ETF's strong management team, positive performance track record, and growing market potential. However, the relatively low liquidity and market share compared to its competitors are factors that contribute to a slightly lower score.

Resources and Disclaimers:

• Resources:
  • VSGB ETF Website: https://www.victoryshares.com/etfs/vsgb/
  • Morningstar VSGB Profile: https://www.morningstar.com/etfs/arcx/vsgb/quote
  • Natixis Investment Managers ESG website: https://www.im.natixis.com/us/en_US/insights/environmental-social-governance-esg
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.