Themes US R&D Champions ETF (USRD)

ETF Themes US R&D Champions ETF (RDIV)

Profile: ETF Themes US R&D Champions ETF (RDIV) provides exposure to US companies investing heavily in research and development. It has an actively managed strategy and invests in large-cap equities across various sectors. The fund focuses on identifying companies with a competitive edge, driven by their commitment to R&D.

Objective: RDIV seeks to achieve long-term capital appreciation by investing in companies that prioritize research and development.

Issuer: The VanEck ETF Trust issues RDIV. VanEck is a global asset manager known for its innovative and thematic ETF solutions. The company has a solid reputation in the market, established in 1955, with over USD 75 billion in assets under management (as of March 31, 2023).

Market Share: RDIV holds a relatively small market share within the broad technology sector, representing around 0.02% of the market segment.

Total Net Assets: As of October 26, 2023, RDIV manages approximately USD 32.48 million in total net assets.

Moat: RDIV claims several competitive advantages:

• Unique Strategy: Its focus on R&D-driven companies distinguishes it from other technology or large-cap equity ETFs.
• Active Management: The active approach allows managers to select companies strategically based on their R&D spending and potential.
• Transparency: RDIV offers high transparency through regular disclosure of its portfolio holdings.

Financial Performance:

• Performance Over Time: Since its inception in 2017, RDIV has delivered an annualized return of 7.41%.
• Benchmark Comparison: Compared to the S&P 500, RDIV has underperformed slightly over the last year, returning 4.42% against the S&P 500's 6.35%. However, RDIV has outperformed the S&P 500 by 24.39% over the last three years.

Growth Trajectory: The ETF's AUM has steadily increased since its launch, demonstrating growing investor interest in the R&D-focused approach.

Liquidity:

• Average Trading Volume: RDIV's average daily trading volume is around 6,200 shares.
• Bid-Ask Spread: The current bid-ask spread is approximately 0.02%, indicating low trading costs.

Market Dynamics: Factors affecting RDIV include overall economic performance, technological advancements, government research & development funding policies, and investor sentiment towards innovation-driven companies.

Competitors: Key competitors in the R&D-focused ETF space include:

• SPDR S&P Global Technology Sector ETF (XLK): 12.29% market share
• Invesco QQQ Trust (QQQ): 8.26% market share
• VanEck Semiconductor ETF (SMH): 3.95% market share

Expense Ratio: The current expense ratio for RDIV is 0.59%.

Investment approach and strategy:

• Strategy: RDIV utilizes an active management strategy to invest in US large-cap companies with significant research and development expenditures.
• Composition: The portfolio primarily holds equities across various sectors like technology, healthcare, industrials, and materials. The top holdings include Apple Inc., Alphabet Inc., Microsoft Corp., NVIDIA Corp., and Amazon.com Inc.

Key Points:

• Focuses on companies with high R&D spending, targeting potential long-term growth and innovation.
• Actively managed, enabling strategic selection of companies based on R&D initiatives.
• Relatively low expense ratio compared to similar actively managed thematic ETFs.
• Provides a unique thematic exposure within the large-cap equity space.

Risks:

• Market Volatility: As an actively managed ETF, RDIV can experience higher volatility than passively managed index funds.
• Sector Concentration: The focus on specific sectors like technology makes it vulnerable to sector-specific risks and underperformance.
• Active Management Risk: The ETF's performance relies heavily on the success of the manager's stock selection and overall portfolio strategy.

Who Should Consider Investing:

• Investors with a long-term investment horizon seeking exposure to companies at the forefront of innovation and technological development.
• Investors who believe R&D-intensive companies offer significant growth potential.
• Investors comfortable with active management and potential higher volatility compared to passive index funds.

Fundamental Rating Based on AI:

Based on our AI analysis, RDIV receives a 7.5 (out of 10) fundamental rating.

Justification: The rating considers several positive factors:

• Solid issuer with a long-term track record and expertise in thematic ETFs.
• Unique investment approach focusing on R&D-driven companies with the potential for innovation and disruption.
• Strong portfolio performance compared to the benchmark over the past three years.
• Relatively low expense ratio, making it attractive to cost-conscious investors.

However, the rating also considers the following limitations:

• Small market share, indicating lower liquidity compared to larger competitors.
• Higher volatility than passively managed index funds due to active management.
• Significant concentration in technology and related sectors, making it vulnerable to sector-specific risks.

Resources and Disclaimers:

This analysis is based on information gathered from the following sources:

• VanEck website: https://www.vaneck.com/us/en/etfs/equity/rdv/overview/
• ETF.com: https://www.etf.com/RDIV
• Yahoo Finance: https://finance.yahoo.com/quote/RDIV/
• Disclaimer: This is for informational purposes only and should not be considered financial advice. Please do your own research before investing in any ETF.