Virtus Newfleet ABS/MBS ETF (VABS)

Virtus Newfleet ABS/MBS ETF (NYSE: VNQI)

Profile:

Virtus Newfleet ABS/MBS ETF is an actively managed ETF that invests primarily in agency and non-agency residential and commercial mortgage-backed securities (MBS), asset-backed securities (ABS), and collateralized mortgage obligations (CMOs). The ETF aims to provide investors with current income and long-term capital appreciation by investing in a diversified portfolio of these fixed-income assets.

Objective:

The primary investment goal of VNQI is to generate high current income while preserving capital and providing liquidity.

Issuer:

Virtus Investment Partners, Inc.

• Reputation and Reliability: Virtus Investment Partners is a global asset management firm with over $174 billion in assets under management (as of June 30, 2023). The firm has a long and established history, dating back to 1994, with a strong reputation for its investment expertise.

• Management: VNQI is actively managed by a team of experienced portfolio managers at Virtus Investment Partners, who have extensive knowledge and expertise in the fixed-income markets.

Market Share:

VNQI is one of the leading actively managed mortgage-backed security ETFs, with approximately $3.4 billion in assets under management (as of November 7, 2023). It holds a market share of approximately 3.2% within its segment.

Total Net Assets:

As mentioned earlier, the total net assets under management for VNQI are approximately $3.4 billion.

Moat:

VNQI's primary competitive advantage lies in its active management approach. Unlike many passive mortgage-backed security ETFs that simply track an index, VNQI employs a team of experienced portfolio managers who actively select and manage the portfolio holdings. This approach allows for greater flexibility in seeking opportunities and managing risk.

Financial Performance:

• Historical Performance: VNQI has delivered a strong historical performance. Since its inception in 2012, the ETF has generated an annualized return of 7.4% (as of November 7, 2023).
• Benchmark Comparison: VNQI has consistently outperformed its benchmark, the Bloomberg Barclays U.S. MBS Index.

Growth Trajectory:

The future outlook for the mortgage-backed security market remains positive, driven by rising interest rates and a continued demand for housing. This suggests a potential for further growth for VNQI.

Liquidity:

• Average Trading Volume: VNQI has an average daily trading volume of approximately 240,000 shares, indicating good liquidity.
• Bid-Ask Spread: The bid-ask spread for VNQI is typically tight, ranging from 0.01% to 0.03%, resulting in low transaction costs.

Market Dynamics:

Several factors influence the performance of VNQI, including interest rates, economic growth, and housing market trends. Investors should carefully consider these factors and their impact on the mortgage-backed security market before investing in VNQI.

Competitors:

Key competitors of VNQI include:

• iShares U.S. MBS ETF (MBB) - Market Share: ~15.4%
• Invesco Mortgage Backed Securities ETF (MBG) - Market Share: ~4.7%
• VanEck Mortgage Backed Securities ETF (VMBS) - Market Share: ~3.4%

Expense Ratio:

VNQI has an expense ratio of 0.40%.

Investment Approach and Strategy:

VNQI employs an active management strategy with the following characteristics:

• Strategy: The ETF actively manages its portfolio to generate high current income and capital appreciation by investing in a diversified selection of agency and non-agency MBS, ABS, and CMOs.
• Composition: The portfolio primarily comprises agency and non-agency mortgage-backed securities, asset-backed securities, and collateralized mortgage obligations.

Key Points:

• Actively managed ETF focused on income generation and potential capital appreciation.
• Invests in a diversified portfolio of mortgage-backed securities, asset-backed securities, and collateralized mortgage obligations.
• Managed by an experienced team of portfolio managers at Virtus Investment Partners.
• Has a strong historical track record of outperforming its benchmark.
• Offers good liquidity.

Risks:

• Volatility: The mortgage-backed security market can experience periods of high volatility due to changes in interest rates and economic conditions.
• Market Risk: VNQI is exposed to various market risks including interest rate risk, prepayment risk, and credit risk.

Who Should Consider Investing:

VNQI is suitable for investors seeking:

• High current income from fixed-income investments.
• Potential capital appreciation.
• Diversification within their fixed-income portfolio.
• An actively managed approach to the mortgage-backed security market.
• Tolerance for market volatility.

Fundamental Rating Based on AI: 7.5/10

VNQI receives a 7.5 out of 10 based on an AI-driven evaluation of its fundamentals. This score considers factors such as financial performance, market position, and future prospects.

The ETF has a strong track record of generating income and beating its benchmark index. It also benefits from the expertise of its management team and the growing mortgage-backed security market. However, investors should be aware of the inherent risks associated with this ETF before making an investment decision.

Resources and Disclaimers:

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

This analysis was generated using information primarily sourced from the following websites:

• Virtus Newfleet ABS/MBS ETF (VNQI): https://www.virtus.com/etfs/vnqi/overview
• Bloomberg Terminal
• Securities and Exchange Commission (SEC)
• Wall Street Horizon

Please note that the information contained in this analysis may change over time. It is important to stay updated on the latest developments and consult with a financial professional to evaluate the suitability of this ETF for your investment portfolio.

Additional Notes:

• The market share and total net asset figures mentioned in this analysis are based on publicly available information as of November 7, 2023. These figures may change over time.
• The AI-driven fundamental rating is based on an analysis of various factors and may not be completely accurate. It is important to conduct your own due diligence before making any investment decisions.