Virtus Newfleet ABS/MBS ETF (VABS)

ETF Virtus Newfleet ABS/MBS ETF (NFAM): Overview

Profile:

• Focus: NFAM invests primarily in asset-backed securities (ABS) and mortgage-backed securities (MBS) issued by U.S. government agencies and government-sponsored enterprises.
• Asset Allocation: 100% Fixed Income
• Investment Strategy: Actively managed, seeking total return through a combination of current income and capital appreciation.

Objective:

• To provide investors with high current income and capital appreciation potential through investments in ABS and MBS.

Issuer:

• Company: Virtus ETF Trust
• Reputation and Reliability: Virtus ETF Trust is a subsidiary of Virtus Investment Partners, Inc., a global investment management firm with over $180 billion in assets under management as of January 31, 2023. Virtus has a strong reputation for expertise in fixed income investing.
• Management: The portfolio managers are experienced professionals with deep knowledge of the ABS and MBS markets.

Market Share:

• NFAM has a market share of approximately 0.1% in the ABS/MBS ETF category.

Total Net Assets:

• As of January 31, 2023, NFAM had $43.2 million in total net assets.

Moat:

• Active management: The ETF benefits from the active management expertise of Virtus' fixed income specialists, who can navigate market changes and select attractive investments.
• Focus on high-quality assets: NFAM primarily invests in investment-grade ABS and MBS, which offer a balance of risk and return.
• High income potential: The ETF's focus on income-generating assets provides a dependable source of income for investors.

Financial Performance:

• Historical Track Record: NFAM has a short track record, having launched in November 2022. Since inception, it has achieved a total return of 2.64% as of January 31, 2023.
• Benchmark Comparison: NFAM has outperformed the Bloomberg U.S. MBS Index, its benchmark, by 0.54% since inception.

Growth Trajectory:

• The demand for income-generating fixed income investments is expected to continue, positively impacting NFAM's growth prospects.
• The ETF's focus on actively managed investments allows it to adapt to changing market conditions and potentially outperform its benchmark.

Liquidity:

• Average Trading Volume: NFAM has an average daily trading volume of approximately 2,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically around 0.05%, indicating reasonable liquidity.

Market Dynamics:

• Interest rate fluctuations and economic conditions significantly impact the performance of ABS and MBS.
• Regulatory changes and prepayment risk can also affect the ETF's performance.

Competitors:

• iShares MBS ETF (MBB) - Market share: 42.9%
• SPDR Bloomberg Barclays Mortgage Backed Bond ETF (MBG) - Market share: 26.8%
• VanEck Merk Mortgage ETF (MORT) - Market share: 10.1%

Expense Ratio:

• The expense ratio is 0.35%, which is relatively low compared to other ABS/MBS ETFs.

Investment Approach and Strategy:

• Strategy: Actively managed, seeking high current income and capital appreciation.
• Composition: Primarily invests in ABS and MBS issued by U.S. government agencies and government-sponsored enterprises.

Key Points:

• Actively managed, seeking high current income and capital appreciation.
• Focuses on high-quality, investment-grade ABS and MBS.
• Relatively low expense ratio.
• Experienced management team with a strong track record.

Risks:

• Interest rate risk: Rising interest rates can negatively impact the value of ABS and MBS.
• Credit risk: The creditworthiness of the underlying borrowers can impact the value of the securities.
• Prepayment risk: Early repayment of the underlying mortgages can reduce the ETF's income.
• Market risk: General market fluctuations can affect the ETF's performance.

Who Should Consider Investing:

• Investors seeking high current income and capital appreciation potential.
• Investors with a low to moderate risk tolerance.
• Investors who believe in the continued strength of the U.S. housing market.

Fundamental Rating Based on AI:

• 7.5/10
• Justification: NFAM benefits from active management expertise, a focus on high-quality assets, and a competitive expense ratio. However, its short track record and limited market share present some uncertainty. Overall, the ETF offers a compelling option for income-oriented investors seeking exposure to the ABS and MBS markets.

Resources and Disclaimer:

• Sources:
  • Virtus ETF Trust Website
  • ETF.com
  • Bloomberg
  • Morningstar
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.