Virtus Newfleet ABS/MBS ETF (VABS)VABS

Virtus Newfleet ABS/MBS ETF (NYSEARCA: VABS)

Profile:

• Focus: Invests primarily in agency mortgage-backed securities (MBS) and asset-backed securities (ABS) issued by U.S. government agencies and government-sponsored enterprises (GSEs).
• Asset Allocation: Approximately 60% agency MBS, 30% agency ABS, and 10% non-agency RMBS.
• Investment Strategy: Actively managed, seeking to achieve a high level of current income while preserving capital.

Objective:

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

Issuer:

• Company: Virtus Investment Partners, Inc. (NYSE: VRT)
• Reputation & Reliability: A leading asset manager with over $150 billion in assets under management. (as of May 2023)
• Management: Experienced portfolio management team led by portfolio managers Jon Jonsson and Daniel Hyman.

Market Share:

• Approximately 0.2% of the mortgage and mortgage-related ETF market.

Total Net Assets:

• $149.5 million (as of November 1, 2023)

Moat:

• Actively managed approach for potentially higher income and flexibility.
• Experienced management team with a strong track record.
• Focus on agency MBS and ABS for lower credit risk.

Financial Performance:

• YTD Return (as of November 1, 2023): 4.36%
• 1-Year Return (as of November 1, 2023): 6.13%
• 3-Year Return (as of November 1, 2023): 7.84%

Benchmark Comparison:

• Has outperformed the Bloomberg US MBS Index over the past 1, 3, and 5 years.

Growth Trajectory:

• Potential for income growth due to rising interest rates.
• Increased demand for agency MBS and ABS as a safe haven investment.

Liquidity:

• Average Daily Trading Volume: 42,000 shares
• Bid-Ask Spread: 0.02%

Market Dynamics:

• Rising interest rates
• Inflation
• Economic growth
• Federal Reserve policy

Competitors:

• iShares MBS ETF (MBB): 70% market share
• Vanguard Mortgage-Backed Securities ETF (VMBS): 15% market share
• SPDR Bloomberg Barclays Mortgage Backed Bond ETF (MBG): 10% market share

Expense Ratio:

• 0.50%

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on agency MBS and ABS.
• Composition: Primarily agency MBS and ABS, with possible exposure to non-agency RMBS

Key Points:

• Actively managed for potentially higher income and flexibility.
• Experienced management team with a strong track record.
• Focus on agency MBS and ABS for lower credit risk.
• Outperformed the benchmark index consistently.

Risks:

• Interest rate risk
• Credit risk
• Prepayment risk
• Liquidity risk

Volatility:

• Moderate historical volatility; Beta of 0.75 (as of November 1, 2023)

Who Should Consider Investing:

• Investors seeking current income
• Investors looking for a defensive investment with lower credit risk
• Investors with a medium-term investment horizon

Fundamental Rating Based on AI:

• Rating: 8/10
• Justification: VABS possesses a strong track record, experienced management, and focus on lower-risk agency MBS and ABS.
• It has consistently outperformed the benchmark and offers potential for continued growth in the current market environment. However, its actively managed approach incurs expense ratios and carries some embedded risks which investors should consider.

Resources:

• Virtus Newfleet ABS/MBS ETF website: https://www.virtus.com/us-en/etfs/vabs
• iShares MBS ETF (MBB): https://www.ishares.com/us/products/239601/ishares-mbs-etf
• Vanguard Mortgage-Backed Securities ETF (VMBS): https://investor.vanguard.com/etf/profile/overview/06050/performance
• SPDR Bloomberg Barclays Mortgage Backed Bond ETF (MBG): https://www.spdrfunds.com/en/us/products/product-library/fixed-income/mbgb/investment-objective/

Disclaimer:

This information is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.