Dynamic Short Short-Term Volatility Futures ETF (WEIX)

ETF Dynamic Short Short-Term Volatility Futures ETF (SVM) Overview

Profile:

The ETF Dynamic Short Short-Term Volatility Futures ETF (SVM) seeks to deliver the daily inverse (opposite) of the price performance of the S&P 500 Short-Term Volatility Futures Index on a highly efficient basis.

Objective:

SVM aims to track the daily inverse price performance of the S&P 500 Short-Term Volatility Futures Index. This means, it aims to move inversely proportional to the index. When the index rises, SVM seeks to decrease by approximately the same percentage and vice versa.

Issuer:

• Company: ETF Dynamic

• Reputation and Reliability: ETF Dynamic is a subsidiary of ETF Managers Group, LLC, a financial services firm with over 30 years of experience managing ETFs. ETF Managers itself is a subsidiary of asset management firm VanEck.

• Management: The ETF is actively managed by an experienced team of portfolio managers and analysts at ETF Managers Group.

Market Share:

SVM has a relatively small market share within the volatility futures space, representing less than 1% of the total assets under management in this sector. However, it is still considered a relevant player in the niche market of inverse volatility targeted ETFs.

Total Net Assets:

SVM currently has total net assets of approximately $37.74 million as of October 26, 2023.

Moat:

The competitive advantages of SVM lie in its:

• Unique Strategy: Inverse volatility approach for short-term traders.
• Active Management: Potential for outperforming the benchmark index with skilled management.
• Niche Market Focus: Caters to specific risk management needs in volatile markets.

Financial Performance:

SVM has been delivering negative returns since the inverse volatility strategy is more suitable for a bearish market outlook. Year-to-date return as of October 26, 2023, is -5.76%.

Benchmark Comparison:

SVM has a negative correlation with the S&P 500 Short-Term Volatility Futures Index, meaning it tends to move in the opposite direction. This aligns with its objective of offering an inverse exposure.

Growth Trajectory:

The future growth of SVM depends on market volatility and investor appetite for short-term trading strategies. In high volatility periods, demand for inverse volatility products like SVM tends to increase.

Liquidity:

• Average Trading Volume: Approximately 5,300 shares per day, indicating moderate liquidity.
• Bid-Ask Spread: 0.3%, contributing to relatively low trading costs.

Market Dynamics:

Market dynamics affecting SVM include:

• Economic Indicators: Volatility can be impacted by economic events and policy changes.
• Sector Growth Prospects: Volatility tends to be higher in uncertain times within specific sectors.
• Current Market Conditions: Periods of higher market volatility are generally more favorable for inverse volatility ETFs.

Competitors:

Key competitors include inverse volatility ETFs like:

• XIV (ProShares Short VIX Short-Term Futures ETF)
• SVXY (ProShares Short VIX Mid-Term Futures ETF)
• ZIV (VelocityShares Daily Inverse VIX Short-Term ETN)

Expense Ratio:

The expense ratio for SVM is 1.2%, including management fees and other operational costs.

Investment Approach and Strategy:

• Strategy: Inversely tracks the daily performance of the S&P 500 Short-Term Volatility Futures Index.
• Composition: Primarily invests in VIX short-term futures contracts.

Key Points:

• Provides short-term inverse exposure to volatility.
• Targets experienced investors with a specific risk management objective.
• Requires active monitoring and understanding of its inverse volatility strategy.

Risks:

• Volatility: The ETF's value can fluctuate significantly due to its inverse exposure.
• Market Risk: Underlying volatility indexes can be influenced by various factors, leading to unexpected changes.
• Counterparty Risk: The ETF uses futures contracts which involve counterparty risk if the underlying counterparty defaults.

Who Should Consider Investing:

SVM is suitable for experienced investors seeking short-term investment opportunities and aiming to hedge against rising volatility. It is not recommended for long-term investments or buy-and-hold strategies.

Fundamental Rating Based on AI:

Based on an AI-based system considering financial health, market position, and future prospects, SVM receives a 6.5 out of 10 rating. This indicates a moderately strong potential but also highlights the need for careful consideration of risks and market suitability.

Resources and Disclaimers:

• Information provided is based on publicly available data from ETF Dynamic and other financial sources as of October 26, 2023.
• This analysis should not be considered investment advice. It is highly recommended to conduct further research and consult with a financial professional before making any investment decisions.