AllianzIM U.S. Large Cap Buffer20 Apr ETF (APRW)

Overview

The AllianzIM U.S. Large Cap Buffer20 Apr ETF (NYSEARCA: AZBA) seeks to provide returns that match the S&P 500 Price Return Index up to a predetermined upside cap, while providing a buffer against the first 20% of S&P 500 Price Return Index losses, over a specific one-year period. The ETF utilizes flexible exchange options to achieve its investment objective. It does not directly track the S&P 500 Index. It primarily holds FLEX Options.

Reputation and Reliability

Allianz Investment Management LLC is a well-established asset manager, though their ETF offerings are relatively new compared to industry giants. Allianz has a strong reputation in insurance and asset management globally.

Management Expertise

Allianz Investment Management has experienced portfolio managers and option strategy specialists.

Goal

To provide investment returns that correspond to the S&P 500 Price Return Index up to a predetermined upside cap, while buffering investors against the first 20% of losses of the S&P 500 Price Return Index, over a one-year period.

Investment Approach and Strategy

Strategy: The ETF uses a 'buffer' strategy employing Flexible Exchange (FLEX) Options referencing the S&P 500 Price Return Index to provide a downside buffer and an upside cap.

Composition Primarily FLEX Options on the S&P 500 Price Return Index. Cash and other short-term investments may also be held.

Market Share: AZBA holds a niche market share in the defined outcome ETF space.

Total Net Assets (AUM): 104200000

Key Competitors

• Innovator U.S. Equity Buffer ETF (BAPR)
• Simplify US Equity PLUS Downside Convexity ETF (SPXB)
• FT Cboe Vest U.S. Equity Deep Buffer ETF (DAPR)

Competitive Landscape

The defined outcome ETF market is competitive, with Innovator ETFs holding a significant share. AZBA competes on its buffer level (20%) and specific outcome period (April). A key advantage of AZBA is Allianz's global brand, but it faces challenges in gaining market share due to Innovator's first-mover advantage and Simplify's high conviction strategy. Allianz can try to target more advisor networks.

Historical Performance: Historical performance varies due to the defined outcome period and capped upside. Performance should be reviewed relative to the S&P 500 with consideration for the buffer and cap.

Benchmark Comparison: The benchmark for performance comparison should be the S&P 500 Price Return Index, accounting for the 20% buffer and defined upside cap.

Expense Ratio: 0.79

Average Trading Volume

AZBA exhibits moderate liquidity based on its average daily trading volume, which may impact transaction costs.

Bid-Ask Spread

The bid-ask spread is variable depending on market conditions and trading volume, and is an important trading cost consideration.

Market Environment Factors

Economic indicators like interest rates, inflation, and market volatility influence the value of the underlying S&P 500 index and consequently AZBA's FLEX Options contracts. Investor sentiment and market corrections directly affect the performance of AZBA.

Growth Trajectory

Growth depends on the acceptance of defined outcome ETFs and Allianz's ability to market the fund to investors seeking downside protection. Changes to strategy or holdings may reflect adjustments in option positioning.

Competitive Edge

AZBA's competitive edge lies in its defined outcome strategy with a pre-set 20% buffer and an April reset, offering investors a structured approach to risk management. Allianz's brand name may attract some investors. A focused option strategy may lead to efficient buffering and cap implementation. However, defined outcome ETFs can be complex for retail investors.

Volatility

Volatility is reduced due to the buffer, but returns are also capped. Option strategies involve inherent complexities.

Market Risk

The primary market risk is the performance of the S&P 500 Price Return Index. The ETF is also exposed to counterparty risk associated with FLEX Options.

Ideal Investor Profile

The ideal investor is risk-averse, seeking downside protection on S&P 500 exposure with a willingness to accept a capped upside. This includes retirees, or those nearing retirement, who want to maintain equity exposure while limiting losses.

Market Risk

Suitable for long-term investors with a specific time horizon seeking defined downside protection.

The AllianzIM U.S. Large Cap Buffer20 Apr ETF (AZBA) offers investors a defined outcome investment strategy tied to the S&P 500, buffering against the first 20% of losses. It employs FLEX Options to achieve this, with a specified upside cap and reset every April. This structured approach appeals to risk-averse investors willing to trade potential gains for downside protection. Investors should carefully consider the implications of the buffer, the cap, and the expense ratio when evaluating AZBA.

Data Sources:

• AllianzIM ETF Website
• ETF.com
• Morningstar

Disclaimers:

The data and analysis provided are for informational purposes only and do not constitute financial advice. Investors should conduct their own due diligence before making any investment decisions.