Principal U.S. Small-Cap Multi-Factor ETF (PSC)

Overview

The Principal U.S. Small-Cap Multi-Factor ETF (PSC) seeks to provide investment results that closely correspond, before fees and expenses, to the Nasdaq US Small Cap Select Leaders Index. The fund focuses on U.S. small-cap companies and employs a multi-factor approach, emphasizing value, quality, momentum, and low volatility. It aims to outperform traditional small-cap indices by selecting stocks with desirable factor characteristics.

Reputation and Reliability

Principal Funds is a well-established asset manager with a solid reputation for providing diverse investment solutions. They are known for their systematic and research-driven investment processes.

Management Expertise

Principal Funds has a dedicated team of investment professionals with experience in quantitative analysis and factor-based investing. They have a proven track record of managing factor-based ETFs.

Goal

The primary investment goal is to provide investment results that closely correspond, before fees and expenses, to the Nasdaq US Small Cap Select Leaders Index.

Investment Approach and Strategy

Strategy: The ETF aims to track the Nasdaq US Small Cap Select Leaders Index, which employs a multi-factor selection methodology.

Composition The ETF primarily holds U.S. small-cap stocks selected based on value, quality, momentum, and low volatility factors.

Market Share: Data not available to calculate precise market share.

Total Net Assets (AUM): 609245000

Key Competitors

• iShares Russell 2000 ETF (IWM)
• Vanguard Russell 2000 ETF (VTWO)
• Schwab Fundamental U.S. Small Company Index ETF (FNDA)

Competitive Landscape

The small-cap ETF market is highly competitive. PSC differentiates itself with its multi-factor approach, targeting specific characteristics. IWM and VTWO offer broad exposure to the Russell 2000 index, while FNDA uses a fundamental indexing strategy. PSC's factor focus may provide enhanced returns but also introduces potential tracking error compared to broad-based indices.

Historical Performance: Historical performance data not available in structured format.

Benchmark Comparison: Performance compared to the Nasdaq US Small Cap Select Leaders Index, data not available in structured format.

Expense Ratio: 0.23

Average Trading Volume

The ETF exhibits moderate liquidity, evidenced by an average trading volume that allows for relatively easy entry and exit for typical retail investors.

Bid-Ask Spread

The bid-ask spread is generally competitive, reflecting adequate liquidity and efficient trading dynamics.

Market Environment Factors

Economic growth, interest rate movements, and investor sentiment toward small-cap stocks influence PSC. Strong economic growth typically benefits small-cap companies, while rising interest rates can negatively impact their valuations. Sector-specific trends within the small-cap universe also play a role.

Growth Trajectory

The ETF's growth trajectory is tied to the performance of the Nasdaq US Small Cap Select Leaders Index and the effectiveness of its multi-factor selection process. Changes in the index methodology or market conditions can affect its holdings and performance.

Competitive Edge

PSC's competitive advantage lies in its multi-factor approach, which aims to select small-cap stocks with desirable value, quality, momentum, and low volatility characteristics. This strategy may lead to outperformance compared to traditional market-cap-weighted small-cap indices. The fund's systematic approach and experienced management team also contribute to its competitive edge. However, the reliance on specific factors introduces the risk of underperformance if those factors are out of favor.

Volatility

Historical volatility data is not available in structured format.

Market Risk

The ETF is subject to market risk associated with small-cap stocks, which are generally more volatile than large-cap stocks. Economic downturns, changes in investor sentiment, and sector-specific risks can negatively impact the ETF's performance.

Ideal Investor Profile

The ideal investor is one who seeks exposure to U.S. small-cap stocks and believes in the potential for outperformance through a multi-factor investment strategy. Investors should be comfortable with the volatility associated with small-cap investing.

Market Risk

The ETF is suitable for long-term investors who are seeking to enhance returns in their small-cap allocation and are willing to accept moderate levels of risk.

The Principal U.S. Small-Cap Multi-Factor ETF (PSC) offers exposure to U.S. small-cap stocks selected based on value, quality, momentum, and low volatility factors, aiming to outperform traditional small-cap benchmarks. Its multi-factor approach and experienced management team are designed to deliver superior results. However, the reliance on specific factors introduces the risk of underperformance during periods when those factors are out of favor. Investors should consider their risk tolerance and investment objectives before investing in PSC.

Data Sources:

• Principal Funds Website
• ETF.com
• Bloomberg
• Nasdaq

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investors should consult with a qualified financial advisor before making any investment decisions. Market share and performance data are subject to change.