VictoryShares US Small Mid Cap Value Momentum ETF (USVM)

Overview

The VictoryShares US Small Mid Cap Value Momentum ETF (USVM) seeks to provide investment results that correspond to the performance of the Nasdaq US Smart Value Momentum Index. It focuses on identifying undervalued U.S. small and mid-capitalization stocks that also exhibit strong price momentum characteristics. The ETF aims to capture companies with solid fundamentals and upward price trends, offering a blend of value and momentum investment styles within the small and mid-cap segment of the U.S. equity market.

Reputation and Reliability

VictoryShares, an affiliate of Victory Capital, is a well-established asset manager known for its quantitative-driven investment strategies. They have a track record of developing and managing ETFs with a focus on smart beta and factor-based investing.

Management Expertise

The ETF is managed by Victory Capital, which employs experienced investment professionals with expertise in quantitative research, portfolio construction, and risk management, particularly in factor-based strategies.

Goal

To provide investment results that correspond to the performance of the Nasdaq US Smart Value Momentum Index.

Investment Approach and Strategy

Strategy: The ETF aims to track the Nasdaq US Smart Value Momentum Index, which uses a quantitative methodology to select stocks based on both value and momentum factors.

Composition The ETF primarily holds U.S. equity securities of small and mid-capitalization companies, selected based on their inclusion in the underlying index. The index methodology prioritizes companies exhibiting characteristics of both value (e.g., low P/E, low P/B) and momentum (e.g., strong recent price performance).

Market Share: As of recent data, the ETF operates in a competitive space for small and mid-cap factor-based ETFs. Specific market share data for USVM within this niche is not widely published, but it is a participant in the broader U.S. small/mid-cap ETF market.

Total Net Assets (AUM): 215000000

Key Competitors

• iShares MSCI USA Small-Cap Value Factor ETF (CUSV)
• Schwab U.S. Small-Cap Value ETF (SCHV)
• Vanguard Small-Cap Value ETF (VBR)

Competitive Landscape

The small and mid-cap value ETF market is highly competitive, with established players offering broad exposure. USVM differentiates itself by combining value and momentum factors, a strategy that can appeal to investors seeking a more dynamic approach. Its primary advantage lies in its specific index methodology, which may offer unique stock selections. However, it may face challenges in terms of brand recognition and historical performance compared to larger, more established ETFs in the space.

Historical Performance: The ETF has demonstrated varied performance over different periods, reflecting the cyclical nature of value and momentum factors. Investors should consult up-to-date performance charts and data for the most current figures. Recent performance has been influenced by market conditions favoring growth over value in certain periods, but momentum aspects can also drive gains when trends are strong.

Benchmark Comparison: The ETF's performance is benchmarked against the Nasdaq US Smart Value Momentum Index. Its effectiveness is measured by its ability to track this index closely, with performance deviations often attributable to expense ratios and tracking error.

Expense Ratio: 0.59

Average Trading Volume

The ETF's average trading volume indicates moderate liquidity, suggesting that most investors can enter and exit positions without significant price impact.

Bid-Ask Spread

The bid-ask spread for USVM is generally competitive for its asset class, reflecting reasonable trading costs for investors.

Market Environment Factors

USVM is sensitive to macroeconomic conditions that influence small and mid-cap equities, as well as the performance of value and momentum investment styles. Interest rate changes, inflation, and overall economic growth prospects significantly impact its holdings. Sector-specific trends within technology, healthcare, and industrials, which are often prominent in small/mid-cap indices, also play a role.

Growth Trajectory

The ETF's growth trajectory is tied to the adoption of smart beta and factor-based investing strategies, particularly for small and mid-cap companies. Any changes in the underlying index methodology or the manager's strategic approach would impact its holdings and future performance.

Competitive Edge

USVM's competitive edge stems from its unique dual-factor approach, combining value and momentum in the small and mid-cap universe. This quantitative strategy aims to capture market inefficiencies by identifying companies that are both undervalued and experiencing upward price trends. The rigorous index methodology, developed by Nasdaq, provides a systematic and rules-based selection process, reducing discretionary risk and offering a distinct alternative to broader market ETFs or single-factor funds.

Volatility

VictoryShares US Small Mid Cap Value Momentum ETF exhibits historical volatility typical of small and mid-cap equity funds, which are generally more volatile than large-cap equities. Its volatility is also influenced by the inherent fluctuations of value and momentum factors.

Market Risk

The ETF is exposed to market risk, including systematic risk associated with the U.S. equity market. Specific risks include the inherent volatility of small and mid-cap companies, potential underperformance of value stocks during growth-led markets, and the risk that momentum strategies may not be sustained.

Ideal Investor Profile

The ideal investor for USVM is one who seeks exposure to U.S. small and mid-cap equities with a quantitative, factor-based approach. Investors should have a moderate to high risk tolerance, a belief in the efficacy of value and momentum investing, and a long-term investment horizon.

Market Risk

USVM is best suited for long-term investors who are looking to diversify their portfolios with a focus on specific equity factors within the small and mid-cap segment. It is less suited for short-term traders due to its factor-based methodology and potential for cyclical underperformance.

The VictoryShares US Small Mid Cap Value Momentum ETF (USVM) offers a quantitative approach to investing in U.S. small and mid-cap stocks, blending value and momentum factors. Its objective is to track the Nasdaq US Smart Value Momentum Index, seeking undervalued companies with positive price trends. While operating in a competitive landscape, its dual-factor strategy provides a distinct offering. Investors should be aware of the inherent volatility associated with small/mid-cap equities and factor-based strategies. It is generally suitable for long-term investors with a higher risk tolerance.

Data Sources:

• VictoryShares Official Website
• Nasdaq Index Data
• Financial Data Aggregators (e.g., Morningstar, ETF.com)

Disclaimers:

This information is for educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investing in ETFs involves risks, including the possible loss of principal. Investors should consult with a qualified financial advisor before making any investment decisions.