Virtus Newfleet ABS/MBS ETF (VABS)

Overview

The Virtus Newfleet ABS/MBS ETF (VABS) is an actively managed exchange-traded fund that invests primarily in asset-backed securities (ABS) and mortgage-backed securities (MBS). Its focus is on generating income and capital appreciation through strategic selection and management of these fixed-income instruments, aiming to provide investors with exposure to the securitized credit market.

Reputation and Reliability

Virtus Investment Partners, Inc. is a well-established asset management company with a broad range of investment strategies and products. They have a reputation for providing access to specialized investment expertise through various affiliated managers.

Management Expertise

The ETF is managed by Newfleet Asset Management, a Virtus Investment Partners company. Newfleet has a dedicated team with extensive experience in fixed income, particularly in securitized products, bringing a depth of knowledge in credit analysis and portfolio construction for ABS and MBS.

Goal

The primary investment objective of the Virtus Newfleet ABS/MBS ETF is to seek total return, with an emphasis on current income and capital appreciation.

Investment Approach and Strategy

Strategy: VABS is an actively managed ETF. Instead of tracking a specific index, the fund's management team actively selects ABS and MBS based on their research, credit analysis, and market outlook. The strategy involves identifying undervalued securities and managing portfolio duration and credit risk.

Composition The ETF holds a diversified portfolio of asset-backed securities (ABS) and mortgage-backed securities (MBS). This can include residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), and other securitized debt instruments backed by various underlying assets like auto loans, credit card receivables, and student loans.

Market Share: Market share data for specific, actively managed ABS/MBS ETFs like VABS is often not as clearly defined as for broad market index ETFs. Its market share is likely to be smaller compared to larger, passively managed bond ETFs.

Total Net Assets (AUM):

Key Competitors

• iShares MBS ETF (MBB)
• Vanguard Mortgage-Backed Securities ETF (VMBS)
• SPDR Bloomberg Barclays Mortgage-Backed Securities ETF (MBG)
• Invesco Mortgage-Backed Securities ETF (PGZ)
• iShares Core Agency Mortgage-Backed Securities ETF (AGZ)

Competitive Landscape

The US ABS/MBS ETF market is dominated by a few large, passively managed ETFs that track broad MBS indices. VABS operates in a more specialized, actively managed segment. Its advantages lie in potentially superior active management skill to navigate market complexities and identify opportunities, while disadvantages include higher fees and the risk that active management may underperform its benchmark. The passive ETFs benefit from lower costs and guaranteed index exposure.

Historical Performance: Historical performance data for VABS needs to be retrieved from a financial data provider. Generally, ABS/MBS ETFs offer income through interest payments and potential capital appreciation. Performance can be influenced by interest rate movements, prepayment speeds, and credit quality of underlying assets.

Benchmark Comparison: As an actively managed fund, VABS's performance is typically compared against a relevant benchmark such as the Bloomberg U.S. MBS Index or similar ABS/MBS indices. The active management aims to outperform this benchmark.

Expense Ratio:

Average Trading Volume

The average daily trading volume for VABS is generally lower than that of larger, more established passively managed bond ETFs, which can impact ease of trading.

Bid-Ask Spread

The bid-ask spread for VABS can be wider than for highly liquid ETFs, reflecting its status as an actively managed, specialized fund with potentially lower trading volumes.

Market Environment Factors

The performance of VABS is significantly influenced by interest rate policy from the Federal Reserve, prepayment risk on mortgages, economic growth, and the overall health of the housing and credit markets. Changes in interest rates can affect the value of MBS and ABS, while economic downturns can impact the creditworthiness of underlying borrowers.

Growth Trajectory

As an actively managed ETF, its growth trajectory depends on the success of its investment strategy and its ability to attract assets. Changes to strategy and holdings are at the discretion of the fund managers to adapt to market conditions and pursue investment opportunities.

Competitive Edge

Virtus Newfleet ABS/MBS ETF's competitive edge stems from its active management approach, leveraging the specialized expertise of Newfleet Asset Management in the complex ABS and MBS markets. This allows for tactical allocation and security selection, aiming to capitalize on inefficiencies and generate alpha. The fund may also offer diversification benefits not found in broad fixed-income portfolios. Its niche focus provides a dedicated investment solution for investors seeking this specific asset class.

Volatility

The historical volatility of VABS will be influenced by interest rate sensitivity (duration) and credit risk of its underlying holdings. MBS can exhibit volatility due to prepayment risk, which is sensitive to interest rate changes.

Market Risk

Market risks include interest rate risk (rising rates decrease bond prices), credit risk (borrowers defaulting on underlying loans), prepayment risk (borrowers paying off mortgages early, especially when rates fall), and liquidity risk. The specific risks depend on the types of ABS and MBS held by the ETF.

Ideal Investor Profile

The ideal investor for VABS is someone seeking diversified exposure to asset-backed and mortgage-backed securities with the potential for alpha generation through active management. They should have a moderate risk tolerance and understand the complexities of fixed-income securitized products.

Market Risk

VABS is best suited for investors looking for an actively managed approach to the MBS and ABS market, potentially for income generation and capital appreciation. It is not typically for passive index trackers or very short-term traders due to its active strategy and the nature of the underlying assets.

The Virtus Newfleet ABS/MBS ETF (VABS) offers actively managed exposure to the asset-backed and mortgage-backed securities market. It aims for total return through income generation and capital appreciation, leveraging the expertise of Newfleet Asset Management. While facing competition from larger passive ETFs, VABS's advantage lies in its specialized, active strategy. Investors should be aware of interest rate, credit, and prepayment risks associated with these securitized products.

Data Sources:

• Virtus Investment Partners official website
• Financial data providers (e.g., Morningstar, Bloomberg, ETF.com - specific data requires access)
• SEC Filings

Disclaimers:

This information is for general informational purposes only and does not constitute investment advice. Performance data, AUM, expense ratios, and market share are subject to change. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. The AI-based rating is a quantitative assessment and should not be the sole basis for investment decisions.