Academy Veteran Bond ETF (VETZ) Stock Price, News & Analysis

Academy Veteran Bond ETF (NYSE Arca: VETZ), also referred to as the Academy Veteran Impact ETF in company communications, is an exchange-traded fund sub-advised by Academy Asset Management, a SEC-registered investment adviser. According to Academy Asset Management, VETZ is described as the first publicly traded ETF to primarily invest in loans to U.S. service members, military veterans, their survivors, and veteran-owned businesses.

The fund follows an actively managed fixed income strategy. Academy Asset Management states that the ETF focuses on veteran lending through the mortgage and asset-backed markets. The strategy primarily invests in mortgage-backed securities (MBS) guaranteed by government-sponsored enterprises, such as Ginnie Mae, and also invests in pools of small business loans backed by the U.S. Small Business Administration (SBA). In company materials, Academy Asset Management notes that at least 80% of the underlying assets are intended to consist of loans to veterans or their families.

Veteran-focused impact objective

VETZ is positioned by Academy Asset Management as a way for investors to gain exposure to fixed income securities while supporting the veteran community. The firm highlights that the ETF’s underlying loans are intended to help active-duty service members, veterans, their survivors, and veteran-owned enterprises access residential mortgages and small business financing. Academy Asset Management also states that a portion of the management fees associated with the strategy is donated to veteran and military-related charities.

Role of Academy Asset Management

Academy Asset Management is described as the nation’s first post-9/11 veteran-owned and operated institutional asset manager, specializing in fixed-income funds and separately managed accounts. The firm emphasizes its veteran ownership, its focus on fixed income, and its mission to hire, train, and mentor military veterans for careers in financial services. Academy Asset Management notes that its leadership and team members bring military training combined with experience in global capital markets.

Within its broader business, Academy Asset Management identifies veteran lending through the mortgage and asset-backed markets as one of its flagship offerings. The firm has highlighted the performance of this strategy and its impact focus in third-party recognitions. In particular, Academy Asset Management reports that its Veteran Impact ETF strategy associated with VETZ has received PSN Top Guns awards in the US Fixed Income Universe, reflecting rankings for certain periods based on returns as measured by Zephyr’s PSN database.

Investment focus and risk considerations

Company materials describe VETZ as investing in fixed income instruments, including agency and non-agency mortgage-backed securities and SBA-backed small business loan pools. The disclosures associated with the fund reference several risk factors, including:

• Agency Small Business Loan & MBS risk, including uncertainty regarding obligations of entities such as Fannie Mae and Freddie Mac that have been placed under U.S. government conservatorship.
• Fixed income securities risk, where the value of fixed income securities typically changes inversely with prevailing interest rates.
• Non-agency MBS risk, noting that non-agency mortgage-backed securities are not subject to the same underwriting requirements as agency MBS and may involve heightened risk.
• Prepayment and extension risk, as many issuers have the right to prepay fixed income securities, which can affect the timing and amount of cash flows.
• Repurchase agreement risk, where repurchase agreements are viewed as collateralized loans made by the fund.
• TBA (to-be-announced) transaction risk related to the fund’s potential use of TBA transactions for MBS.
• New fund risk, reflecting that as a relatively new fund, there can be no assurance that it will grow or maintain an economically viable size.

Academy Asset Management’s disclosures also reference concepts such as investment grade credit ratings for fixed income securities and provide definitions of mortgage-backed securities and widely followed bond indices, such as the Bloomberg US Aggregate Bond Index and the Bloomberg US Mortgage-Backed Securities Index, as context for understanding the fixed income market in which VETZ operates.

Social mission and impact framing

In describing VETZ, Academy Asset Management emphasizes a social mission centered on veterans. The firm states that the ETF is intended to support veterans in their financial pursuits by facilitating access to homeownership, business formation, and quality-of-life improvements through lending. It also notes that the ETF supports the firm’s broader effort to mentor, hire, and train veterans for roles in financial services, and that part of the management fees is allocated to veteran and military-related charitable organizations.

Adviser and distribution relationships

Academy Asset Management serves as sub-adviser to the fund and identifies itself as a disabled veteran-owned, SEC-registered investment adviser focused on fixed-income strategies and separately managed accounts. Company disclosures state that the fund is distributed by Foreside Fund Services, LLC (or Foreside Fund Services), which is described as not related to Academy Asset Management. In connection with the ETF’s launch, Academy Asset Management also identified Jane Street Capital as the lead market maker supporting the trading of VETZ.

Investor information and disclosures

In its communications, Academy Asset Management advises that investors should consider the investment objectives, risks, charges, and expenses of the fund carefully before investing, and refers to the fund’s prospectus and summary prospectus for detailed information. The firm also notes that investing involves risk and that principal loss is possible.