New Multi-Asset ETF Targets 5% Yield

December 29, 2021

Today, Strategy Shares launched a follow-up to its largest ETF, the $1.5 billion Strategy Shares Nasdaq 7 HANDL Index ETF (HNDL). The Strategy Shares Nasdaq 5HANDL Index ETF (FIVR), like its counterpart, is an ETF-of-ETFs. However, whereas HNDL targets an annual distribution rate of 7%, FIVR targets 5%.

And while HNDL has an expense ratio of 0.97%, FIVR charges 0.88%. It lists on the Nasdaq stock exchange.

“FIVR’s approach provides those investors and advisors who may be interested in a lower volatility approach with a compelling offering to either pair with or use independently from our successful 7 HNDL ETF,” said David Miller, the manager for both FIVR and HNDL.

“The 5% target distribution rate of FIVR aligns with what many financial advisors are now suggesting for retired clients looking to live off their respective portfolios,” Rational Advisors President Jerry Szilagyi noted. Rational Advisors is the advisor to Strategy Shares ETFs.

Investment Approach

The fund will generally hold 19 other ETFs. Its underlying index consists of two subsets that are given equal weight. The “core” portfolio will include fixed income (70%) and equity (30%) ETFs, while the “explore” portfolio will include ETFs providing exposure to 12 asset categories that offer income, according to the prospectus.

The core portfolio will include ETFs offering exposure to the U.S. aggregate bond space and the U.S. large cap equity space, with the ETFs selected based on the coverage they provide and their low costs, the document says.

Meanwhile, the “explore” portfolio will invest in ETFs representing a range of asset classes or strategies, all of which offer investors income: dividend equity, covered call strategies, bonds, mortgage-backed securities (MBS), collateralized debt obligations, collateralized loan obligations, active fixed income, master limited partnerships (MLPs), preferred securities, real estate investment trusts (REITs), utility stocks, and growth and income equities.

The ETFs are selected for this portion of the portfolio using an in-house methodology that considers momentum when optimizing its allocations. The included funds are generally either among the cheapest or the largest ETFs in their respective categories, the prospectus says.

Contact Heather Bell at [email protected]

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