New ETF Goes Deep in Search of Income

With the number of dividend exchange traded funds on the rise, issuers that are new to the game are taking increasingly refined approaches in an effort to catch the eyes of income investors.

The new Master Income ETF (NYSEArca: HIPS), which debuted Thursday courtesy of Master Shares and Trust & Fiduciary Management Services is one example of the new breed of income ETFs. Trust & Fiduciary Management Services, a Boston-based registered investment advisor, is the provider of the High Income Pass-Through Securities (HIPS) 300 index upon which the ETF is based.

Rather than focusing on traditional common dividend stocks, HIPS emphasizes pass-through securities, or those companies that due to favorable tax treatment are obligated to distribute significant percentages of profit in the form of dividends. Think master limited partnerships (MLPs), real estate investment trusts (REITs), business development companies (BDCs) and royalty trusts, among other asset classes. [BDC ETFs for Income Investors]

The Investment Advisor to the Master Income ETF is Exchange Traded Concepts of New York. The lead market maker is Cantor Fitzgerald, according to a statement.

The new ETF, which charges 0.87% per year and will pay its dividend on a monthly basis, is home to familiar names such as Annaly Capital Management (NYSE: NLY), Carlyle Group (NYSE: CG), Linn Energy (NasdaqGS: LINE) and Ventas (NYSE: VTR).