GraniteShares Takes Control of High Income ETF

GraniteShares, a new kind of ETF company, acquired a U.S. high-income focused ETF strategy that invests in securities structured as pass-through entities.

On Monday, GraniteShares took over the HIPS US High Income ETF (NYSEArca: HIPS) and lowered the management fee on the ETF to 0.70% from 1.47%.

The GraniteShares HIPS US High Income ETF will try to reflect the performance of the TFMS HIPS 300 Index, which includes a basket of securities structured as pass-through entities such as master-limited partnerships, real estate investment trusts, closed-end funds and business development companies.

MLPs profit off the quantity of oil and natural gas they are able to move around. An MLP provides income potential as the firms typically pay out the majority of operating cash to investors on a quarterly basis.

REITs are securities that trade like a stock and invest in real estate directly through property ownership or mortgages. Consequently, revenue are mainly generated through rents or interest on mortgage loans. To qualify for special tax considerations, the asset also distributes the majority of income, about 90% of taxable profits, to investors as dividends.

Closed-end funds or CEFs are a publicly traded investment company that raised a certain amount of capital once through an initial public offering. The price of the CEF can fluctuate like any other stock listed on an exchange. However, unlike ETFs, a CEF issues a set number of shares, so the CEF can trade at a high premium or discount to its underlying net asset value.