A High-Yield ETF that Capitalizes on the CEF Structure | ETF Trends

An increasing number of investors are looking to supplement income through yield-generating investments and exchange traded funds.

For example, the Amplify High Income ETF (NYSE Arca: YYY) shows a 12.69% 12-month yield.

“There’s a big search for yield. Many Baby Boomers retiring – I think 10,000 a day, and people are looking for high current income. So, what we’ve done is created a strategy that looks at closed-end funds,” Christian Magoon, Founder, and CEO, Amplify ETFs, said at the Inside ETFs conference.

“They have a unique feature, and oftentimes, this feature is not liked by investors, but when you can actually buy a fund at a discount, that’s actually a nice benefit. It can increase yield potential,” he added.

YYY takes advantage of the closed-end fund (CEF) structure, where funds often trade at a discount to the net asset value. The strategy would employ leverage in a low-interest-rate environment to increase income potential for shareholders, producing high current monthly income for investors.

Also, due to YYY’s contrarian approach to buying CEFs with high current discounts to net asset value, the fund has historically delivered a basket of CEFs diversified by asset class, manager, and investment style.

Watch Christian Magoon Discuss High Yield Investments:

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