Multi-Asset Funds Target Steady, Consistent Income for Retirees

The global financial crisis in 2008 caused many retirees to fall behind their savings goals. With millions of Baby Boomers retiring every year, that’s a large investor base seeking income. To accommodate this growing need, ETF issuer Strategy Shares has been launching funds that target sustainable total return and provide investors with steady, consistent income.

In 2018, Strategy Shares launched the Strategy Shares Nasdaq 7HANDL Index ETF (HNDL), a diversified multi-asset high income fund. HNDL targets an annualized yield of approximately 7% on the fund’s per-share net asset value to be paid out monthly. HNDL tracks the Nasdaq 7HANDL™ Index and is made up of 19 ETFs, representing an estimated 20,000 individual underlying securities.

The index is evenly split between two components: 50% to a “core portfolio,” and the other 50% to what issuer Strategy Shares is calling the “Dorsey Wright Explore Portfolio.” Within the core portfolio, 70% is allocated to U.S. aggregate fixed income ETFs and 30% is allocated to U.S. large-cap equity ETFs. The Dorsey Wright Explore Portfolio is a tactical allocation with U.S. fixed income, U.S. blend, U.S. equity, and U.S. alternative assets, or categories that have historically provided high levels of income. This portion of the fund is comprised of 12 different categories and includes such assets as mortgage-backed securities, Build America Bonds, REITS, and MLPs.

HNDL has an expense ratio of 0.97%.

Since HNDL was brought to market, Strategy Shares has decided to launch similar income funds to complement the fund and provide investors with options over targeted returns and how much leverage they’re comfortable with. In December 2021, Strategy Shares launched the Strategy Shares Nasdaq 5HANDL Index ETF (FIVR), which targets a 5% distribution rate and uses no leverage.

It is also set to launch the Strategy Shares Nasdaq 10HANDL Index ETF (TENH), targeting a 10% distribution rate using leverage equal to 50% of its portfolio.

In addition to targeting different distribution rates, the three funds also use different levels of leverage. While HNDL uses leverage equal to 23% of the portfolio to achieve its 7% distribution rate, FIVR uses no leverage, and TENH intends to use leverage equal to 50% of its portfolio.

While having different targets and leverage, all three funds have the same investment strategy.

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