Non-Traditional Income: Strategies for a Rising Rate Environment

The hunt for income has become a never-ending quest in recent years, as the bond markets’ rapidly changing dynamics simply aren’t getting the job done for most investors. In response, many advisors have turned to non-traditional sources of portfolio yield. But how can you make sure that you’re taking appropriate risks to generate future cash flows?

In the upcoming webcast, Non-Traditional Income: Strategies for a Rising Rate Environment, Jay Hatfield, CEO, Infrastructure Capital Advisors; George Goudelias, head of leveraged finance, senior portfolio manager, Seix Investment Advisors; and John Bartlett, president, portfolio manager, analyst, Reaves Asset Management, will survey the landscape and help you make the best risk-return trade-off for your clients.

For example, the actively managed Virtus InfraCap MLP ETF (NYSEArca: AMZA) can help investors gain a pure-play exposure to master limited partnerships. The fund invests in midstream MLPs that are principally involved in the gathering, processing, transportation, and storage of crude oil, natural gas, natural gas liquids, and refined products.

MLPs don’t make their money based on oil or gas prices. Unlike other energy sector stocks, MLPs primarily deal with the distribution and storage of energy products, so their business model is less reliant on the commodities market, since MLPs profit off the quantity of oil and natural gas they are able to move around.

The actively managed Virtus Seix Senior Loan ETF (NYSEArca: SEIX) seeks to provide investors with a high level of current income via first- and second-lien senior floating-rate loans. Senior loans are typically used for business recapitalizations, acquisitions, leveraged buyouts, and re-financing.

The ETF is sub-advised by Seix Investment Advisors LLC, which will manage investments for the portfolio. Seix seeks to generate competitive absolute and relative risk-adjusted returns over the full market cycle through a bottom-up focused, top-down aware process. Seix employs multi-dimensional approaches based on strict portfolio construction methodology, sell disciplines, and trading strategies with prudent risk management as a cornerstone.

Additionally, the Virtus Reaves Utilities ETF (UTES) seeks to provide total return through a combination of capital appreciation and income. The fund invests not less than 80% of its net assets (plus the amount of any borrowings for investment purposes) in equity securities of companies in the utility sector (“Utility Sector Companies”).

The manager considers a company to be a “Utility Sector Company” if at least 50% of the company’s assets or customers are committed to, or at least 50% of the company’s revenues, gross income, or profits derive from, the provision of products, services, or equipment for the generation or distribution of electricity, gas, or water. The fund is non-diversified.

Financial advisors who are interested in learning more about non-traditional income strategies can register for the Thursday, February 3 webcast here.