Natixis Investment Managers and Gateway Investment Advisers today launched the Natixis Gateway Quality Income ETF (NYSE Arca: GQI). This actively managed, income-oriented equity ETF is designed to generate a strong, consistent stream of monthly income.
GQI seeks stocks exhibiting such factors as stable earnings, strong return-on-equity and assets, cash flow generation, and strong balance sheets. It combines a factor-based, quality-focused equity portfolio with the characteristics of an index-option-selling overlay program.
Gateway’s President, CEO and CIO Michael Buckius will manage GQI along with Gateway Portfolios Managers Daniel Ashcraft, Kenneth Toft, and Mitchell Trotta.
“Gateway’s goal… has been helping clients reduce the risks of stock market investing through actively managed options-based equity strategies,” Buckius said. He added that the firm achieves this goal by “writing call options to generate market volatility-driven cash flow.”
Gateway has exclusively focused on options-based strategies to manage risk and generate cash flow since 1977. GQI is Gateway’s first ETF.
David Giunta, CEO of Natixis IM in the U.S., praised “Gateway’s multi-decade experience managing options writing strategies” in the release.
Using a Multifactor Quantitative Model
Gateway uses a multifactor quantitative model to construct and manage GQI’s stock portfolio. The model evaluates U.S.-exchange-traded equities. It seeks to maximize exposure to quality characteristics while considering issuer and sector exposures, among other constraints and considerations.
The equity portfolio generally consists of about 75-150 securities. The fund’s holdings can include U.S. exchange-listed common stocks, preferred stocks, American depository receipts, and investment companies (including ETFs).
GQI has an active options overlay program built into its strategy designed to generate consistent monthly income. It replicates the characteristics of a laddered portfolio of one-month, near-the-money S&P 500 call options sold on a rolling weekly basis. The options overlay is implemented on half of GQI’s equity portfolio to balance capital appreciation with income.
GQI carries a net expense ratio of 34 basis points.
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