Florida-based investment advisor Sound Income Strategies has made its ETF debut with the launch of a pair of actively managed income-focused strategies aimed at retirees and those planning for retirement.
David J. Scranton, Founder of Sound Income Strategies.
The Sound Equity Income ETF (SDEI US) and Sound Enhanced Fixed Income ETF (SDEF US) have listed on NYSE Arca and come to market in partnership with private label ETF platform Tidal ETF Services.
Each ETF has a primary objective of delivering high current income and a secondary objective of obtaining modest long-term capital appreciation.
David J. Scranton, Founder of Sound Income Strategies, commented: “When it comes to planning and saving for retirement, it’s all about investing for income. The new ETFs were created specifically for retirees and those approaching retirement who need income from their investments.
“As long-time specialists in income-generating savings and investment strategies, we focus on maximizing the value of investors’ income portfolios and help them build retirement plans that seek to deliver dependable income first and foremost, with growth potential as a secondary consideration.”
The Sound Equity Income ETF invests in common stock issued by dividend-paying companies with market capitalizations above $2 billion. The fund targets a dividend yield that is at least double that of the S&P 500.
Security selection is based on favourable economic foundations as demonstrated by indicators such as positive cash flows, strong profitability ratios, and manageable leverage.
Secondary factors contributing towards selection include the presence of catalysts for capital appreciation such as strong management, new products, corporate restructuring, recapitalization, changes in factor costs, or competitive dynamics.
The Sound Enhanced Fixed Income ETF invests in an approximately equal combination of investment-grade and high-yield debt securities from issuers globally, although this allocation may be altered based on the market environment.
Eligible securities include government, agency, and corporate bonds, debt from supranational organizations, preferred securities, and ETFs that invest in any of the aforementioned asset classes. The fund may also hold shares of business development companies and real estate investment trusts.
The firm uses a fundamental, bottom-up approach to analyzing individual debt securities, considering an issuer’s leverage and cash flow over a 12- to 24-month period. Securities are selected based on expected return while accounting for duration and option-adjusted spread.
The Sound Equity Income ETF comes with an expense ratio of 0.45%, while the Sound Enhanced Fixed Income ETF costs slightly more at 0.49%.