Strategy Shares has introduced the Strategy Shares Nasdaq 5HANDL Index ETF (FIVR US) on Nasdaq Stock Market.
The fund targets a 5.0% annual distribution rate, all or a portion of which may include a return of capital.
FIVR utilizes an ETF-of-ETFs approach to provide diversified, multi-asset exposure while targeting a 5.0% annual distribution rate, all or a portion of which may include a return of capital.
The strategy focuses on total risk-adjusted returns that can support the target distribution rate without reaching for yield which, according to Strategy Shares, can lead to unwanted levels of risk.
The fund is referenced to the Nasdaq 5HANDL Index which was developed by indexing firm Bryant Avenue Ventures, known for its suite of HANDLS (High-distribution AND Liquid Solutions) indices that address the income needs of retirees, in collaboration with relative strength specialist Nasdaq Dorsey Wright.
The index is composed of 19 ETFs covering various US equity and USD fixed income asset classes. The underlying ETFs are split into two equally weighted categories: a core portfolio and a Dorsey Wright explore portfolio.
The core portfolio consists of a 70% allocation to US aggregate fixed income ETFs and a 30% allocation to US large-cap equity ETFs.
The Dorsey Wright explore portfolio consists of an allocation to ETFs representing income-producing asset classes: high-dividend equities, broad equities combined with a covered call overlay, investment-grade bonds, high-yield bonds, mortgage-backed securities, real estate investment trusts, master limited partnerships, preferred securities, growth & income equities, utility stocks, and Build America Bonds.
Constituent ETFs in the explore portfolio are weighted monthly based on a proprietary Dorsey Wright approach that considers yield, volatility, and momentum.
The ETF comes with an expense ratio of 0.88%.
The fund is the second HANDL ETF from Strategy Shares following the January 2018 launch of the Strategy Shares Nasdaq 7HANDL Index ETF (HNDL US). This fund, which targets a 7.0% annual distribution rate, currently houses $1.5 billion in assets and comes with an expense ratio of 0.97%.
David Miller, Portfolio Manager for FIVR and HNDL, said: “We are very excited to be expanding our target distribution ETF suite. FIVR’s approach provides those investors and advisors who may be interested in a lower volatility approach with a compelling offering to either pair with or use independently from our successful 7HANDL ETF.”
Jerry Szilagyi, President, of Rational Advisors, the advisor to Strategy Shares ETFs, added: “A five percent target distribution rate aligns with what many financial advisors are now suggesting for retired clients looking to live off their respective portfolios. This is a powerful new tool for investors seeking target distributions with lower anticipated volatility than similar products, and we look forward to discussing FIVR and HNDL with the advisor and investor communities.”