What’s Not to Like About a Fund With a 7% Yield

[Luvtoride]

Another interesting investment alternative article in the Wall Street Journal. I hope the link below works.

If not, to summarize, this is an ETF that pays out a 7% Yield by investing in Bond and stock ETF's. Part of the payout is from actual income (interest and dividends) from the underlying ETF investments, while most of the return comes from harvesting increases in the ETFs value during the hot stock market run.
True, this could result in the value of the ETF going down if stock returns falter, but over the past 18 months, the value has increased while the 7% return has been maintained.
Not a risk free way to get yield, but one that seems to be working well in the current markets, with moderate risk.

https://www.wsj.com/articles/whats-...gy-shares-nasdaq-7handl-index-etf-11639757973

Consider the Strategy Shares Nasdaq 7HANDL Index

Here's a link to the fund from Morningstar...

https://www.morningstar.com/search?query=Strategy Shares Nasdaq 7 Handl™ ETF

 

[Bruno]

No the link didnt work for me. So what is the ETF that pays the 7%.

Thanks BB

 

[target2019]

Nobody likes a WSJ paywall. Just say what the ticker is, please.

 

[target2019]

https://www.pehalnews.in/whats-not-to-like-about-a-fund-with-a-7-yield/1414280/

HNDL

https://finance.yahoo.com/quote/HNDL/performance?p=HNDL

Must be magical?

 

[Luvtoride]

Nobody likes a WSJ paywall. Just say what the ticker is, please.

Sorry, added the name and link to Morningstar in the post above.

 

[GrayHare]

A downside is such funds take capital gains and pay them out as dividends. Many individuals pay a higher tax rate on dividends than on capital gains.

 

[bobandsherry]

My initial thought, fund only in existence since 2018, the "good times". 7% return is meh to me over that period. The test will be how it performs in a flat or down market. This is basically just an ETF made up of other ETF's, top 10 holdings in attachment.

 

[aja8888]

My initial thought, fund only in existence since 2018, the "good times". 7% return is meh to me over that period. The test will be how it performs in a flat or down market. This is basically just an ETF made up of other ETF's, top 10 holdings in attachment. View attachment 41185

Mostly ETFs with bond holdings. When rates go up, those suffer.

 

[target2019]

More exploring about HANDL, at the link https://www.nasdaq.com/articles/a-targeted-approach-to-fixed-income-with-hndl

The underlying index is broadly diversified and divided evenly between fixed income and equity ETFs that make up 50% and a “Dorsey Wright Explore Portfolio” that makes up the other 50%.

The article goes on to describe the two halves (or sleeves) of the product. There is a chart that better explains the sleeves and 14 investments. It appears to me that the ETF is 1/2 passive and 1/2 active. For this you pay .80 or higher.

Since Jan 25, 2018 the NAV is up just 1.5%. The dividend has grown from 0.14 to 0.15. I think in your mind you could say this is my bond substitute. But it is correlated with the stock market for 4 years, so if you need to dig into principal watch out.

https://www.portfoliovisualizer.com...ocation2_2=100&symbol3=HNDL&allocation3_3=100

You can explore the various tabs at portfolio visulaizer link above. At this time I'm not going to sacrifice growth for the sake of income. But it could make sense for some.

 

[freedomatlast]

If this is the kind of fund that is appealing to the OP, ADX strives to pay out a minimum of 6% annually and has been around seemingly forever.

 

[ERD50]

Smoke and Mirrors!

You realize you can do this yourself, easily, and outperform HNDL (partially by saving most of the 1.17% fees).

https://tinyurl.com/y4e4esag << link to portfoliovisualizer.com with 7% annual w/d

That shows that a 60/40 blend of VTI/BND, with a 7% withdraw outperforms HNDL.

Portfolio...Initial Balance...Final Balance
60/40.......$100,000..........$136,697
HNDL........$100,000..........$121,137

Just have the divs go to your account, and 4 or 2 or one time a year, sell enough to make up the delta between the divs and 7% (or whatever number you want).

The 7% is not magic! It's just divs plus return of principal. You can do better on your own.

-ERD50

 

[thefist]

Smoke and mirrors indeed!

HNDL is bonds, traditional dividend sectors, and some tech for growth.

Geez, you could take VIG by itself, write covered calls on it, and get same return without withdrawing principal.

 

[Montecfo]

The Zweig article reappeared in the weekend WSJ with the title "The Sorcery that's conjuring a 7 pct yield". The article seems rather critical but in any event a security which yields 2.96 pct and distributes 7 percent and with holdings including Nasdaq stocks and o&g pipelines does not seem like an attractive bond alternative.

 

[moontower]

Just buy NTSX and JEPI - 60/40....you'll get return of SPY plus at least 50 basis points AND a relatively stable 7% divy without any leverage or tricks of a CEF