New ETF Aims to Provide a Steady 7% Annual Distribution Rate - Investors

New ETF Aims to Provide a Steady 7% Annual Distribution Rate

"What's unique is the 7% target distribution," said David Miller, HNDL's portfolio manager. "As opposed to just owning a diversified portfolio, investors wouldn't have to go to the effort to sell part of their holdings to generate what they would get from the distributions."

'The distribution is not a dividend. It's a consistent payout that investors can rely on. All or part of the distribution may consist of a return of capital. That means if dividends, fixed income and capital gains don't fund the distribution, it may be funded by the capital investors pay in.'

"I think it's a unique and novel approach, particularly in a low-yield environment where people have trouble finding sources for distributions," said Corey Hoffstein, chief investment officer for Newfound Research, a Boston-based asset manager.

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   It sounds very tempting if I can live with that boundary in 7% annual distribution rate out of capital. But this is not for most people. However, the idea is attractive enough to hold attention for a while. And it definitely provides one of alternative investment opportunities since people are expected to live longer than they might think.

   I'm going to see how it is doing for a certain period of time to assess how it is really doing in reality.