It has been a trying week for U.S. stocks, but ETF sponsors
have still pushed some new product to market. Income investors
will get another ETF to consider today when the YieldShares High
Income ETF (
The fund comes courtesy of new ETF sponsor YieldShares, which
is managed by Christian Magoon. YYY is taking the place of the
Sustainable North American Oil Sands ETF (NYSE:
). Current shareholders in SNDS will get one share of YYY for
each SNDS share they hold.
Magoon's new ETF has the potential to be a dividend investor's
delight. Closed end funds are prized by income investors for the
asset class's robust yields and YYY has the potential to oblige
even the most discerning yield hunters with an indicated index
yield of 10.18 percent, according to data provided to Benzinga by
YYY has an established competitor in the form of the
PowerShares CEF Income Composite Portfolio (NYSE:
), which has $475.7 million in assets under management. PCEF has
a distribution yield of just over eight percent and an annual
expense ratio of 1.73 percent,
according to PowerShares data
. YYY has total management fees of 1.65 percent.
The new closed end fund ETF, which tracks the ISE High Income
Index, only includes those CEFs with $500 million or more market
cap and $1 million six month average daily trading volume. From
there, the ISE index selects 30 highest overall ranked CEFs by
ISE based on three criteria: fund yield, discount to net asset
value and liquidity.
YYY will use a unique linear-weighting strategy, meaning
highest ranked CEF would have 30 times the weight of the 30th
ranked CEF in the index. No CEF can exceed 4.25 percent of the
ETF's weight at the time of reconstitution.
As of Thursday, 59 percent of the index was invested in equity
CEFs with 26 percent in debt CEFs. The average discount to NAV
was just over seven percent with an overall index duration of
1.38 years. The top four issuers in the index were Eaton Vance,
BlackRock, Nuveen and PIMCO.
For more on
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