Issuer Q&A with Amplify ETFs

By Christian Magoon, CEO of Amplify ETFs, and Danielle Rutsky, Senior Product Manager, Nasdaq ETP Listings

What are some of the key initiatives you are currently focused on at Amplify? 

Amplify recently launched its first two high free cash flow ETFs into the marketplace. COWS is an index tracking ETF that sets itself apart from other cash flow ETFs by focusing ownership in dividend paying high free cash flow stocks in the U.S. In addition, COWS has a zero percent expense ratio in its first year and caps maximum industry exposure of 25%, which is key as other leading cash flow ETFs may actually see industry concentration in the 30% plus range. HCOW executes the high income version of the free cash flow story by combining ownership of the COWS ETF with a call income strategy on the S&P 500. This investment strategy has produced income distributions of nearly 4x the traditional cash flow universe. Both COWS and HCOW pay distributions monthly and the first distributions will be made at the end of October. 

In addition to new products launching, Amplify is in the midst of acquiring 14 ETFs from another ETF Sponsor, ETF Managers Group. From cybersecurity to junior silver miners to mobile payments, the ETF product lineup being acquired is robust and will nearly double Amplify's ETF offerings. We encourage investors in ETFs like HACK, SILJ, IPAY and other ETFMG ETFs to read the proxy material being sent out and vote their shares as they see fit. 

You recently launched HCOW and COWS on Nasdaq. What trends are you seeing for high income and dividend focused ETFs? 

With money markets and Treasury ETFs yielding over 5%, traditional dividend ETFs seem to be losing some of their appeal with investors due to their low relative yields versus cash and bond alternatives. We believe it’s the ideal time to look at dividend income strategies that use both dividends and option writing strategies to achieve materially more income than a standard ETF. Amplify ETFs like DIVO and IDVO are great examples of this concept as they combine high quality stock exposure in the U.S. or internationally with a dividend and tactical covered call approach. Paying monthly, these ETFs yield significantly more than the average dividend ETF, while also providing higher quality stock exposure. HCOW is another ETF that fits this concept of dividend and option income and will be Amplify’s highest yielding ETF implementing this two-income engine approach. 

Is there an increased appetite for alternative income strategies today?  

Many investors are beginning to augment their traditional income allocation with alternative income strategies that have much higher yield potential. This is because current interest rate levels and inflation have minimized the appeal of 2-3% yielding dividend strategies. At Amplify, we have developed a variety of high yielding income ETFs to satisfy this need. NDIV focuses on large cap energy and materials stocks that are significant dividend payers. Currently, NDIV yields close to 8%, which may appeal to investors who need to step up their income and are comfortable with an ETF concentrated in two sectors. Alternatively, our YYY ETF owns 45 income focused closed-end-funds run by many of the most well-known asset managers in the world. YYY yields 11% and may be an attractive option for investors who are seeking high current income. Both NDIV and YYY have a monthly distribution schedule. 

What's next for Amplify over the next 12 months?

As a firm, we look forward to adding 14 more ETFs to our lineup via the announced transaction with ETF Managers Group. In addition, we plan to continue to launch innovative strategies in the income and growth market segments in the coming quarters. We see many opportunities for first-to-market strategies that leverage the efficiency, transparency and flexibility of the ETF structure. Despite the market environment being mixed, Amplify is at a record high in shares outstanding across our ETF lineup and we see continued growth ahead. 

For more information, please visit https://amplifyetfs.com/

This piece was originally published in the Nasdaq ETF Intel Newsletter. Subscribe here for more ETF content.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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