A traditional balanced portfolio of stocks and bonds currently pays well below 2%. This leads many return-hungry investors to consider a wider range of investments, including diversification with non-traditional sources of income that have shown weaker correlations, while still being mindful of risk / reward tradeoffs.
In the next webcast, Income for a better outcome: where to invest in non-traditional income, Jay D. Hatfield, CIO and portfolio manager at InfraCap Capital Advisors; George Goudelias, head of leveraged finance and senior portfolio manager at Seix Investment Advisors; and James Jessup, Product Manager at Virtus Investment Partners, will discuss how these non-traditional sources of income can make a huge difference in clients’ portfolios.
For example, active management ETF Virtus InfraCap US Preferred Stock (NYSEArca: PFFA) tries to generate current income and capital appreciation in an industry that may be less understood by investors. The fund invests in a portfolio of over 100 preferred securities issued by US companies with a market capitalization of over $ 100 million, with an emphasis on income. The fund may offer the potential for attractive returns and generate convincing total return results.
Preferred stocks are a class of equity securities that generally pay fixed or floating dividends to investors and have a “preference” over common stocks, but they are subordinate to bonds. The issuing company must pay dividends to preferred shareholders before common shareholders and, in the event of bankruptcy or liquidation of the assets of the company, must put preferred shareholders’ claims ahead of common shareholders.
In addition, active management Virtus InfraCap MLP ETF (NYSEArca: AMZA) can also help investors gain pure exposure to master limited partnerships. The fund invests in intermediate MLPs which are primarily involved in the collection, processing, transportation and storage of crude oil, natural gas, natural gas liquids and refined products.
MLPs don’t make their money off the price of oil or gas. Unlike other stocks in the energy sector, MLPs mainly deal with the distribution and storage of energy products, so their business model is less dependent on the commodity market, as MLPs profit from the quantity of oil and natural gas that they can move.
In addition, active management Virtus Seix Senior Loan ETF (NYSEArca: SEIX) seeks to provide investors with a high level of current income through senior senior variable rate loans. Senior Loans are typically used for business recapitalizations, acquisitions, debt buyouts, and refinancing.
The ETF is under-advised by Seix Investment Advisors LLC, which will manage the portfolio investments. Seix seeks to generate competitive risk-adjusted absolute and relative returns over the entire market cycle through a bottom-up, knowledge-driven process. Seix uses multidimensional approaches based on a strict portfolio construction methodology, sales disciplines and trading strategies with prudent risk management as a cornerstone.
Financial advisors who want to learn more about non-traditional income strategies can register for the Monday, October 25 webcast here.