On Tuesday, Sound Income Strategies, a Florida-based registered investment advisory firm, is making its income-generating strategies more accessible to a broader group of investors with the recent debuts of two actively managed income-based exchange traded funds that could be particularly useful for retirees and those nearing retirement.
“When it comes to planning and saving for retirement, it’s all about investing for income. The new ETFs were created specifically for retirees and those approaching retirement who need income from their investments,” said David J. Scranton, CFA, Founder, Sound Income Strategies, in a statement. “As long-time specialists in income-generating savings and investment strategies, we focus on maximizing the value of investors’ income portfolios and help them build retirement plans that seek to deliver dependable income first and foremost, with growth potential as a secondary consideration.”
The Sound Equity Income ETF (SDEI) is actively managed. Its primary objective is to generate current income via a dividend yield that is targeted to be at least two times that of the S&P 500 Index. SDEI’s secondary objective is to capture long-term capital appreciation. SDEI seeks to achieve its investment objectives by investing in common stock issued by dividend-paying, mid- and large-capitalization companies.
“SDEI seeks to achieve its investment objective by investing in common stock issued by dividend-paying, mid-and large-capitalization companies,” according to the issuer. “The sub-adviser focuses on companies with what it believes are sound economic foundations, as demonstrated by indicators such as generally positive cash flows, favorable profitability ratios, and manageable leverage ratios.”
Top 10 holdings in SDEI include Pfizer (PFE), AT&T (T) and Johnson & Johnson (JNJ). SDEI charges 0.45% per year, or $45 on a $10,000 investment.
The Sound Enhanced Fixed Income ETF (NYSEARCA: SDEF) is an actively managed ETF that seeks current income while providing the opportunity for capital appreciation by investing in fixed income securities. The ETF invests in a combination of investment-grade and below investment grade (often referred to as “high yield” or “junk” bonds) debt securities. Typically, the ETF will have an approximate equal weighting of investment grade and high yield debt securities; however, the portfolio weighting will be adjusted from time to time based on the sub-advisor’s assessment.
“Typically, the SDEF portfolio will have an approximate equal weighting of investment grade and high yield debt securities. The portfolio weighting will be adjusted from time to time based on the sub-advisor’s assessment,” according to the issuer.
Several of its holdings are other ETFs. SDEF charges 0.49% per year, which is reasonable among actively managed high-yield bond strategies.
