On Thursday, North Square Investments launched the North Square RCIM Tax-Advantaged Preferred and Income Securities ETF (QTPI).
QTPI is built to provide strong current income along with capital appreciation over the long term. This strategy has an additional emphasis on tax-advantaged qualified dividend income (QDI). The fund is actively managed with a net expense ratio of 60 basis points.
Primarily, QTPI invests the lion’s share of its net assets in both preferred and debt securities. In particular, these are securities with dividends that qualify for favorable U.S. federal income tax treatment.
In terms of preferred and debt securities, the ETF may opt to invest in a wide variety of options. These include fixed and variable rate preferred securities, REIT preferred securities, and contingent convertible securities, among others.
Screening for Quantity & Quality
Maximizing its after-tax yield remains a key objective of this fund. To help do so, Red Cedar Investment Management operates as the subadvisor for QTPI.
When it comes to picking securities for the fund, Red Cedar uses a proprietary credit screening with a focus on quantitative factors. This is all done to optimize value while mitigating risk for downgrades or defaults.
Once QTPI has screened its securities for quantitative factors, it then considers qualitative factors before making a final call. Lastly, the ETF will examine the individual security to see if it has the potential to maximize the fund’s potential QDI.
As an additional factor, QTPI will keep duration and coupon structure for the security under consideration. QTPI may opt to invest in referred and debt securities issued from either U.S. companies or from companies located outside the United States.
In terms of portfolio maturity, QTPI does not restrict itself to any maturity or specific duration. Per the fund prospectus, QTPI holds stronger investment concentration toward the financial services sector.
For more information, please visit VettaFi.com | ETF Trends.
