Three years on, the HNDL fund has attracted nearly $333 million in assets, delivered share price returns that have landed it in the top half of its Morningstar investment category, and provided an annual distribution yield of roughly 7%. A portion of the distribution consists of a return of capital.
The fund’s three-year average annual return is 8.2%. Its upside capture ratio of 73 slightly trails its Morningstar-assigned “Allocation—30% to 50% Equity” category average, while its downside capture ratio of 60 slightly bests the category average.
Miller said the fund’s target market are retail investors and financial advisors investing on behalf of their clients.
“You can’t really dial up your yield without taking on a lot of credit risk,” he said. “We’re trying to deliver something that retail investors couldn’t really get on there own; they can’t fix their balanced portfolio and add a little bit of leverage to get the best diversification and minimize their drawdowns because their cost of leverage would be too high.
“We’re trying deliver something that retail investors essentially need but usually revert to annuities or closed-end funds to get there,” he continued. “We think this ETF structure is a more cost and tax-efficient way to get that, and more liquid as well.”