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GraniteShares

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GraniteShares Revises Index Methodology for HIPS US High Income ETF (HIPS)

Posted:
Topic: Income
Publication Type: Viewpoints

Enhanced index provides new way for investors seeking to generate income in today’s low interest rate environment

NEW YORK – July 1, 2019 – GraniteShares, a disruptive exchange-traded fund (ETF) company, debuted a revised methodology for the index underlying the GraniteShares HIPS US High Income ETF (NYSE Arca: HIPS), a high alternative income-focused fund that invests in a diversified basket of pass-through securities.

The revised index, officially renamed the TFMS HIPS Index, rolled out July 1, 2019, and includes several key enhancements that could potentially benefit investors.

First, a quantitative screen was applied to the stock selection process to help minimize index volatility and dampen the effect of recent market uncertainty on index return. Additionally, a cap was introduced that limits the index to holding no more than 60 high-income securities, versus 300 securities measured in the original index. 

HIPS is historically one of the highest-yielding ETFs in the U.S., and currently boasts a very competitive yield.

“With the markets predicting a 99% chance of an interest rate cut in 2019, it may soon become significantly more challenging to generate consistent high levels of income,” said Will Rhind, Founder and CEO of GraniteShares. “We believe the recent updates to the index underlying HIPS uniquely positions us to better serve investors seeking high yields in today’s low interest rate environment.”

GraniteShares acquired HIPS in December 2017 as a way to democratize investor access to diversity, liquidity and yield via the ETF wrapper. HIPS invests in a basket of pass-through securities, such as master-limited partnerships (MLPs), real estate investment trusts (REITs), business development companies (BDCs) and closed-end funds, all of which are required to distribute all of their earnings to shareholders.

HIPS is part of GraniteShares’ growing ETF suite that has surpassed over $625 Million in total assets under management in just over two years*.

For more information on HIPS or other funds on the GraniteShares ETF platform, please visit www.graniteshares.com or call 844-476-8747.

About GraniteShares

GraniteShares is an independent, fully funded ETF company headquartered in New York City. The firm seeks to launch disruptive ETFs. GraniteShares focuses on products that bring the excitement back to investing, using new ideas, innovative structures and low cost. William Rhind, Founder and CEO, is an established ETF entrepreneur with more than 18 years of experience in the industry.

* ETF.com, June 2019

Media Contact

Gregory FCA for GraniteShares
Rachelle Gaynor | 610-228-2119
graniteshares@gregoryfca.com

This material must be preceded or accompanied by a prospectus. Carefully consider the Fund’s investment objectives risk factors, charges, and expenses before investing. Please read the prospectus before investing or sending money.

Investing involves risk; Principal loss is possible. Investments in debt securities typically decrease when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Investments in foreign securities involve greater volatility and political, economic, and currency risks and differences in accounting methods. Investments in smaller companies involve additional risks, such as limited liquidity and greater volatility. Master Limited Partnerships (“MLPs”) are subject to certain risks inherent in the structure of MLPs, including complex tax structure risks, limited ability for election or removal of management, limited voting rights, potential dependence on parent companies or sponsors for revenues to satisfy obligations, and potential conflicts of interest between partners, members and affiliates. Investments in asset-backed and mortgage-backed securities include additional risks including credit risk, prepayment risk, possible illiquidity, and default, as well as increased susceptibility to adverse economic developments. A Real Estate Investment Trusts (“REIT’s”) share price may decline because of adverse developments affecting the real estate industry. REITs may have limited financial resources, may trade less frequently and in limited volume, and may be more volatile than other securities. The risks of investing in REITs include certain risks associated with the direct ownership of real estate and the real estate industry in general. Business Development Companies (“BDCs”) may carry risks similar to a private equity or venture capital fund. BDCs usually trade at a discount to their NAV because they investing unlisted securities and have limited access to capital markets. Closed-end Funds (“CEFs”) may be subject to leverage, liquidity risk, credit risk, and losses may be magnified due to the use of leverage. leverage may increase the risk of loss and cause fluctuations in the market value of the Fund’s portfolio, to have disproportionately large effects or cause the NAV of the Fund generally to decline faster than it would otherwise. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. An investment in the Fund does not receive the same tax advantages as a direct investment in a Pass-Thru Security. Funds accrue deferred income taxes for future tax liabilities associated with the portion of Pass-Thru Security distributions considered to be a tax-deferred return of capital and for any net operating gains as well as capital appreciation of its investments. This deferred tax liability is reflected in the daily NAV and as a result, the Fund’s after-tax performance could differ significantly from the underlying assets even if the pre-tax performance is closely tracked. The potential tax benefits from investing in Pass-Thru Securities depend on them being treated as partnerships for federal income tax purposes. Diversification does not assure a profit or protect against loss in a declining market.

The funds are distributed by Foreside Fund Services, LLC. GraniteShares is not affiliated with Foreside Fund Services, LLC.

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