World-first ETFs aim to give investors increased monthly payouts from individual stocks of top firms
Purpose Investments has just officially added to its record of providing world-leading solutions for Canadian investors.
Following an announcement late last month, the firm has launched its initial suite of Yield Shares ETFs, the first yield-focused single-stock ETFs in the world.
“It’s a turbulent economic environment right now, and with Yield Shares by Purpose, we’re excited to offer Canadians the opportunity to get exposure to individual stocks like Tesla and Apple and receive enhanced monthly distributions while being invested in them,” Vlad Tasevski, chief operating officer and head of Product, said in a statement.
Investing in some of the most popular names in the world, such as Tesla, Amazon, and Berkshire Hathaway, each of the new ETFs lets investors get a monthly yield beyond the equivalent stock’s individual declared dividend, while retaining exposure to the performance of the underlying individual stock. They employ moderate leverage targeted at a maximum of 25% of net asset value.
Yields arising from the ETFs’ covered-call options strategy, which are targeted at a maximum of 50% of net asset value, will be tax-efficient as they come in the form of capital gains. They also help address a common advisor pain point.
“For advisors, it’s not that easy to actually overwrite calls and use modest leverage to augment the income,” Tasevski told Wealth Professional in an interview last month. “Trying to achieve that, account by account, is very tedious.”
The Yield Shares ETFs let investors get Canadian dollar-denominated investment exposure to U.S. stocks, while hedging against the risks associated with U.S. dollar currency exposure.
Purpose’s initial suite of Yield Shares ETFs, now trading on the NEO Exchange, include:
- Alphabet (GOOGL) Yield Shares Purpose ETF (YGOG);
- Apple (AAPL) Yield Shares Purpose ETF (APLY);
- Amazon (AMZN) Yield Shares Purpose ETF (YAMZ);
- Berkshire Hathaway (BRK) Yield Shares Purpose ETF (BRKY); and
- Tesla (TSLA) Yield Shares Purpose ETF (YTSL)
“Over the years, Purpose has consistently earned a reputation for innovation in the investment industry, and the all-new Yield Shares by Purpose are the latest way investors can get more optionality in how they invest abroad,” said Erik Sloane, Chief Revenue Officer at NEO.
“NEO is proud to continue supporting Purpose as their exchange partner, and we are honoured to deliver a best-in-class platform providing superior access and visibility for investors and financial advisors.”
