Many investors are looking for current income right now, but it’s not just those at or near retirement who can benefit. Indeed, should the markets face some geopolitical or election-related tumult, many investors may want an added income cushion. Still, many investors still want some exposure to equities. That’s where an active income ETF like GQI, the Natixis Gateway Quality Income ETF, can play a role, recently passing $100 million AUM.
See more: As Rate Cut Uncertainty Grows, Look to Active ETFs
GQI charges a 34 basis point (bps) fee for its approach. Having launched less than a year ago, it has since hit $103.6 million in AUM per VettaFi’s ETF Database. That AUM owes to both new flows in the last three months as well as price appreciation for its holdings.
So, how does the strategy invest? The active income ETF screens the equity landscape for large and mid-cap stocks that meet its quality standards. It seeks out established firms with low leverage and notable profitability, crafting a diversified list of between 75 and 150 names. That provides it with a degree of exposure to the stock market’s ups and downs.
However, it provides a measure of stability to a portfolio by adding current income. The strategy generates income by selling options through ELNs. Though ELNs, or Equity-Linked Notes, may cap some degree of market upside, the equity side of the strategy can still provide a lift.
GQI has returned 7.3% since inception, per Natixis Investment Managers. While the economy continues to hum along steadily, interest rate drama still does loom over stocks. For those looking for an active income ETF that combines active’s strengths with equity and income exposure, GQI stands out as one notable option.
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