Nicholas Wealth Announces Distribution Yield on $GIAX

Rhea-AI Summary

Nicholas Wealth has announced a 24.00% monthly distribution for its Nicholas Global Equity and Income ETF (GIAX). The distribution details are as follows:

• Distribution per Share: $0.4020
• Ex-Date: 9/25/2024
• Record Date: 9/25/2024
• Payment Date: 9/26/2024
• 30-Day SEC Yield: 0.93%

GIAX, launched on 7/29/2024 in partnership with Tidal Investments , is an actively managed ETF seeking current income and capital appreciation. The fund achieves this by holding shares of unaffiliated passively managed ETFs for global equity exposure and selling daily index credit call spreads on US equity indexes.

Positive

• High monthly distribution yield of 24.00%
• Actively managed ETF strategy for income and capital appreciation
• Diversified exposure to global equity securities through Index ETFs

Negative

• Low 30-Day SEC Yield of 0.93% compared to the distribution rate
• Recently launched fund with performance history (inception date: 7/29/2024)

Insights

Financial Analyst

The announcement of a 24.00% distribution yield for the Nicholas Global Equity and Income ETF (GIAX) is significant. This high yield is likely to attract income-focused investors, potentially boosting the fund's assets under management. However, it's important to note the stark difference between the distribution rate and the 30-day SEC yield of 0.93%.

This discrepancy suggests that a substantial portion of the distribution may be coming from sources other than traditional income, such as return of capital or realized capital gains. While high distributions can be attractive, they may not be sustainable long-term if not supported by underlying earnings.

The fund's strategy of holding passive ETFs while selling index credit call spreads is an interesting approach to generate income. This could provide enhanced yields in sideways or slightly bullish markets but may limit upside in strongly bullish conditions. Investors should carefully consider the risk-return profile and understand the potential impact on total return over time.

ETF Specialist

The launch of GIAX in July 2024 and its subsequent high distribution yield announcement mark an interesting development in the actively managed income ETF space. The fund's strategy of combining passive ETF holdings with options-based income generation is a sophisticated approach that aims to capitalize on global equity exposure while enhancing income through derivative strategies.

However, the 24.00% distribution rate is exceptionally high and unsustainable based solely on traditional equity income. This suggests aggressive use of options strategies or potential return of capital, which could erode the fund's asset base over time if not matched by capital appreciation.

The low 30-day SEC yield of 0.93% is a red flag, indicating that the high distribution rate may not be reflective of the fund's actual earnings. Investors should be cautious and understand that such high distribution rates often come with increased risk and potential for capital erosion. It's important to monitor the fund's NAV and total return performance over time to assess the sustainability of this distribution strategy.

NEW YORK, Oct. 01, 2024 (GLOBE NEWSWIRE) -- Nicholas Wealth, a leading provider of actively managed income ETFs, announced monthly distributions of 24.00% on the Nicholas Global Equity and Income ETF (GIAX).

Distribution as of 10/1/2024

ETF Ticker	Distribution per Share		Distribution Rate *	30-Day SEC Yield**	Ex-Date	Record Date	Payment Date
GIAX	$0.4020		24.00%	0.93%	9/25/2024	9/25/2024	9/26/2024

Inception date: 7/29/2024
Click here to view standardized performance for GIAX.

The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted above. Performance current to the most recent month-end can be obtained by calling (855) 563-6900.

GIAX, launched in partnership with Tidal Investments LLC, is an actively managed ETF that seeks current income and capital appreciation. The Fund aims to achieve this by holding shares of unaffiliated passively managed ETFs that seek to provide exposure to a range of global equity securities (“Index ETFs”) and selling daily index credit call spreads (“Index Call Spreads*”) on one or more US equity indexes.

About Nicholas Wealth
At Nicholas Wealth Management, we believe in making a positive difference in the lives of our clients by staying true to our principles and keeping our promises. Since 2012, we’ve aimed to help individuals secure their financial future with the goal of generating income and preserving wealth. Building wealth takes years of discipline and hard work. Our comprehensive approach seeks to maximize the amount individuals get to keep from their hard-earned investment and retirement savings.

About Tidal Investments LLC 
Formed by ETF industry pioneers and thought leaders, Tidal Investments LLC sets out to revolutionize the way ETFs have historically been developed, launched, marketed, and sold. With a focus on growing AUM, Tidal offers a comprehensive suite of services, proprietary tools, and methodologies designed to bring lasting ideas to market. Tidal is an advocate for ETF innovation. The firm is on a mission to provide issuers with the intelligence and tools needed to efficiently and to effectively launch ETFs and to optimize growth potential in a highly competitive space. For more information, visit https://www.tidalfinancialgroup.com/.  

* The Distribution Rate is the annual rate an investor would receive if the most recently declared distribution, which includes option income, remained the same going forward. The Distribution Rate is calculated by multiplying an ETF’s Distribution per Share by twelve (12), and dividing the resulting amount by the ETF’s most recent NAV. The Distribution Rate represents a single distribution from the ETF and does not represent its total return. Distributions are not guaranteed.

** The 30-Day SEC Yield represents net investment income, which excludes option income, earned by such ETF over the 30-Day period ended August 31, 2024, expressed as an annual percentage rate based on such ETF’s share price at the end of the 30-Day period.

The Distribution Rate and 30-Day SEC Yield is not indicative of future distributions, if any, on the ETFs. In particular, future distributions on any ETF may differ significantly from its Distribution Rate or 30-Day SEC Yield. You are not guaranteed a distribution under the ETFs. Distributions for the ETFs (if any) are variable and may vary significantly from month to month and may be zero. Accordingly, the Distribution Rate and 30-Day SEC Yield will change over time, and such change may be significant.

The distribution may include a combination of ordinary dividends, capital gain, and return of investor capital, which may decrease a fund's NAV and trading price over time. Please see the 19a-1 notice for more information on return of investor capital.

As a result, an investor may suffer significant losses to their investment. These distribution rates caused by unusually favorable market conditions may not be sustainable. Such conditions may not continue to exist and there should be no expectation that this performance may be repeated in the future. Additional fund risks can be found below.

Must be preceded or accompanied by a prospectus.

Investments involve risk. Principal loss is possible.

Derivatives Risk. Derivatives are financial instruments that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. The Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation and legal restrictions.

Counterparty Risk. The Fund is subject to counterparty risk by virtue of its investments in option contracts which exposes the Fund to the risk that the counterparty will not fulfill its obligation to the Fund.

Equity Market Risk. By virtue of the Fund’s investments in option contracts equity ETFs and equity indices, the Fund is exposed to common stocks indirectly which subjects the Fund to equity market risk.

High Portfolio Turnover Risk. The Fund may actively and frequently trade all or a significant portion of the Fund’s holdings. A high portfolio turnover rate increases transaction costs, which may increase the Fund’s expenses.

Non-Diversification Risk. Because the Fund is “non-diversified,” it may invest a greater percentage of its assets in the securities of a single issuer or a smaller number of issuers than if it was a diversified fund.

Hedging Transactions Risk. Hedging transactions involve risks different than those of underlying investments. In particular, the variable degree of correlation between price movements of hedging transactions and price movements in the position being hedged means that losses on the hedge may be greater than gains in the value of the Fund’s positions, opportunities for gain may be limited or that there may be losses on both parts of a transaction.

Illiquid Investments Risk. The Fund may, at times, hold illiquid investments, by virtue of the absence of a readily available market for certain of its investments, or because of legal or contractual restrictions on sales.

Interest Rate Risk. The value of the Fund’s investments in fixed income Treasury securities will fluctuate with changes in interest rates.

New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions. 

*Index Credit Spread: An index call spread is a type of options trading strategy that involves buying a call option on an index and selling another call option on a higher strike price with the same expiration date.

Distributed by Foreside Fund Services, LLC.

FAQ

What is the distribution yield for Nicholas Global Equity and Income ETF (GIAX)?

Nicholas Wealth announced a monthly distribution yield of 24.00% for the Nicholas Global Equity and Income ETF (GIAX) as of October 1, 2024.

When was the Nicholas Global Equity and Income ETF (GIAX) launched?

The Nicholas Global Equity and Income ETF (GIAX) was launched on July 29, 2024, in partnership with Tidal Investments

What is the investment strategy of the Nicholas Global Equity and Income ETF (GIAX)?

GIAX is an actively managed ETF that seeks current income and capital appreciation by holding shares of unaffiliated passively managed ETFs for global equity exposure and selling daily index credit call spreads on US equity indexes.

What is the 30-Day SEC Yield for the Nicholas Global Equity and Income ETF (GIAX)?

The 30-Day SEC Yield for the Nicholas Global Equity and Income ETF (GIAX) is 0.93% as of October 1, 2024.