Nicholas Wealth Announces Increased Distribution Rate on $FIAX

Rhea-AI Summary

Nicholas Wealth has increased monthly distributions to 8.04% on the Nicholas Fixed Income Alternative ETF (FIAX). As of September 18, 2024, the distribution per share is $0.1321, with an ex-date of 9/16/2024, record date of 9/17/2024, and payment date of 9/18/2024. The ETF's 30-Day SEC Yield stands at 3.43%.

FIAX, launched on 11/30/2022, has a gross expense ratio of 0.95%. The Distribution Rate represents the annual rate an investor would receive if the most recent distribution remained constant. However, investors should note that distributions are not guaranteed and may vary significantly month to month, potentially reaching zero.

The fund involves high-risk investments, including derivatives and counterparty risks. It's non-diversified and subject to equity market risk, high portfolio turnover risk, and interest rate risk. Potential investors should carefully consider these factors before investing.

Positive

• Increased monthly distribution rate to 8.04% for FIAX
• Distribution per share of $0.1321 as of September 18, 2024
• 30-Day SEC Yield of 3.43%

Negative

• High-risk investment strategy involving derivatives and counterparty risks
• Non-diversified fund structure increases potential for losses
• High gross expense ratio of 0.95%
• Distributions are not guaranteed and may vary significantly or reach zero
• Subject to equity market risk, high portfolio turnover risk, and interest rate risk

Insights

Financial Analyst

The increased distribution rate for the Nicholas Fixed Income Alternative ETF (FIAX) to 8.04% is a notable development. This higher yield could attract income-seeking investors in the current market environment. However, it's important to note that the 30-Day SEC Yield stands at only 3.43%, which is significantly lower than the distribution rate. This discrepancy suggests that a portion of the distribution may be coming from sources other than investment income, possibly including return of capital. Investors should be cautious as this could potentially erode the fund's NAV over time if not supported by underlying performance.

The fund's relatively high gross expense ratio of 0.95% should also be considered, as it may impact overall returns. While the increased distribution rate might seem attractive, investors need to carefully evaluate the sustainability of these payouts and the potential long-term implications on the fund's value.

Risk Management Expert

The substantial gap between FIAX's distribution rate (8.04%) and its 30-Day SEC Yield (3.43%) raises red flags about the sustainability of the fund's payout strategy. This discrepancy often indicates that distributions are being funded by sources other than organic income, which could include return of capital or realized capital gains. Such practices can lead to NAV erosion over time if not supported by underlying asset appreciation.

Moreover, the fund's non-diversified nature and use of derivatives amplify risk. The prospectus warns of counterparty risk, equity market risk and potential for high portfolio turnover. These factors, combined with the fund's short operating history (inception: 11/30/2022), make it difficult to assess long-term viability. Investors should approach with caution, understanding that the high distribution rate comes with elevated risk and potential for capital erosion.

NEW YORK, Sept. 19, 2024 (GLOBE NEWSWIRE) -- Nicholas Wealth, a leading provider of actively managed income ETFs, just announced increased monthly distributions to 8.04% on the Nicholas Fixed Income Alternative ETF (FIAX).

Distribution as of 9/18/2024

ETF Ticker	Distribution per Share		Distribution Rate		30-Day SEC Yield		Ex-Date	Record Date	Payment Date
FIAX	$	0.1321	8.04	%	3.43	%	9/16/2024	9/17/2024	9/18/2024

Inception date: 11/30/2022
Click here to view standardized performance for FIAX.

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.

¹ Nicholas Fixed Income Alternative ETF has a gross expense ratio of 0.95%.

² The 30-Day SEC Yield for FIAX is 3.43%. 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.

³ The Distribution Rate is the annual rate an investor would receive if the most recent 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 may also include a combination of ordinary dividends, capital gain, and return of investor capital, which may decrease an ETF’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 may be caused by unusually favorable market conditions and 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.

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 (833) 378-0717.

Investors in the Fund will not have rights to receive dividends or other distributions with respect to the underlying reference asset.

Distribution figures include return of capital.

Prospectus

For a prospectus or summary prospectus with this and other information about the Fund, please call (855) 563-6900 or visit our website at www.nicholasx.com.

Distributions are not guaranteed. The Distribution Rate and 30-Day SEC Yield are 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.

Risk Information

Investments involve risk. Principal loss is possible.

Investing in the Funds involves a high degree of risk.

THE FUND, TRUST, AND SUB-ADVISER ARE NOT AFFILIATED WITH ANY UNDERLYING ETF.

Due to the Funds’ investment strategies, the Funds’ investment exposures are concentrated in the same industries that are assigned to the underlying stock or ETF. As with any investment, there is a risk you could lose all or part of your investment in the Fund. Some or all of these risks may adversely affect the Funds’ net asset value (“NAV”) per share, trading prices, yields, total returns, and/or ability to meet their objective.

Shares of any ETF are bought and sold at market price (not NAV) and may trade at a discount or premium to NAV. Shares are not individually redeemable from the Fund and may only be acquired or redeemed from the Fund in creation units. Brokerage commissions will reduce returns.

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.

Yield to Maturity: Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures.

Dividend Yield: The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Average Duration: A measure of a fund’s interest-rate sensitivity—the longer a fund’s duration, the more sensitive the fund is to shifts in interest rates. Duration is determined by a formula that includes coupon rates and bond maturities. Small coupons tend to increase duration, while shorter maturities and higher coupons shorten duration.

Distributed by Foreside Fund Services, LLC. Foreside Fund Services, LLC is not affiliated with Tidal Financial Group

Launch & Structure Partner: Tidal Financial Group.

FAQ

What is the new distribution rate for Nicholas Fixed Income Alternative ETF (FIAX)?

Nicholas Wealth has increased the monthly distribution rate to 8.04% for the Nicholas Fixed Income Alternative ETF (FIAX) as of September 18, 2024.

When was FIAX launched and what is its expense ratio?

FIAX was launched on November 30, 2022, and has a gross expense ratio of 0.95%.

What is the 30-Day SEC Yield for FIAX as of August 31, 2024?

The 30-Day SEC Yield for FIAX is 3.43% as of August 31, 2024.

Are the distributions for FIAX guaranteed?

No, distributions for FIAX are not guaranteed. They may vary significantly from month to month and could potentially reach zero.

What are the main risks associated with investing in FIAX?

The main risks include derivatives risk, counterparty risk, equity market risk, high portfolio turnover risk, non-diversification risk, and interest rate risk.