Nicholas Wealth Announces Increased Distribution Yield on FIAX ETF
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Insights
An increase in the distribution yield of an ETF, such as the Nicholas Fixed Income Alternative ETF (FIAX), from 6.56% to 7.01%, signifies a higher payout to investors relative to the share price. This could be indicative of a fund's strong performance or a strategic decision to distribute more income. Investors typically view higher yields as attractive, particularly in a fixed income space where returns are generally more stable compared to equity markets.
However, it's crucial to consider the ETF's gross expense ratio of 0.95%, which can impact net returns. The 30-day SEC Yield, standing at 4.08%, provides a standardized measure of the fund's net investment income over a month, annualized based on the share price at the month's end. This figure is pertinent as it reflects the fund's income-generating ability after accounting for fund expenses, excluding option income.
The distribution rate calculation is essential for understanding potential future yields, but it's not a guarantee of ongoing returns. The composition of distributions, including ordinary dividends, capital gains and return of capital, can affect the ETF's net asset value (NAV). A return of capital, for instance, can erode the fund's NAV and potentially lead to capital losses for investors over time.
Investors should also be aware that high distribution rates may result from favorable market conditions that may not be sustainable. A critical analysis of the ETF's performance and the underlying assets is necessary to assess the risk of capital depreciation.
The distribution yield of an ETF is a reflection of the broader economic environment, including interest rates, inflation and market volatility. The increase to 7.01% for the FIAX could suggest that the fund is navigating the current economic landscape effectively, potentially through astute bond selection or interest rate strategies.
However, investors should be aware of the cyclical nature of fixed income investments and the impact of economic changes on bond yields. For instance, in a rising interest rate environment, existing bonds with lower rates become less attractive and their prices may decrease. This scenario could affect the ETF's performance and its ability to sustain high distribution yields.
Moreover, the reported distribution rates and SEC yields should be evaluated in the context of the overall market performance and compared against benchmarks and peer funds to gauge relative performance. It's also important to consider the duration and credit quality of the bonds within the ETF's portfolio, as these factors influence risk and return profiles.
In the context of the fixed income ETF market, the FIAX's performance should be analyzed against industry trends and peer funds. The distribution yield and SEC yield are important metrics for comparison, but a comprehensive analysis would also include the fund's credit risk, interest rate risk and the quality of its underlying assets.
The ETF's gross expense ratio of 0.95% is another critical factor, as higher expenses can erode returns over time. Industry norms for expense ratios vary and investors should consider how FIAX's ratio compares to similar funds.
While the increase in distribution yield may attract investors, it's essential to understand the sustainability of these distributions. A detailed examination of the fund's portfolio holdings, turnover rate and the management's strategy in current market conditions is necessary to evaluate the long-term prospects of the ETF.
ATLANTA, Dec. 20, 2023 (GLOBE NEWSWIRE) -- Nicholas Wealth today announced a
Distribution Information
| ETF Ticker1 | ETF Name | Distribution per Share | 30-day SEC Yield (as of 11/30/2023)2 | Distribution Rate3 | Ex-Date | Record Date | Payment Date | |||
| FIAX | Nicholas Fixed Income Alternative ETF | 12/15/2023 | 12/18/2023 | 12/19/2023 | ||||||
Distribution History
| Distribution per Share | Distribution Yield | Ex-Date | Record Date | Payment Date | |
| 1/17/2023 | 1/18/2023 | 1/19/2023 | |||
| 2/15/2023 | 2/16/2023 | 2/17/2023 | |||
| 3/15/2023 | 3/16/2023 | 3/17/2023 | |||
| 4/17/2023 | 4/18/2023 | 4/19/2023 | |||
| 5/15/2023 | 5/16/2023 | 5/17/2023 | |||
| 6/14/2023 | 6/15/2023 | 6/16/2023 | |||
| 7/17/2023 | 7/18/2023 | 7/19/2023 | |||
| 8/15/2023 | 8/16/2023 | 8/17/2023 | |||
| 9/14/2023 | 9/15/2023 | 9/18/2023 | |||
| 10/16/2023 | 10/17/2023 | 10/18/2023 | |||
| 11/15/2023 | 11/16/2023 | 11/17/2023 | |||
1 Nicholas Fixed Income Alternative ETF has a gross expense ratio of
2 The 30-Day SEC Yield for FIAX is
3 The Distribution Rate is the annual yield 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. 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.
Standardized Performance
For FIAX’s standardized performance, click here.
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.
Investors in the Fund will not have rights to receive dividends or other distributions with respect to the underlying reference asset.
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.
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
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information are in the prospectus. Please read the prospectuses carefully before you invest.
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.
Indirect Investment Risk
The underlying companies are not affiliated with the Trust, the Fund, the Adviser, the Sub-Adviser, or their respective affiliates and is not involved with this offering in any way and has no obligation to consider your Shares in taking any corporate action that might affect the value of Shares. Investors in the Funds will not have voting rights and will not be able to influence management of the underlying company but will be exposed to the performance of the underlying company’s stock or ETF. Investors in the Funds will not have rights to receive dividends or other distributions or any other rights with respect to the underlying stock or ETF but will be subject to declines in the performance of the underlying stock.
U.S. Obligations Risk
The Funds may invest in securities issued by the U.S. government or its agencies or instrumentalities. U.S. Government obligations include securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies, or instrumentalities, such as the U.S. Treasury. Payment of principal and interest on U.S. Government obligations may be backed by the full faith and credit of the United States or may be backed solely by the issuing or guaranteeing agency or instrumentality itself. In the latter case, the investor must look principally to the agency or instrumentality issuing or guaranteeing the obligation for ultimate repayment, which agency or instrumentality may be privately owned. There can be no assurance that the U.S. Government would provide financial support to its agencies or instrumentalities (including government sponsored enterprises) where it is not obligated to do so.
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.
Currency Risk
The Fund is exposed to currency risk indirectly due to the underlying ETF’s investments. The underlying ETF’s net asset value is determined on the basis of the U.S. dollar, therefore, the underlying ETF may lose value if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the underlying ETF’s holdings go up.
Options Contracts
The use of options contracts involves investment strategies and risks different from those associated with ordinary portfolio securities transactions. The prices of options are volatile and are influenced by, among other things, actual and anticipated changes in the value of the underlying instrument, including the anticipated volatility, which are affected by fiscal and monetary policies and by national and international political, changes in the actual or implied volatility or the reference asset, the time remaining until the expiration of the option contract and economic events.
Price Participation Risk
The Fund employs an investment strategy that includes the sale of call option contracts, which limits the degree to which the Fund will participate in increases in value experienced by the underlying stock or ETF over the Call Period. This means that if the underlying stock or ETF experiences an increase in value above the strike price of the sold call options during a Call Period, the Fund will likely not experience that increase to the same extent and may significantly underperform the underlying stock or ETF over the Call Period. Additionally, because the Fund is limited in the degree to which it will participate in increases in value experienced by the underlying stock or ETF over each Call Period, but has full exposure to any decreases in value experienced by the underlying stock or ETF over the Call Period, the NAV of the Fund may decrease over any given time period.
Distribution Risk
As part of the Fund’s investment objective, the Fund seeks to provide current monthly income. There is no assurance that the Fund will make a distribution in any given month. If the Fund does make distributions, the amounts of such distributions will likely vary greatly from one distribution to the next.
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.
Distributed by Foreside Fund Services, LLC. Foreside is not affiliated with Nicholas Wealth.
Launch & Structure Partner: Tidal Financial Group.
FAQ
What is the distribution yield announced by Nicholas Wealth for the Nicholas Fixed Income Alternative ETF (FIAX)?
When is the dividend payable for the Nicholas Fixed Income Alternative ETF (FIAX)?
What is the gross expense ratio of the Nicholas Fixed Income Alternative ETF (FIAX)?
What is the 30-day SEC Yield of the Nicholas Fixed Income Alternative ETF (FIAX) as of 11/30/2023?
What is the Distribution Rate for the Nicholas Fixed Income Alternative ETF (FIAX)?
What does the Distribution Rate represent for the Nicholas Fixed Income Alternative ETF (FIAX)?
