Westwood Announces Monthly Income Distributions for Westwood Salient Enhanced Midstream Income ETF (MDST) and Westwood Salient Enhanced Energy Income ETF (WEEI)
Westwood Holdings Group (WHG) announced monthly income distributions for its Westwood Salient Enhanced Midstream Income ETF (MDST) and Westwood Salient Enhanced Energy Income ETF (WEEI). Both ETFs offer income from dividends and options premiums, providing double-digit income rates of 11% and 11.4% respectively.
MDST, launched on April 9, 2024, invests in midstream energy companies and holds $38.74 million in net assets. WEEI, launched on May 1, 2024, focuses on various energy companies and has $2.96 million in net assets. These funds aim to generate high monthly income while offering potential equity appreciation.
However, the announcement cautions that the annualized distribution rates are based on current conditions and may not be sustainable, potentially leading to significant investment losses if market conditions change unfavorably.
- Double-digit income rates: MDST (11%) and WEEI (11.4%).
- MDST has $38.74 million in net assets (as of May 30, 2024).
- WEEI has $2.96 million in net assets (as of May 30, 2024).
- Both ETFs offer a combination of dividend yield and options premiums.
- Potential for equity appreciation in the energy sector.
- Sustainability of annualized distribution rates is uncertain.
- Potential for significant investment losses if market conditions change.
- Distributions may decrease the ETF's NAV and trading price over time.
Insights
Westwood Holdings Group's announcement of monthly income distributions for its ETFs, MDST and WEEI, deserves attention for a few reasons. Firstly, the annualized distribution rates of
The funds use a strategy combining dividend yields and options premiums from covered calls, providing a diversified source of income. Investors should note, however, that this approach can expose them to increased risk, particularly if market conditions change unfavorably. The relatively recent launch dates and small asset bases (MDST at
Overall, MDST and WEEI could provide robust income but require a thorough understanding of the underlying strategies and risks. The high distribution rates might not be sustainable if market conditions shift, particularly in the energy sector, which is known for its volatility.
The specific focus on midstream energy companies for MDST and a broader energy sector coverage for WEEI highlights an interesting niche in the ETF market. The energy sector’s cyclical nature can influence these funds significantly. Investors should consider the volatility and potential regulatory changes impacting oil and gas markets.
For instance, midstream energy companies are generally considered more stable within the energy sector due to their essential role in energy infrastructure. However, factors such as changes in energy demand, technological advancements in energy production and shifts toward renewable energy sources could impact these ETFs’ performance. It's important investors understand that high yields often come with corresponding risks, particularly in sectors prone to fluctuation like energy.
Given these considerations, while the high distribution rates appear attractive, they should be viewed with a critical eye concerning long-term viability and the evolving energy landscape.
DALLAS, June 03, 2024 (GLOBE NEWSWIRE) -- Westwood Holdings Group (WHG), a publicly-traded investment management boutique and wealth management firm, today announced monthly income distributions for Westwood Salient Enhanced Midstream Income ETF (NYSE: MDST) and Westwood Salient Enhanced Energy Income ETF (NASDAQ: WEEI) as shown in the table below. This pair of Westwood Exchange- Traded Funds (ETFs) deliver income from both dividends and options premiums to help provide monthly income distributions for investors. Most recently, both strategies are providing double-digit income to investors.
| ETF Ticker | ETF | Distribution per Share | Annualized Distribution Rate1 |
| (NYSE: MDST) | Westwood Salient Enhanced Midstream Income ETF | 0.225 | |
| (NASDAQ: WEEI) | Westwood Salient Enhanced Energy Income ETF | 0.225 |
Both MDST and WEEI are actively managed funds, designed to provide advisors and investors with a robust solution for generating high distributable monthly income, combining dividend yield and options premiums from covered calls, while also offering the potential for equity appreciation within the energy sector.
“Westwood launched MDST and WEEI to provide a differentiated income solution for advisors and investors in an efficient ETF wrapper,” said Greg Reid, president of Real Assets at Westwood and portfolio manager of MDST and WEEI. “In the short time since their launch, we believe both ETFs have demonstrated their value and purpose. We view both funds as valuable tools for generating income in an investor’s portfolio.”
Launched April 9, 2024, MDST seeks to deliver current income and capital appreciation by investing in midstream energy companies, defined as companies and master limited partnerships (MLPs) that gather, transport, store and distribute crude oil, natural gas and other energy products. The fund combines dividend yield and options premiums from covered calls to target significant monthly income distributions. MDST currently has
WEEI, which launched May 1, 2024, offers broad exposure to energy companies, including upstream, downstream, oil service and integrated companies that operate in all phases of oil exploration, production, service and distribution. Like MDST, WEEI combines dividend yield and options premiums from covered calls to target significant monthly income distributions. WEEI currently has
1The Annualized Distribution Rate shown is as of May 30, 2024. The Annualized Distribution Rate is the annual yield an investor would receive if the most recent distribution, which includes option premium income, remained the same going forward. The Annualized 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.
More information on Westwood’s ETF offerings is available at westwoodetfs.com.
ABOUT WESTWOOD HOLDINGS GROUP, INC.
Westwood Holdings Group, Inc. is a focused investment management boutique and wealth management firm.
Founded in 1983, Westwood offers a broad array of investment solutions to institutional investors, private wealth clients and financial intermediaries. The firm specializes in several distinct investment capabilities: U.S. Value Equity, Multi-Asset, Energy & Real Assets, Income Alternatives, Tactical Absolute Return and Managed Investment Solutions, which are available through separate accounts, the Westwood Funds® family of mutual funds, exchange-traded funds (ETFs) and other pooled vehicles. Westwood benefits from significant, broad-based employee ownership and trades on the New York Stock Exchange under the symbol “WHG.” Based in Dallas, Westwood also maintains offices in Chicago, Houston and San Francisco.
For more information on Westwood, please visit westwoodgroup.com.
Westwood ETFs are distributed by Northern Lights Distributors, LLC (Member FINRA). Northern Lights Distributors and Westwood ETFs (or Westwood Holdings Group, Inc.) are separate and unaffiliated.
To determine if these Funds are an appropriate investment for you, carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. This and other information can be found in the Fund prospectus’, which may be obtained by calling 800.944.0755. Please read the prospectus carefully before investing.
The Fund is newly formed and has no operating history.
The Fund’s investments are concentrated in the energy infrastructure industry with an emphasis on securities issued by MLPs, which may increase price fluctuation. The value of commodity-linked investments such as the MLPs and energy infrastructure companies (including midstream MLPs and energy infrastructure companies) in which the Fund invests are subject to risks specific to the industry they serve, such as fluctuations in commodity prices, reduced volumes of available natural gas or other energy commodities, slowdowns in new construction and acquisitions, a sustained reduced demand for crude oil, natural gas and refined petroleum products, depletion of the natural gas reserves or other commodities, changes in the macroeconomic or regulatory environment, environmental hazards, rising interest rates and threats of attack by terrorists on energy assets, each of which could affect the Fund’s profitability.
MLPs are subject to significant regulation and may be adversely affected by changes in the regulatory environment including the risk that an MLP could lose its tax status as a partnership. If an MLP were to be obligated to pay federal income tax on its income at the corporate tax rate, the amount of cash available for distribution would be reduced and such distributions received by the Fund would be taxed under federal income tax laws applicable to corporate dividends received (as dividend income, return of capital or capital gain). Investing in MLPs involves additional risks as compared to the risks of investing in common stock, including risks related to cash flow, dilution and voting rights. Such companies may trade less frequently than larger companies due to their smaller capitalizations, which may result in erratic price movement or difficulty in buying or selling. Additional management fees and other expenses are associated with investing in MLP funds. The tax benefits received by an investor investing in the Fund differs from that of a direct investment in an MLP by an investor. This document does not constitute an offering of any security, product, service or fund, including the Fund, for which an offer can be made only by the Fund’s prospectus. No fund is a complete investment program and you may lose money investing in a fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description. “Alerian MLP Index,” “Alerian Midstream Energy Select Index,” “AMZ,” and “AMEI” are trademarks of Alerian and their use is granted under a license from Alerian. One cannot invest directly in an index.
Media Contact:
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Hewes Communications
212.207.9454
tyler@hewescomm.com
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