The Indiana-based asset manager Innovative Portfolios is making its debut on the ETF market by converting two of its existing mutual funds to exchange-traded funds.
The Preferred-Plus ETF (IPPP) and Dividend Performers ETF (IPDP) debuted Monday on the Cboe Global Markets, with each charging fixed management fees of 0.85%.
IPPP carries 2 basis points in interest costs and 3 basis points in acquired funds fees for a final expense ratio of 0.90% on debut, while IPDP is estimating an additional interest cost of 4 basis points for the fiscal year, of 0.89%.
IPPP, which brings $12.9 million in assets from its time as a mutual fund, aims to generate income by holding preferred securities, debt and other ETFs with the target of keeping the portfolio overall above junk status. It also aims to maintain a 10% exposure to a credit spread options strategy against an S&P 500 ETF. The fund has generated 12.05% in pre tax returns since inception.
The $15.8 million IPDP invests primarily in large cap U.S. stocks with at least 10 years of consistent dividend payments and dividend growth, and includes the same options strategy employed by IPPP.
Both funds are actively managed.
Innovative Portfolios manages the funds and separately managed portfolios on behalf of other financial advisors. It holds $86 million in assets, according to its latest disclosure to the SEC.
IPPP and IPDP join the Convergence Long/Short Equity ETF (CLSE) to be among the first mutual funds to convert to ETFs this year, bringing the total number of assets converted during that period to $55.2 million.
J.P. Morgan is due to convert four funds with approximately $29.5 billion in assets as soon as April.
Contact Dan Mika at [email protected], and follow him on Twitter
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