WisdomTree Alternative Income Fund
Ticker: HYIN
Exchange: Cboe BZX
Ticker: HYIN
Exchange: Cboe BZX
Expense ratio: 3.20% = 0.50% management fees + acquired fees from underlying Publicly Traded Alternative Credit Vehicles (PACs)
Investment Objective:
Index Methodology Summary:
35 equal-weighted PACs (CEFs, BDCs, and REITs) across six sectors that hold high-yielding securities, selected by descending market cap and with target number of PAC per sector.
- private corporate lending (7)
- public corporate debt (7)
- commercial real estate lending (7)
- agency real estate debt (7)
- non-agency real estate debt (4)
- multi-sector alternative credit (3)
Full details on index methodology at bottom of this post.
Analysis
ETF providers are responding to investors' concerns on both inflation and income, and WT responds with the WisdomTree Alternative Income Fund (HYIN). Alternative Income refers to the fund investing in equities, but those equities are publicly-traded investment vehicles that hold high-yield debt and credit. A more accurate but cumbersome nomenclature for HYIN could be "Fund of publicly-traded high-yield credit non-ETFs".
Besides the underlying high-yield instruments, the distribution yield of HYIN should further be boosted by the fact that the vehicles that hold the underlying may trade at a discount. However, as the SEC requires acquired fund fees to be displayed at the top line, HYIN's expense ratio is inflated to a whopping 3.20%, though distributions by the fund should already be net of the acquired fund fees.
Bottom line is that regardless of asset class or method, HYIN will have to deliver at least 6% [dividend] yield itself after all fees to grab the imagination of investors. Specifically, given existing ETFs, investors looking for US, diversified, non-MLP yield.
Original filing date: December 17, 2020
Effective date: March 30, 2021
Listing Date: May 6, 2021 (Friday)
CUSIP: 97717Y626
Active: No
Index / Benchmark: Gapstow Liquid Alternative Credit Index
Constituents: 35
Adviser: WisdomTree Asset Management, Inc
Sub-Adviser: Mellon Investments Corporation
Portfolio Managers:
- Marlene Walker-Smith
- Thomas J. Durante, CFA
Fund accountant: State Street Bank and Trust Company
Transfer agent: State Street Bank and Trust Company
Custodian: State Street Bank and Trust Company
Distributor: Foreside Fund Services, LLC
Legal counsel: Morgan, Lewis & Bockius LLP
External accounting: Ernst & Young LLP
Prospectus is here.
MORE ETF HEARSAY
- LinkedIn: Henry Jim
- henry@etfhearsay.com
- Twitter: @ETFhearsay
The Index is provided by Gapstow Capital Partners, L.P. and is designed to provide diversified exposure to alternative credit sectors.
The Index is comprised of listed and publicly traded on a major U.S. stock exchange:
To be eligible for inclusion in the Index:
(i) be registered under the Securities Act of 1933
(ii) be listed and publicly traded on a major U.S. stock exchange
(iii) have intra-day pricing provided by such exchange
(iv) have traded for at least the most recent 90 calendar days
(v) have a permanent capital structure (i.e., Vehicles that have a relatively stable number of shares outstanding, such as a CEF that rarely issues new shares or redeems existing shares)
(vi) be perpetual (i.e., without set maturity or termination dates such as target or term funds)
(vii) not invest primarily in other Vehicles (e.g., not be a CEF that invests primarily in other CEFs)
(viii) have a stated objective of investing primarily in:
(x) have a six-month average daily trading volume greater than $750,000
Vehicles meeting the foregoing requirements are classified based on the Vehicle’s investment holdings in the following alternative credit sectors:
(i) private corporate lending
(ii) public corporate debt
(iii) commercial real estate lending
(iv) agency real estate debt
(v) non-agency real estate debt
(vi) multi-sector alternative credit
To meet classification requirements, at least 75% of a Vehicle’s investment holdings must provide exposure to a foregoing sector to be classified within that sector.
Within each sector, eligible Vehicles are selected based on market capitalization until approximately thirty-five (35) Vehicles spanning the foregoing sectors are included as constituents.
Constituents in the Index are equal-weighted.
The Index is rebalanced quarterly and reconstituted semi-annually.
The Index is comprised of listed and publicly traded on a major U.S. stock exchange:
- registered closed-end investment companies (“CEFs”), that have elected to be regulated as “business development companies” and
- real estate investment trusts
To be eligible for inclusion in the Index:
(i) be registered under the Securities Act of 1933
(ii) be listed and publicly traded on a major U.S. stock exchange
(iii) have intra-day pricing provided by such exchange
(iv) have traded for at least the most recent 90 calendar days
(v) have a permanent capital structure (i.e., Vehicles that have a relatively stable number of shares outstanding, such as a CEF that rarely issues new shares or redeems existing shares)
(vi) be perpetual (i.e., without set maturity or termination dates such as target or term funds)
(vii) not invest primarily in other Vehicles (e.g., not be a CEF that invests primarily in other CEFs)
(viii) have a stated objective of investing primarily in:
- public high-yield corporate bonds (“junk bonds”) and broadly-syndicated loans,
- private middle market corporate loans,
- collateralized loan obligations,
- mortgage-backed securities,
- other asset-backed securities and/or real estate loans
(x) have a six-month average daily trading volume greater than $750,000
Vehicles meeting the foregoing requirements are classified based on the Vehicle’s investment holdings in the following alternative credit sectors:
(i) private corporate lending
(ii) public corporate debt
(iii) commercial real estate lending
(iv) agency real estate debt
(v) non-agency real estate debt
(vi) multi-sector alternative credit
To meet classification requirements, at least 75% of a Vehicle’s investment holdings must provide exposure to a foregoing sector to be classified within that sector.
Within each sector, eligible Vehicles are selected based on market capitalization until approximately thirty-five (35) Vehicles spanning the foregoing sectors are included as constituents.
Constituents in the Index are equal-weighted.
The Index is rebalanced quarterly and reconstituted semi-annually.
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