• Designed to provide investors with periodic tax-deferred distributions based upon pre-defined events and enable ETF Providers to enter the multi-billon dollar retirement market
  • Can be applied to a multitude of strategies and/or widely followed equity, fixed income, and commodity indexes (e.g., S&P 500, Russell 2000, gold, etc.)
  • Allow ETF Providers to leverage existing strategies/ETF platforms, and increase profitability
  • Provides new entrants with competitive product set and point of differentiation
  • Are structured to maximize tax efficiency and investment flexibility using patented ETF E&P management technology
  • Enables investors to take or keep the cash distribution and/or engage in periodic rebalancing (lifecycle approach)…forces discipline – great RIA tool
  • Distributions can be reinvested in the same asset (to maintain cost basis), used for rebalancing (lifecycle) or to reclaim cash on tax deferred basis

 


 

Distribution Overview

Distributions, outside of capital gains and dividends, will be made as a return of capital which allows investors to postpone capital gain payments until they sell their shares.

  • Return of capital distributions are tax-deferred
  • Investors lower original cost-basis by amount of distributions (unless reinvested in same instrument)
  • Investor’s heirs would benefit from one time step-up in cost basis upon death if shares are passed on

 

Distribution events will be defined and could include the following:

  • Fixed % (e.g., 6% per year, standard quarterly distribution)
  • Price Appreciation - pay out gains periodically

Leveraging Existing Platforms

Ability to leverage existing managers and strategies to create standalone products

ETF market growth and the ability to employ existing structures through use of a “wrapper,” helps create instant visibility and credibility (e.g., IVV, SPY, EFA, GLD, etc.)

Existing ETF platform provides flexibility

  • Increases the profitability of existing platform
  • Complements existing product line
  • Enables provider to leverage brand – instant recognition
  • Drives assets – ultimate “sticky” asset
  • Can charge premium for enhanced distribution management

 Financial Advisor Value Proposition

Innovative ETFs utilizing patented process designed to provide advisors with:

  • Unique/new strategic asset allocation tool enabling complete/tailored market exposure
  • High tax-advantaged income producing alternative (=/> 6%), paid periodically
  • A tool that increases customer touch points by creating multiple opportunities to address current strategy (e.g., investor needs to decide to take cash off the table, reinvest in the same strategy, or use distributions to rebalance or change focus)
  • Instant liquidity and visibility of the well recognized, managers, strategies, ETFs and/or indexes (e.g., S&P, Russell, MSCI, etc.)
  • Most appealing to desirable segments of the market (i.e., high net worth, family offices, and pre and post-retirement segments)
  • Underlying options increase available investment strategies
  • More effective/efficient “Life-Cycle” product than currently available