Three of CLS Investments’ ETF Managed Income Strategy models are now available on the platform of FTJ FundChoice (FTJFC).
FTJFC provides advisors with efficient and scalable back-office solutions that allow them to focus on raising assets and servicing clients.
The ETF Managed Income Strategy models use a multi-faceted strategy designed to deliver consistent and reliable income from a diversified, risk-budgeted portfolio of income-producing assets. The models are meant to provide clients with income for immediate or future use in all market conditions. They seek to accomplish this by favouring diversified investments that offer strong income yield and growth opportunities, such as preferred stocks, investment-grade and high-yield bonds, dividend-paying stocks, and managed futures. CLS’s portfolios have been composed of ETFs since 2001 in order to give investors more tax-efficient, cost-effective and transparent investment options.
“Our ETF Managed Income Strategy models are a unique type of managed income vehicle, offering investors the opportunity to withdraw income to meet immediate financial needs,” says Todd Clarke, chief executive of CLS. “These portfolios are designed to give investors much more overall flexibility and security than similar products.”
Unlike many other income products, the ETF Managed Income Strategy allows investors to reserve funds for future distributions in cash and reserve accounts. The cash account is designed to keep funds safe for short-term distribution needs, typically three months. The reserve account is for intermediate-term distribution needs, typically four to 15 months out. Because the reserve funds are not needed immediately, they can invest in securities that offer a yield higher than short-term bank CDs, but still provide significantly low risk for security purposes. By using income-oriented investments for the bulk of the portfolio, the cash and reserve accounts can be replenished on a regular basis primarily with income from those investments rather than through sale of investment securities at fluctuating net asset values. Investors have the flexibility to adjust the size of the cash and reserve accounts to meet their individual income needs.
CLS’s risk-budgeting methodology provides investors in the ETF Managed Income Strategy models with the security of a constant level of risk. Under this approach, each portfolio is assigned a risk score relative to a diversified equity portfolio, but stocks and bonds are viewed on a continuum instead of within a traditional ratio. CLS also analyses each asset’s potential for return and its risk using a proprietary combination of three risk measurements with quantitative inputs.
“In light of the market volatility we continue to experience, it is vital that investors have access to a product that offers a consistent stream of income regardless of market conditions,” says Clarke. “Thanks to FTJFC, a greater number of investors can benefit from our dependable, flexible, and secure investment models, as well as our stringent risk-management practices, which are synonymous with CLS’s innovative approach to portfolio diversification.”
“We are excited to welcome CLS to our platform as a third-party money manager in our ETF Strategist Program,” says Dean Cook, president of FTJ FundChoice. “CLS is well equipped to provide us a series of model portfolios that focus on our client’s distribution needs.”