100% rules-based indexes defining a diversified portfolio of exchange-traded funds that have historically produced high risk-adjusted returns as defined by the Sharpe Ratio.
The HANDLS™ Indexes were specifically developed with the goal (NOT GUARANTEE) to support, from total return, their stated HANDL (i.e., distribution rate, net of estimated expenses, after incorporating any leverage, if necessary to achieve the target HANDL). Accordingly, returns for the index are calculated net of the estimated cost of employing such leverage.
HANDLS™ Indexes therefore have risk characteristics similar to the broad US capital markets and can be expected to generally rise and fall with prevailing market conditions. Higher HANDLS will have proportionately higher volatility. Similarly, lower HANDLS will have proportionally lower volatility. Volatility is a measurement of risk.
All HANDLS™ Indexes are split into two components, with a 50% allocation to a Core Portfolio and a 50% allocation to an Explore Portfolio.
Income investors too often focus on yield when evaluating potential investments, which explains the popularity of niche asset categories like high-yield bonds, master limited partnerships, real estate investment trusts and covered-call funds.
While these asset categories can serve as important components of diversified portfolios, the total return of a portfolio determines how much income it can provide to an investor.
It does an investor no good to receive a six percent yield from a holding if it loses 20% of its value. Conversely, a portfolio that generates a total return in excess of its portfolio yield can pay higher distributions without losing principal.