Preferred-Plus Overview
The Fund’s primary investment objective is to seek current income. The Fund invests in preferred equities and an S&P500 index-based option overlay for additional income.
Overall rating based on total returns among 50 funds in the Preferred Stock category for the 3-year period ending 12/31/21.
Potential Benefits
Seeks potential income from higher yielding preferred stocks and capital securities, some of which may be U.S. tax-advantaged.
Additional income can be anticipated through option premiums.
Active management to potentially exploit inefficiencies such as credit quality, interest rate structure, and call risk.
Diversification from traditional equity and fixed income strategies.
Portfolio Construction
1ST | Macro Outlook
Develop opinions about the economy, markets, and interest rates.
2ND | Screen
Filter retail, institutional, and preferred closed-end funds for yield, duration, liquidity, credit quality, and structure.
3RD | Decision
Select from the screened holdings based on pricing and attractive opportunities which can include undervalued sectors and/or companies.
4TH | Options
Create a put credit spread position on an S&P500 ETF or Index which involves the selling of the put option with the purchase of a put option with the same expiration.
Fund Details
Documents
Performance Returns
Data as of 12/31/21
| Qtr. End | YTD | 1-Year Annualized | 3-Year Annualized | Since Inception Annualized (12/24/18) | ||
|---|---|---|---|---|---|---|
| Preferred-Plus | 1.61% | 7.74% | 7.74% | 12.06% | 12.05% | |
| Benchmark (S&P U.S. Preferred Stock Index) | 1.16% | 6.64% | 6.64% | 10.64% | 11.46% |
Performance data quoted represents past performance which is no guarantee of future results. Performance returns stated net of fees. Current performance may be lower or higher than the performance quoted. For up-to-date performance data please call 800-869-1679. The investment return and the principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Returns are historical and include change in share price and reinvestment of all distributions. There is no guarantee that any investment objective will be achieved.
During the periods presented above, the advisor waived fees and/or reimbursed expenses.¹ Without this arrangement, performance would be lower.
Benchmark returns are shown for comparative purposes only and may not necessarily be representative of the Fund’s portfolio.
S&P U.S. Preferred Stock Index is an index designed to measure the performance of the U.S. preferred stock market and consists of U.S. preferred stocks with a market cap greater than $100 million and a maturity of at least one year or longer.
An investor cannot invest directly in an index, and index performance does not reflect the deduction of any fees, expenses or taxes
Because of its option overlay, the Funds are subject to special risk considerations described in the Fund’s prospectus, which is available on this website.
For information on distribution yield of this fund, click here.
Yield
Data as of 12/31/21
| NAV | 12.05 |
| 12 Month Distribution1 | 0.790941 |
| 12 Month Distribution Yield1 | 6.56% |
| SEC 30 Day Yield Unsubsidized2 | 3.84% |
| SEC 30 Day Yield Subsidized2 | 4.30% |
Distributions
Data as of 12/31/21
| Pay Date | Record Date | Ex-Dividend Date | Amount/Share |
|---|---|---|---|
| 12/30/21 | 12/29/21 | 12/30/21 | $0.19312 |
| 09/30/2021 | 09/29/2021 | 09/30/2021 | $0.20876 |
| 06/30/2021 | 06/29/2021 | 06/30/2021 | $0.19940 |
| 03/31/2021 | 03/30/2021 | 03/31/2021 | $0.18966 |
| 12/30/2020 | 12/29/2020 | 12/30/2020 | $0.09819 |
| 09/29/2020 | 09/28/2020 | 09/29/2020 | $0.10554 |
| 06/29/2020 | 06/26/2020 | 06/29/2020 | $0.11131 |
| 03/30/2020 | 03/27/2020 | 03/30/2020 | $0.09881 |
| 12/31/2019 | 12/30/2019 | 12/31/2019 | $0.20994 |
| 09/30/2019 | 09/27/2019 | 09/30/2019 | $0.16598 |
| 06/28/2019 | 06/27/2019 | 06/28/2019 | $0.09408 |
| 03/29/2019 | 03/28/2019 | 03/29/2019 | $0.11456 |
Estimated Sources of Distribution
Data as of 12/31/21
| Pay Date | Per Share Distribution | Net Investment Income | Return of Capital | Short Term Gain | Long Term Gain |
|---|---|---|---|---|---|
| 12/30/21 | 0.19312 | 0.11366 | 0.00000 | 0.03216 | 0.04730 |
| 09/30/2021 | 0.20876 | 0.09200 | — | 0.11676 | — |
| 06/30/2021 | 0.19940 | 0.08956 | — | 0.10984 | — |
| 03/31/2021 | 0.18966 | 0.09899 | — | 0.09067 | — |
| 12/30/2020 | 0.09819 | 0.09819 | — | — | — |
| 09/29/2020 | 0.10554 | 0.10554 | — | — | — |
| 06/29/2020 | 0.11131 | 0.11131 | — | — | — |
| 03/30/2020 | 0.09881 | 0.09881 | — | — | — |
| 12/31/2019 | 0.20994 | 0.09366 | — | 0.11628 | — |
| 09/30/2019 | 0.16598 | 0.10536 | 0.06062 | — | — |
| 06/28/2019 | 0.09408 | 0.07431 | 0.01977 | — | — |
| 03/29/2019 | 0.11456 | 0.11456 | — | — | — |
Click here for Important Tax Information
Estimates Only—Do Not Use for Tax Reporting Purposes
These tables provide estimates of the Fund’s distribution sources at the time of payment and should not be relied upon or used for tax planning or tax reporting purposes. Please see notice Pursuant to Rule 19a-1 under the Investment Company Act of 1940 (the “Notice”) here. The amounts and sources of distributions reported are estimates on a book basis, are not being provided for tax reporting purposes and may later be determined to be from taxable net investment income, short‐term gains, long‐term gains (to the extent permitted by law), and return of capital. A return of capital occurs when a portion of the money that you invested is paid back to you and should not be confused with “yield” or “income.” The Fund may report a return of capital on the Notice. This is because the Fund intends to distribute quarterly short-term option capital gains which will be categorized as an estimated return of capital at the time of distribution. The actual amounts and sources for tax reporting purposes will depend upon the Fund’s investment experience during the remainder of the fiscal year and may be subject to changes based on tax regulation.
The final determination of the source and tax characteristics of all distributions will be made after year-end and reported to you on Form 1099-DIV and these final amounts may vary significantly from the estimates provided above. Form 1099-DIV, which is mailed after the close of the calendar year, will specify how the distributions paid by the Fund during the year should be characterized and reported on your tax return (e.g. ordinary income, return of capital and capital gain).
1 12-Month Distribution is calculated by adding the Fund’s trailing 12-month distributions. 12-Month Distribution Yield is calculated by adding the Fund’s trailing 12-month distributions, and dividing the sum by the Fund’s most recent month ended NAV. The Fund may pay distributions in excess of its net investment company taxable income and, to the extent this occurs, the distribution yield quoted will include a return of capital. The estimated return of capital for each distribution is available, Pursuant to Rule 19a-1 under the Investment Company Act of 1940, by clicking here. However, please note that distributions are subject to recharacterization for tax purposes and the final tax treatment of these distributions will be reported to shareholders after the close of each calendar year on form 1099-DIV.
2 The SEC yield is calculated by dividing annualized net investment income per share during a 30-day period by the maximum offering price per share as of the close of that period. SEC yield reflects the rate at which the Fund is earning income on its current portfolio of securities. The SEC 30-Day Yield is computed under an SEC standardized formula and is based on the maximum offer price per share. Subsidized yields reflect fee waivers in effect. Without such waivers, yields would be reduced. Unsubsidized yields do not reflect fee waivers in effect.
Top Equity Holdings
Data as of 12/31/21
| Company | Sector | % Net Assets |
|---|---|---|
| Bank of America Corp 5.875% Perpetual Pfd 03/15/28 | Financial Services | 2.33% |
| AerCap Holdings 5.875% Pfd 10/10/24 | Industrial | 2.17% |
| Regions Financial Corp 5.75% Perpetual Pfd 06/15/25 | Financial Services | 1.91% |
| Athene Holding Ltd 6.35% Perpetual Pfd 06/30/29 | Financial Services | 1.86% |
| Edison International 5.375% Perpetual Pfd 03/15/26 | Utilities | 1.83% |
| Truist Financial Corp 4.80% Perpetual Pfd 09/01/24 | Financial Services | 1.82% |
| Capital One Financial Corp 4.80% Perpetual Pfd 06/01/25 | Financial Services | 1.82% |
| Ally Financial Inc 4.70% Perpetual Pfd 05/15/26 | Financial Services | 1.81% |
| Equitable Holdings Inc 5.25% Pfd 12/15/24 | Financial Services | 1.67% |
| Capital One Financial Corp 5.00% Perpetual Pfd 12/01/24 | Financial Services | 1.50% |
Portfolio holdings are subject to change without notice. The mention of specific securities is not a recommendation to buy, sell or hold any particular security. Weights may vary over time and holdings are subject to change without notice.
Sector Allocation
Data as of 12/31/21
| Financial Services | 69.24% |
| Utilities | 8.11% |
| Real Estate | 6.69% |
| Industrial | 5.76% |
| Communication Services | 3.02% |
| Consumer Cyclical | 2.48% |
| Consumer Defensive | 1.68% |
| Money Market | 1.51% |
| Energy | 1.25% |
| Closed-End Funds | 0.23% |
| Put Option | 0.04% |
Portfolio weights are subject to change without notice. Due to rounding, values might not add up to 100%. Sector allocation excludes written (short) put options.
Tax Information
| Date | Document |
|---|---|
| 06/28/2019 | Form 19(a)-1 |
| 09/30/2019 | Form 19(a)-1 |
| 12/31/2019 | N/A |
| 03/31/2020 | N/A |
| 06/30/2020 | N/A |
| 09/30/2020 | N/A |
The above notice Pursuant to Rule 19a-1 under the Investment Company Act of 1940 (the “Notice”) provides the reported amounts and sources of distributions. The reported amounts are estimates on a book basis, are not being provided for tax reporting purposes and may later be determined to be from taxable net investment income, short‐term gains, long‐term gains (to the extent permitted by law), and return of capital. A return of capital occurs when a portion of the money that you invested is paid back to you and should not be confused with “yield” or “income.” The Fund may report a return of capital quarterly on the Notice. This is because the Fund intends to distribute quarterly short-term option capital gains which will be categorized as an estimated return of capital at the time of distribution. The actual amounts and sources for tax reporting purposes will depend upon the Funds investment experience during the remainder of the fiscal year and may be subject to changes based on tax regulation.
The final determination of the source and tax characteristics of all distributions will be made after year-end and reported to you on Form 1099-DIV and these final amounts may vary significantly from the estimates provided above. Form 1099-DIV, which is mailed after the close of the calendar year, will specify how the distributions paid by the Fund during the year should be characterized and reported on your tax return (e.g. ordinary income, return of capital and capital gain).
Dividend Calendar
| Record Date | Ex-Date | Pay Date |
|---|---|---|
| 03/30/2021 | 03/31/2021 | 03/31/2021 |
| 06/29/2021 | 06/30/2021 | 06/30/2021 |
| 09/29/2021 | 09/30/2021 | 09/30/2021 |
| 12/29/2021 | 12/30/2021 | 12/30/2021 |
Fund Managers
Edward “JR” Humphreys II, CFA, CAIA
SENIOR PORTFOLIO MANAGER
Dave Gilreath, CFP®
MANAGING DIRECTOR
CHIEF INVESTMENT OFFICER
PORTFOLIO MANAGER
Mutual fund investing involves risk. Principal loss is possible.
An investor should consider the investment objectives, risks, charges and expenses carefully before investing. A prospectus containing this and other information may be obtained by calling 1-800-869-1679 or clicking here. Please read the prospectus carefully before investing.
NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE
Distributed by Arbor Court Capital, LLC (Member FINRA)
Important Information
Expense Ratios as disclosed in the February 1, 2021 Prospectus:
Gross Expense Ratio 2.52%
Net Expense Ratio 1.59%
(1) Expense ratios as disclosed in the February 1, 2021 Prospectus. Innovative Portfolios, LLC, the Fund’s investment advisor (the Advisor) has contractually agreed to waive its fee and/or reimburse expenses, at least through January 31, 2023, so that the Fund’s total annual operating expenses (excluding acquired fund fees and expenses, taxes and extraordinary expenses) do not exceed 1.50%. Without this arrangement, performance would be lower.
(2) Par: Equal to the nominal or face value of a security. Par value has no relation to market value, the market price for a bond or preferred stock may be above or below par. Par value has importance with bonds and preferred stock, as preferred dividends and bond interest are normally stated as a percentage of the par value of a preferred stock or bond issue.
Portfolio holdings are subject to change without notice. The mention of specific securities is not a recommendation or solicitation to buy, sell or hold any particular security.
NAV per share is as of the prior day’s market close of regular trading on the NYSE, generally 4:00 p.m. Eastern time, on each day the NYSE is open for trading.
The Fund invests in options. All investment strategies carry risk, and transactions in options may carry a high degree of risk. Investors should carefully consider a Fund’s risks and investment objectives as an investment in a Fund may not be appropriate for all investors and is not designed to be a complete investment program. Investing in the Funds involves risk. It is possible that investing in the Funds may result in a loss. Before making an investment/allocation decision, investors and registered investment advisers (RIAs) allocating to clients’ account should consider the suitability of this investment with respect to such investor’s or client’s net worth, income, age, and risk tolerance. Investment should be avoided where an investor has a short-term investing time horizon and/or cannot bear the loss of some or all of their investment. Before investing in the Fund, investors and RIAs allocating to client’s account should read the discussion of risks of investing in the prospectus. You can obtain a prospectus by clicking here.
This material represents an assessment of the market environment at a specific point in time and should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment. This material is not being provided in a fiduciary capacity and is not intended to recommend any investment policy or investment strategy or take into account the specific objectives or circumstances of any investor. Please consult with your investment, tax or legal adviser regarding your individual circumstances prior to investing.
The Funds are offered only to United States residents, and information on this site is intended only for such persons.
© 2022 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
The Morningstar Rating™ for funds, or “star rating,” is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Preferred-Plus fund received 5 stars among 50 funds in the Preferred Stock category for the overall and three-year periods ending December 31, 2021. The inception for the Preferred-Plus fund is December 24, 2018 and, as such, there is no performance for the 5- and 10-year periods. Past performance is no guarantee of future results.