In an effort to redefine income-focused investing, VistaShares has launched its newest product: the VistaShares Target 15 USA Quality Income ETF QUSA. The actively managed fund combines a portfolio of high-quality U.S. equities with a strong options overlay, seeking a stunning 15% annual income, paid out monthly at 1.25%.

“We’re just getting started,” announced VistaShares CEO Adam Patti in a post on LinkedIn.

This is the second release in the company’s “Target 15” series, after the Berkshire-inspired VistaShares Target 15 Berkshire Select Income ETF OMAH that launched in March and already has over $100 million in assets under management.

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Patti said factor ETFs have gathered more than $100 billion in investor dollars, but none have combined a true equity options overlay, until now.

Two-Pronged Investment Strategy

QUSA’s strategy is simple but nuanced. The fund first builds a portfolio of 20 to 50 U.S. equities chosen on the basis of quality-focused metrics such as high return on equity, low volatility of earnings and healthy debt-to-equity ratios. The equity component is rebalanced quarterly to capture changing fundamentals and macroeconomic trends.

Then here is the kicker: the options overlay, crafted by the experienced hand of Tidal Financial Group, works to capture yield by selling options on a portion or all of the holdings within the portfolio. Though it could limit some potential upside, the overlay brings to the mix an income aspect of great power less commonly associated with factor ETFs.

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Income, Meet Innovation

Like OMAH, QUSA maintains cash or short-term Treasuries to function both as income stabilizers and collateral. This provides the ETF an advantage in terms of delivering a hybridized risk profile, somewhere in between fixed income alternatives and dividend-heavy equities.

The net expense ratio for the fund stands at 0.95%, reflective of its options-heavy approach and actively managed strategy.

Patti said that with QUSA, the firm is adding “a core equity exposure can now simultaneously deliver high monthly income potential.”

“It is nothing short of a game changer when it comes to introducing greater efficiencies into the portfolio construction process,” he added.

In a market increasingly hungry for yield without compromising on quality, QUSA's promise of consistency, selectivity and income may just turn some heads — and portfolios.

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