A preferable split
BMAX focuses on fixed income asset classes that are different than mainstream selections to provide income and diversification. This includes a U.S. Preferred Share ETF (BPRF), and an allocation to Brompton Split Corp. Preferreds.
“You can think of these types of Preferreds as ‘fixed income diversifiers’,” says Cullen. “These are fixed income assets that are outside of the mainstream for Canadian fixed income investors and which compliment and provide diversification benefits to other fixed income or equity positions. These two alternative classes of Preferreds provide income, added stability, and a much more reliable returns profile than Canadian Corporate Preferreds have produced over the past decade.”
A portfolio with muscle
2016 saw an historic 20 per cent increase in the number of people over age 65 compared to 2011. By 2030, Canadians aged 65 and older will surpass 9.5 million, or 23 per cent of the population. With the rising cost of living due to outsized inflation in 2022, generating high levels of investment income is expected to be one of the primary challenges for investors entering their retirement years. BMAX’s high levels of distributions can help investors to meet this challenge.
Brompton’s PM team have positive views on the sectors, geographies and themes comprising the BMAX portfolio, which includes healthcare equities (ETF ticker HIG), technology equities (TLF), and European dividend growth equities (EDGF).
Covered call strategy for distributions and to help keep volatility in check
Brompton’s covered-call program is actively managed. Their portfolio managers use their own discretion with respect to the amount of calls written on ETF holdings and the level of strike prices, all based on their view of the attractiveness of option premiums. “This makes the Brompton covered-call program an important active portfolio management tool,” says Cullen.
