ALTY hunts for yield in the corners of the market where traditional income funds fear to tread — MLPs, REITs, preferred stocks, and other alternative income securities. It's designed for investors who need more income than bonds provide but want something different than dividend stocks.
How It Works
The fund casts a global net across multiple alternative income asset classes, typically holding 50-100 positions weighted by a combination of yield and liquidity. It rebalances monthly to capture new opportunities and trim positions that have gotten expensive. The portfolio tends to be heavy on real assets and pass-through structures that generate tax-advantaged income.
Key Features
- 6.34% yield from non-traditional sources most income funds ignore
- Monthly distributions with global diversification across asset classes
- Access to MLPs and REITs without K-1 tax headaches
Risks
- Interest rate spikes could crush these yield-sensitive assets by 15-20% in months
- Many holdings are small, illiquid securities that could gap down in market stress
- Complex tax treatment — distributions may include return of capital affecting cost basis
Who Should Own This
Best for retirees or income investors who already own traditional bonds and dividend stocks but need to juice their portfolio yield. Works as a 5-10% satellite position for those comfortable with the complexity and willing to monitor for tax implications. Not for anyone who needs simple, predictable income.