Building All-Weather Income with Pass-Throughs and HIPS

Lead-Lag Live

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15h ago 45:51

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Rate cuts change the math on income, but your cash flow doesn’t have to shrink. We invited Will Rind of GraniteShares to unpack a practical way to keep payouts steady as short-term yields slide: a diversified basket of pass-through securities inside the HIPS ETF that aims for an all-weather stream of monthly income. We dig into how REITs, MLPs, BDCs, and fixed income–oriented closed-end funds each respond to different growth and inflation regimes, and why blending them can smooth the ride when markets lurch.
We walk through the index rules that power HIPS—screening for the highest yields and the lowest volatility within each sector, then equal-weighting the results—and why the pass-through structure matters. Because these entities distribute most of their income and avoid corporate tax, more of the cash makes it to investors, and a return of capital component can improve after-tax outcomes. We also get candid about trade-offs: NAV will move with markets, but the fund has paid the same fixed monthly amount for more than a decade, including through the 2020 shock when many dividend strategies cut or suspended payouts.
From portfolio fit to policy risk, we tackle the real questions advisors and investors ask. Should HIPS be core or a satellite? How does it complement the Agg or government bonds without doubling down on duration or credit? What do expense ratios mean when BDCs are involved, and how should you interpret acquired fund fees? We compare liquid, transparent alternative income to private credit’s lockups and opaque marks, then explore pairing HIPS with GraniteShares’ options-based Yield Boost strategies for those seeking weekly distributions and higher-octane cash flow—recognizing the higher volatility that comes with it.
If you’re planning for consistent cash in a falling-rate world, this conversation offers a clear framework, a battle-tested track record, and practical ways to assemble an income sleeve that pays. Subscribe, share this episode with a friend who manages income portfolios, and leave a quick review to tell us what topic you want us to tackle next.
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Chapters

1. Setup, CE credits, and agenda (00:00:00)

2. Rate cuts and the income problem (00:02:20)

3. What HIPS invests in and why (00:07:05)

4. Pass-throughs and tax-efficient payouts (00:11:20)

5. The four sectors: REITs, MLPs, BDCs, CEFs (00:15:05)

6. All-weather income across cycles (00:19:05)

7. Index design: high yield, low volatility (00:22:48)

8. Transparency, holdings, and performance (00:26:18)

9. COVID stress test and consistent distributions (00:29:48)

10. Taxes, return of capital, and expense ratios (00:32:18)

11. Portfolio role: core vs satellite income (00:37:55)

12. NAV questions and trade-offs (00:41:55)

13. Pairing HIPS with Yield Boost strategies (00:45:55)

848 episodes

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