Hugh Lam

Royal, R-O-Y-L.

Probably a little bit, not unloved, but not as well known as the other ones out there.

So, just giving it some love.

My number two would have to be INCM.

INCM.

Yeah, so that's almost like a, you can think of it as a global flavor to HYLD.

That's a global high yield or high dividend aristocrats ETF.

Now, it's been in the market for quite some time, although it's had a bit of a strategy change recently.

um again it's a relatively straightforward strategy so global shares but we're filtering for those companies that have um demonstrated a very strong track record of paying out dividends so we have a filter in incn where um we only filter for companies that have um paid out um dividends it has to be positive for 10 years in a row minimum yep and also have to have positive eps which is earnings per share so they have to be profit growth so they have to be profitable

have to demonstrate they do pay out distributions um for at least 10 consecutive years so that adds like a very strong filter um you know to um you know ensuring that the portfolio remains generally high quality um the other aspect is and this is in regards to that recent strategy change that i mentioned um is that you know we do have sort of constraints to the index or the benchmark

Why is that important is because a traditional high yield global share strategy, if you're just effectively ranking for the highest paying stocks, there are risks to it, as I've mentioned before, like dividend traps, et cetera.

Now, when you do that in a global universe, what happens is you often skew that portfolio towards certain sectors of the market.

So, for example, if we just did a naive ranking system by dividend yield on the MSCI world, which is effectively a measure of global equities, you would tend to see that portfolio very, very concentrated in sectors like utilities, financials, et cetera, because those sectors tend to pay out high distribution yields.

Generally, that's not a bad thing.

You know, you want income from those sectors.

But the issue is from a broader portfolio construction perspective, that portfolio can exhibit quite large variation in return.

So talk about volatility.

You're really going to skew your portfolio to large swings.

Generally, if you're not someone that's comfortable with that return profile and you want to be able to sleep at night, then you're going to make sure you constrain yourself closer to that benchmark.

That's what we've done with INCM.