Lead-Lag Live

Building All-Weather Income with Pass-Throughs and HIPS

• Michael A. Gayed, CFA

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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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SPEAKER_00:

Glad that some people are here for what will be a very good conversation around uh hips, and I don't mean uh the body part. Uh I mean uh the uh ticker uh hips. The hips don't lie, exactly. That should be a slogan for for hips. Uh for those that are uh here that are uh financial advisors, do me a favor if you have to be physically in an office, please tell other advisors that this webinar is taking place. I have uh been traveling the last seven weeks. It's been quite a bit of back and forth away from home, and now I'm back in action and gonna be getting back in the swing of things with webinars with sponsors and clients and great people like Will Ryan of Granite Shares. So uh for those that are here for the CE credits, do me a favor, uh stick around to the end of the presentation. We'll probably keep this to around 30, 40 minutes or so. Uh, I will email you afterwards, get your information, uh, submit that to the CFP board. Uh so stay tuned for that. And uh with that said, I want my friend Mr. Will Ryan of Granite Shares to take from here, talk about HIPS, alternative unconvinced income.

SPEAKER_01:

Exactly. Well, thank you, Michael, and thank you, everybody, for tuning in today to this session. And we're doing this today because obviously, after yesterday's rate cut, um, I thought it'd be a good time to remind everybody in now what is almost certainly a declining interest rate environment towards the end of this year, about how to generate yield in a portfolio. And there are still places to go for high yields and different areas of the market where you still get an attractive risk reward uh return when maybe the nice returns or the nice yields that you've been used to seeing from you know short-term treasuries or from money markets by the end of the year might not look so appealing. So, with that, let's jump into it. And we're gonna talk a little bit just between us. So I'm going through a presentation, but at the same time, it's really just to sort of reference uh this conversation as we go along. So, for those of you that don't know us or are not familiar with Granite Shares, we're an ETF issuer. Uh, means we're an asset manager that focuses exclusively on the creation, the launch, the management, the marketing of exchange traded funds, all things exchange traded. We're a global company based here in New York City, um, but we have a presence all around the world, um, including major Asian markets and running uh somewhere between 10 and 11 billion of AUM these days. We do a number of different ETFs. There are actually too many to fit on these different pages. Um, so you just get a brief snapshot of what we do. Um, but suffice to say, we have a lot of different strategies in our portfolio that range from commodity-based ETFs like physical gold or broad uh commodities to growth equity income, in the case of options income and our yield boost family, uh leveraged ETFs on single stocks, uh, and of course, the subject for today, uh, which is our HIPS ETF. So a lot of different products available for all sorts of different investment needs. But again, we're gonna focus on HIS today. So, as I said, um, you know, in light of the rate decision yesterday, and in light of expectations that we could see another couple of rate cuts um towards the end of the year, and maybe magnitude still somewhat in question, but let's say for argument's sake, around 75 basis points, maybe more between now and the end of the year, that it's worth talking about uh the income environment again. And, you know, again, maybe just a step back a bit that, you know, just to frame this conversation, that, you know, from a historical perspective, up until the last few years, um we were in an environment where the majority of return that was coming from fixed income investments was coming from capital gains and not from yields or from income generation. And that all changed, obviously, when the the Fed started hiking interest rates. We started to go into a rising interest rate environment. And in that particular scenario, people lost money in bonds from a capital perspective and yields improved significantly in that time. So now that we're at the top of that cycle or on the other way down again, um, you know, what can investors do about a scenario where we have declining interest rates? And again, we're back to sort of somewhat similar position before, where we have a more volatile fixed income environment where people have experiences gains and losses and yields that are sort of fluctuating. Is there anywhere we can get more stability in terms of yield and portfolio? So this chart here shows a little bit of the historical context just displayed in chart format. And what you're looking at here is the 10-year treasury uh in blue against the ag total return in red, and then the ag dividend return in sort of orangey yellow color. And again, just to show that um your environment where rates are falling, that bond prices were rising, and people did well in the ag, but that growth or that gain was coming from a capital appreciation as opposed to to income or yield. And now we're on the other side of that where um we're starting to see interest rates come down again. So, for those of you that are not familiar, um, we're gonna be talking about alternative income in today's conversation. So, alternative income is a phrase that uh we use to describe what HIPS does. And this is a category that um refers to non-traditional fixed income. So, first and foremost, the HIPS is not a fixed income ETF, and we're not talking about bonds specifically. That um we're talking about a type of security that is not a traditional either stock or bond or a stock, a dividend-paying stock, and specifically. And you know, what we're talking about is a sort of subset of the market called pass-through securities. And pass-through securities are a subsection of the market, which are securities that are required by law to distribute substantially all of their income generated to shareholders. And so they do that uniquely without any corporation taxation. So pass-through securities are strict, they are are typically structured as pass-throughs, uh, and therefore they avoid corporation taxes. How this looks in sort of practice is a bit like here, where we try and uh chart or you know show by way of a picture the difference between taking income from an entity, a corporation, in this particular case, that is subject to corporation tax. And that's the top sort of three uh circles or bubbles. Um, and then below ones that are not subject, i.e., pass-through securities. So the bottom line here is when you have corporation tax in the middle, you're automatically uh receiving net income amount that is lower than if you were not paying any corporate tax. So to start with, when you have an investment in a pass-through entity, the amount of income that you're receiving is free from corporation tax, but you're starting obviously at a higher level of income versus the equivalent, which has been paid away in terms of corporation taxes. Now, for pass-through securities, there are four main sectors of the pass-through security world, which we'll discuss today. But namely, those four main sectors are gonna be real estate investment trusts, so REITs that invest in mainly a combination of physical property or physical real estate andor mortgages and the other type of REITs. So master limited partnerships, these are entities that typically invest in energy infrastructure, so oil and gas infrastructure, be it pipelines, et cetera. Um, BDCs or business development companies, these are entities that typically act as lenders or non-bank lenders to small and medium-sized businesses. Uh, and then you have closed-end funds, which can have a variety of different strategies, uh, et cetera. But the ones that we're going to be talking about today are typically in the fixed income arena. And again, with all of these uh particular strategies or sectors, uh, they are required by law to distribute almost all of their income to shareholders and do not pay corporation tax. So I think if there's one slide uh in this presentation to take away, then this is probably it. And we use this one to specifically describe the value uh that we that we perceive in HIPS, the ETF. And you know, the bottom line with HIPS is we're trying to create an all-weather income portfolio. And what does that mean? It simply means that we're able to pay a consistent monthly distribution throughout market cycles. So, in other words, it doesn't matter what the market is doing, whether the market's up, whether the market's down, whether we are in a high growth environment, a low growth environment, whether we're in a high inflation environment, a low inflation environment, that in all market cycles, we have a part or portions of the portfolio that will do well in these particular environments. So if you look here, what this is showing you is throughout the economic cycle, if you look at the respective quadrants here in this particular chart, whether you're in a high inflation environment but a low growth environment, that's going to favor investments in the top left, like the cash-like investments, closed-end thumbs, particularly those that are involved in more loan strategies or mortgage rates. And then conversely, on the other side of the chart, uh top right, I'm now looking at where you have a high growth environment and a high inflation environment. That particular environment favors something more like hard assets, or which is MLPs, uh, particularly upstream types of MLPs, equity REITs, which own physical real estate. Um, so there's always going to be something in the portfolio that can benefit in these different market environments. And obviously, given the track record of HIPS, that's exactly what's happened over the last 10 plus years of track record. So HIPS is an index fund, which means that we're tracking a underlying index. Now, how that index is constructed is as follows is that you start with the four main sectors of the pass-through security universe, MLPs, REITs, closed ends, and BDCs. And then you sort those or screen those for the 10 highest yielding securities in each sector and the 10 least volatile securities in each sector. And then you put those together and equal weight them, and that becomes the portfolio. So you end up with an equally weighted portfolio that's represented across all sectors, uh comprising of the highest yielding securities with the lowest volatility. And again, the idea behind that is that we want to create um a high distribution yield, but we also want something that is stable, something that is consistent and not super volatile. So if you look at um what the portfolio holds today, you've got the the top 10 fund holdings um on the right-hand table. But of course, the beauty of any ETF uh in the market is of course you can go to granite shares.com or you can go to most of the public websites that uh you know catalog this kind of data and see the holdings on a daily basis. So ETFs are completely transparent and you can see these holdings. Um, the top 10 here is represented. And then the sector chart on the left-hand side, where you can see uh roughly equal representation for those sectors with a residual cash amount. And again, that's all available on the website, and you can look at that, uh, download the holdings every day for not just hip, but for any ETF. So here again is performance that um you can see on the website, um, be it the one-year performance, the five-year, or since inception. And again, that is performance which includes the distributions, and HIPS is distributed every month, um, a fixed distribution amount since inception, so over 10 years. Again, this is a representation of the performance um since inception. And the important thing here, I think, in this table is just to show you really the one um, you know, worst-case scenario, if you want to call it that, which was in 2020 uh or the COVID pandemic. And this was really the kind of worst-case scenario for income investing. And remember, in this particular environment, when the market crashed, um, was also an environment where we shut down the vast majority of the economy. And in that particular case, you had companies that were dividend payers uh in the market, cutting dividends or postponing dividends. You had funds which were income or dividend-based funds that were cutting dividends andor suspending or canceling uh dividends. And in this particular time, in the HIPS portfolio, we just had one security or one company, which was a hotel REIT, that actually stopped paying distributions. So even in this time, while the NAV, along with everything else in the market, crashed, um, the strategy continued to pay distribution uh every month uh without fail in this particular time. And of course, after the market started to recover, so did the nav, so the portfolio value, just like everything else in the market. And we continued on from there. So it's really just to demonstrate that one of the good things about something like Hips is you've got a long, long track record. And in that time, we've been through multiple uh economic uh cycles, different market environments, including probably what was the worst case scenario for any income or dividend fund in history, which was COVID. And again, the probably the main takeaway, you know, if you're an investment or if you're an investor looking for consistent monthly income, then HIPS really is the fund to consider. Uh every single month since inception, we've paid 10.75 cents per share. And, you know, over time, we've never missed the distribution on a monthly basis. And so, again, for somebody who values consistency of income, that is the core of the HIPS investment proposition. And you know, at the moment, uh, and and actually through through time, that's always around about 10% per annum. So depending on, again, what uh what the market condition is of the market at the time, um, it's give or take more than 10% or slightly less than 10%, but you know, the the yield of the fund is around 10% per annum. One um other important thing to talk about is that um with any income fund, the taxation of that distribution is clearly an important talking point. And here there is a return of capital component to that uh distribution, which can help or does help in terms of making that income or distribution more tax efficient. And what we're talking about is here in the table, you can see um every year up until last year, the historical return of capital per share. And that varies depending on obviously the year, from a high of around 80% back in 2019 to actually uh a low, which is 2024 or 15%. Um, but there's a variable amount of return of capital. And just to be clear, that comes from the income component, typically from the MLP part of the portfolio, is not from the fund selling assets uh and returning investors their own money. So that is just a tax consequence of owning MLPs in the main as part of the constituents uh in the portfolio. Another one to head off here, and this is why we have a slide on it, is that um HIPS is a fund that is quite unique because we own BDCs. And because we own BDCs, we have a high um total expense ratio on a relative basis. So if you look and you see 1.99%, um, this is to explain why that exists. And the bottom line is it's just because we own BDCs and BDCs are taxed in a different way as far as declaring expense ratios is concerned. So BDCs are taxed like registered investment companies or 40 Act funds or mutual funds, as opposed to corporations. And therefore, the expenses required by the regulator are shown very differently to expenses, say, if you owned a corporation. The bottom line is that you have expenses or an expense ratio, a management fee, whatever you want to call it, that comes out of the fund's asset. So a management fee is something that comes out of the assets of the fund or the nav. And then you have the acquired fund fees and expenses, which makes up the remainder of this over 1%. And that is just from or included in the price of the securities. So, in other words, that doesn't come out of the fund's asset. So anybody that's familiar with buying BDCs or holding a BDC fund will understand this. But for those of you that are looking at BDCs or looking at a fund that owns BDCs for the first time, this might be new. It's nothing to worry about. Uh, you pay the management fee. Um, just like any other ETF, it's just the disclosure of the expenses around BDCs, are different or unique to BDCs. So I think one of the main things to touch on before we kind of get into a QA is like how you practically use uh funds like HIPS in the portfolio. And what's interesting is that you know, when you talk about bond portfolios, you're exposed to interest risk and credit risk in the main. And the main thing or the main advantage you get with alternative income is immediately you're not exposed to such risks in the same way because it's a different asset, different asset class. So combining alternative income, you know, with traditional bond solutions can potentially improve overall yield to the portfolio while reducing or maintaining a similar risk profile. And I think sometimes it's easy to contextualize this uh in a slide like this, where on the right hand side you have this bar chart where the different bars are represented by a representative index. So, for example, with the with the equities on the left-hand side there in gray, that's the S P 500 index. And so the annualized yield is about 1.2% um per annum from the SP. And then you move up to the right in terms of the different, you know, the higher the annualized yield for the different asset classes. And so you get to something like HIPS on the right, which is a combination of these multiple um bars, be it BDCs, closed ends, MLPs, and automatically you're just in a different yield category to that of traditional dividend-paying funds or traditional bond funds. And so that I think is is a nice way to show the value add of more income, but to complement that with either traditional uh dividend-paying stocks or bonds. And the correlations here you have um these different charts represented by uh the SP on the left, uh, the Bloomberg AG index in the middle, and then the 10-year government bonds. So you see the R squared for the two on the middle, and then on the right hand side, the fixed income R squared is very, very low. So showing you that hips is not correlated really at all to traditional fixed income. And then on the left-hand side versus the SP, you have a higher R squared, meaning that on the correlation front, you know, HIPS is going to correlate more like equities as opposed to fixed income. And here's just a few slides to finish off in terms of what happens if you were to integrate HIPS into traditional strategies. So in this case, this is a government bond portfolio. In this case, this is 80% government bonds, um, 20% HIPS. And here you can see that by putting in a high-yielding asset such as HIPS into a government bond portfolio, you're able to generate a higher total return in terms of that particular portfolio and increase the yield per unit of risk. And then similar here, this is um integrating HIPS into a US ag bond portfolio. Again, in this case, it's 90% uh AG with a 10% uh weighting towards HIPS. And again, you generate higher total return performance or total yield to the portfolio, but you lower the overall volatility and increase the yield per unit of risk. So some potential advantages of HIPS, it's not correlated to traditional or conventional fixed income. So you avoid concentration risk, and otherwise, you don't you don't double down on duration or credit risks. You have uh the very long track record, 10 years plus of consistent distributions, of 1.75 cents per share every month, um, diversification, equally weighted portfolio across the four main sectors of the pass-through security world, um, provides that all-weather uh income portfolio regardless of economic cycles. And you're around about give or take a 10% per annum yield. And then you have the benefits clearly of the ETF wrapper, whereas there's a liquid portfolio. A lot of these assets, um, sometimes people say they're private credit-like or light, but you don't have the lockups or any of the hassles associated with private funds. This is a liquid ETF wrapper that can be bought and sold with the tax efficiency of ETFs. So just to sum up, historically attractive distributions, consistent monthly income of 1075 per share, uh, 10-year track record, diversification, over 100 million in assets under management, uh, yields that have historically averaged around 10% or exceeded 10%, and ability to enhance yield and or risk. To find us, please contact us at uh granite shares.com or send us an email to info at granite shares uh or call us on the number below. So thank you for listening. Let's uh let's have a chat.

SPEAKER_00:

Yeah, let's do a quick one. And I see uh there's maybe a couple of questions here in the QA. Uh, how often is the portfolio rebalanced and what is the portfolio turnover?

SPEAKER_01:

Yeah, so in terms of rebalancing, this rebalances um on a quarterly basis. I don't have the exact number of the turnover, but it's relatively low. Um, you know, again, this is you know the the pastoral universe is not that big in the grand scheme of things. Um, but the main thing here is that it's uh you know fairly standard in terms of turnover and or rebalance.

SPEAKER_00:

So obviously there's been incredible demand for anything that's got you know consistent high yield, high income potential, uh certainly among retail, but that's growing obviously into the institutional advisor space. Yeah. Um you've got not just this, but we also have a yield boost fund family, which we should touch on. But if you think about HIPS, if somebody wants to just generate a pure income-only portfolio, like that's the only objective, would you consider HIPS to be uh core to other fixed income? Would you consider it uh to be a satellite? How should one think about this within an income portfolio overall?

SPEAKER_01:

Yeah, I think it goes back to you know ultimately your expectation and what the problem is you're trying to solve. So the problem that we were trying to solve is for the income investor that just wants consistent monthly income. So you might have, you know, whatever the liabilities may be in your life, whereby whether it's a mortgage or whatever else it was, you need consistency of that income. And clearly the one thing that you get with the majority of funds or investments in the market, for better or for worse, is you don't have the surety of that distribution or the dividend. You might get a monthly dividend or a distribution, but that varies every month. And I think the problem that we were trying to solve with hips is the consistency. So making sure that, you know, with the fixed cash distribution, that whenever you buy in, so you can buy in today, you can buy in six months from time, for six months from now or six years from now, you're locking in that yield when you buy because of the fixed cash distribution. And that's a very attractive component to people. The flip side to doing that is that the nav or the value with the fund rises and falls with the market. In other words, the value of the underlying securities that are in the portfolio, namely the BDCs, the REITs, etc. So because of that, some people will be completely happy with that. In other words, we'll prioritize the monthly income, understanding that the value of the portfolio will rise and fall with the market. For other people, that might be too much. And what they might want is more stability in terms of the nav of the portfolio, and therefore the trade-off would be less yield. So it really just sort of depends on what problem you're looking to solve. And clearly, this is not a substitute for a money market fund or something where you're going to have a fixed nav for the most part, and you know, your principle is not at risk in the classical sense, but the trade-off is you're getting a commensurate amount of yield for that. And you know, that yield is going down, especially because you're at the short end of the curve, you know, between now and the end of the year, and you know, who knows what's going to happen next year. And so I think that there's an opportunity for people that want to capture a high level of yield in an environment where yields now are falling. But in our examples, that's why we kind of show, okay, it's a 10% holding, a 20% holding. You know, it doesn't really matter. But the assumption, I guess, to your point, Michael, is that hipsters never going to be the entirety of your income portfolio, but it's a complement to existing portfolios where you can increase the amount of yield that you generate across the portfolio while maintaining. The same level of risk, if not lowering your risk in the portfolio, given HIPS acts differently because you're not doubling down on durational credit risk.

SPEAKER_00:

The big question, of course, with all these types of funds is uh how does this nav erosion look? So there's a question here from Devin. Uh, is there any nav erosion over the years?

SPEAKER_01:

I mean, not really, to be honest. I mean, it depends on again what you mean by nav erosion, because um if you're talking about making a distribution that is in excess of the yield that's generated from the portfolio, then no, there's no nav erosion. If you're talking about just making a distribution from the income that's received and not reinvesting it, then yes, there will be nav erosion because by definition, the fund pays out from the nav to fund those distributions. But ultimately, the nav of a portfolio in hips comes from the value of the underlying securities. And as I've said, the value of the underlying securities rise and fall with the market. So it's not a case that the value of the portfolio is constantly falling, providing nav erosion. The value of the underlying, as we've seen in the sort of past here, which the one, I'll just go back to the chart quickly. You can see like it sort of appreciates or has appreciated over time, but it but it rises and falls because these are securities in the market that are priced by the market. And I think what I would say to people is that again, the objective here is consistent monthly income. So if you end up with a nav that is in and around the value that you've you've invested in, you know, that's the win. It's not a growth portfolio. If you're looking for growth, this is not the investment. So I think there's always like it's always a good question to remind people of, again, what problem are you looking to solve? That this is about generating consistent monthly income and trying to do it in a way that's sustainable or as sustainable as possible over time, which you clearly see from the track record. This fund's been around for over 10 years, paid the same amount every month, the portfolio is still here. Does that mean that the value of the underlying goes up and down? Yes, it does, but that's a trade-off against the fixed value of the monthly distributions.

SPEAKER_00:

Let's talk about uh pairing hips against some of these other funds that you've got, in particular yield boost, your fund family, which I just saw crossed, I think, over 400 million. So congrats on that. We should hit on what yield boost. 500. 500. Oh, that's that was from last week. Look how quick you're growing. Uh let's talk about yield boosts uh and how to fit that into hips.

SPEAKER_01:

Yeah, so that's so this is a good segue into again the subject of risk and return. So yield boost, for those that aren't familiar, is a fund of options-based income ETFs. So that's a family of options-based ETFs that Granite Shares has. And they're most famous for paying the probably the highest, but certainly one of the highest levels of distributions or yields in the market, in the entire ETF market. So to put that into context, if HIPS has an annual yield of around 10%, it's not uncommon for a yield boost ETF to have an annual yield of over 100%, and in some cases 150% or more. So people listening to this naturally would be like, well, how do you do that? Or how is that possible? And first and foremost, this is because the income is generated through a completely different way to traditional dividend stocks or from bonds. This is through options. And specifically, this is selling options to generate yield. And by selling options, you generate yield. These are typically referred to as covered calls or call writing or put writing strategies for yield boost. Um, it's actually an even more sophisticated strategy called a put spread, which is essentially a combination of selling a put option and buying a put option at the same time. But we do this on underlying leveraged ETFs. So to put that into context, if you were to sell an option on an underlying stock, let's for argument's sake, say Tesla, you might get the implied volatility of Tesla or the option might be, say, 70. And if you were to sell exactly the same option on a two times leveraged Tesla ETF, then you would expect two times the implied volatility, so by 140. And so more implied volatility or a higher implied volatility means a higher notional premium. In this case, it would be two times the notional premium. Therefore, you have two times the amount to pay out to investors. Now, going back to the nav question, if you look at um something like yield boost, then again, the trade-off for having a yield that is, let's, for argument's sake, say 100% or 150%, is that you have much more volatility with the underlying portfolio. So again, this is all about the trade-off between risk and reward, that you have a portfolio that is highly income generating, and your boost also distributes on a weekly basis, which is interesting. A lot of investors we have want to be paid on a weekly basis, and so these funds do that, but they're ultra-high income payers. And because of that, they have a much more volatile underlying than, say, obviously on the other extreme, a money market fund.

SPEAKER_00:

And again, go back to 400 million or 500 million, who's counting? Uh, obviously, there's there's big demand for that of that uh fund family which Yeah, I mean, I think it's the biggest growing category in the ETF industry.

SPEAKER_01:

Yeah, by far. And and again, I come back to the same, you know, although although it's not the subject of today's presentation, it is within the context of today's presentation, because we're talking about alternative income. In other words, we're talking about the craze, the trend at the moment to generate income from sources that are not traditional, i.e., dividend paying stocks or bonds.

SPEAKER_00:

Anything that we missed here? So you mentioned, you know, obviously falling interest rate environment yield, probably even more important, especially consistent high yield. Anything else that's um you think should be addressed in the context of monetary policy with these products?

SPEAKER_01:

Um well, we probably did miss something. I mean, there's always that I think the the relevant fact is clearly that uh we're again in a different rate environment. And you know, while the short end, and again, we're talking about Fed funds, obviously, when we talk about official interest rates, which if you look at the 10-year today, you might be thinking, oh, I mean it's 10 years going up and you know, Fed funds have gone down. But that is the difference between the market rate and you know, the Fed funds rate. But I think again, it it's you know, absent inflation andor you know other market-driven factors. You know, we're clearly in an environment where interest rates, at least Fed fund rates, are coming down. And that will impact in the main holders of short-term fixed income andor money market securities. So, you know, people that have been sitting pretty in money market funds in short-term treasuries that were earning probably close to 5%, that then went to 4% and is now dropping between now and the end of the year below below that. So I think this talks to another thing, which we didn't talk about directly, but we can talk about it now. Maybe it's a bullish, a bullish factor or a bullish indicator that you'll hear people talking about for the market more broadly, which is there's this wall of money sitting in short-term money markets and/or fixed income that presumably will seek a higher rate of return as rates continue to drop. And therefore, that's the argument that you'll hear a lot in terms of the further stimulus for the market, that that money will have nowhere to go other than into the market. And you know, that's more demand for existing stocks, other investments, which, all things being equal, will help drive up prices.

SPEAKER_00:

Again, folks, for those of you here for the CE Credits, I will email you afterwards to get your uh information to submit it to the CFP board. Again, this is a granite share sponsored webinar. Um, for those that uh want to learn more about the funds, obviously visit granite shares.com. Also sign up, put your email address there, get some great content from granite shares as well as on their substack, granite shares.substack.com. Make sure you also follow the Granite Shares handle uh where rate distribution announcements for the various fund families are announced. Um I mean, I'm I'm personally uh a big fan of hips, and I think uh as a diversified solution to income and generation, it's definitely done well.

SPEAKER_01:

Yeah, I mean, look, it it's what what's nice about it, and this doesn't get talked about enough, I think, is there's been um you know a huge, huge rush for private credit, right? People have been piling into private credit funds, private credit solutions, all for the attractive yields that private credit generates. But the flip side to that is that you know people are locked up. And it probably sounds okay, you know, when you sign up to one of these funds and say there's a three-year lockup or whatever it is, but time changes very quickly and things move on, and people that look to get their money back or get their money out, circumstances change, they can't do that. And a lot of the HIPS investments, well, I'm not saying clearly that it's private credit, it's private credit-like in the sense that a lot of these assets that you're buying in private credit funds are the same things we're holding in HIPS. It's just they're private instead of publicly traded, and certainly similar payoffs and profiles, but you get the benefit of a liquid wrapper, which you know, in some cases there's pros and cons. The pro is obviously that you get liquidity whenever you want it and you can buy and sell. The con, potentially, for those that make the private credit comparison is that you have a nav which is freely traded on the market. So a nav that goes up and down. And you're not able to conceal the volatility of the nav through a private fund structure, which you know is what a lot of what goes on and the appeal of something at private credit say, well, yeah, great. I get you know 8% per annum yield, but I've no idea the volatility of my nav or no idea the value of the underlying investments. So I think the more and more, at least what we see is, and that goes again to the popularity of yield boost, people are saying, you know what? I I get the I get the sort of the idea behind the private credit, and it's interesting. But if I can achieve the same yield with a publicly traded investment, or achieve case of yield boost, clearly like way higher yields, then why do I need to go private or just buy an ETF?

SPEAKER_00:

Yeah, I think that that makes a lot of sense. Um I think that's probably a good place to wrap this uh webinar up. Uh appreciate those that attended. Again, I'll send you an email on the CE credits. Uh, learn more about hips again at growingthechairs.com. We're also doing another webinar talking about gold, uh, which if you haven't noticed has been on tape uh for viewers and granite has a fun layer also, which is worth talking about. So uh stay tuned for that email announcement. Uh Will, take it away. Uh anything that you want to wrap up with.

SPEAKER_01:

I think the you hit on the points, but for anybody that again has questions um on this webinar, anything we do, please uh reach out to us directly. Website is granite shares.com. You'll find all the information on the funds there. We have multiple ways for you to reach out from the chat bar on the site, um, which is a real person, by the way, uh, to calling us, uh, whatever mode you feel more comfortable with. Or as Michael said, you can find us on social media at GraniteShares on X, myself, at Will Rind, the Substack, uh Granite Shares, and of course on LinkedIn. So please reach out if you've got any questions on anything that we do or any ideas you would like us to bring to market. Uh, always enjoy talking to everybody. But thank you, everybody, for listening today. Uh, much appreciated. Thank you, Burning. Enjoy the rest of your day.

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Michael A. Gayed, CFA

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