In episode 6, we speak with David Cohen the Co-Founder of the HANDLS Indexes. David is an industry veteran and has been responsible for the creation of many unique indexes throughout his career. Currently the HANDLS index is the driver of the HNDL ETF, a successful ETF with over a billion dollars of assets. HNDL is a income producing strategy that seeks to provide a target distribution rate to its investors on an annualized basis. For more information on David and the HANDLS Indexes go to handlsindexes.com
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and David Cohen covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
It outperforms any dividend strategy you can come up with. High dividend yield, dividend growth, you name it. And so, we launched a fund. Now, we've launched four soon to be five funds by the time this podcast comes out on this Shareholder Yield concept. And it's one thing to do a back test in the public academic literature. It's another thing to do it with real money. And we're happy with the performance of all these funds. We have a foreign fund and emerging market fund.
So maybe they'll replace 10 or 20% of their stock allocation with this fund. There's people that are a lot more focused on style boxes so they do large cap growth, large cap value, mid-trap growth, mid-cap value in which case they'll use this fund as the mid-cap value category. We have a small cap version of this, which is M-Y-L-D, L-Y-L-D is our large cap version and then we have foreign emerging where we're trying to get people as many choices they want, investors were coming to really appreciate, love this specific exposure.
Market Context and Positioning
Today we have on Med Faber. He is the CEO of Cambria Investments. They have a large suite of ETFs, but we are specifically focusing on their shareholder yield suite today. And more importantly, we are looking at their largest fund in that shareholder yield category S.Y.L.D. We talk about what shareholder yield is, why it is important. Talk about the makeup of this fund. Talk about how it is performed significantly better than almost all dividend yield ETFs out there on the market.
It caps the sectors at a third. We don't want to be all in on energy or tech or something like that. And then it updates once a quarter. So it has somewhere in between like a traditional index and an active management turnover but in the ETF structure, it tends to be quite tax-efficient and at its core. It's a basic long-only type of strategy that the positions are around 1%. And if they go up too much, we'll trim them and if they go down too much, we'll add to them.
So we start with the whole universe. And the first step is what the academics would call net payout yields. Everyone calls it shareholder yield, the vernacular. There's always so much jargon in our world but it's basically cash dividend and net stock buybacks. So that eliminates 75% of the companies. I think it would be a surprise to most investors where if you look at the average company in the stock market as a net stock issuer. So they're issuing shares in a given year.
Notable Insights
"And so, the challenge with that is you can get your healthy serial that even exists, but you can also get your fruit loops and frosted flakes and everything else."
"Now, the difference comes when a buyback is executed if the stock is trading below and transit value."
Key Takeaways
- David is an industry veteran and has been responsible for the creation of many unique indexes throughout his career.
- HNDL is a income producing strategy that seeks to provide a target distribution rate to its investors on an annualized basis.
- The conversation explores important themes in etf structure relevant to today's advisor landscape.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with David Cohen highlights important considerations around international markets. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of international markets and income investing discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with David Cohen, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.