First Look ETF: Active Strategies for Earning High Income and S&P 500 Investing

Hello everyone.

You are watching the May episode of First Look ETF.

I'm Stephanie Stanton with ETF Guide.

I want to give a warm welcome to all.

We are glad to see you again.

Coming up on today's program, we'll examine the risk of topheavy markets dominated by mega cap stocks and the potential benefits of an alternative waiting strategy on the S&P 500.

Also, an important update about the challenges facing income seeking investors and one ETF that aims to solve it.

And finally, we will tell you about a new pair of active ETFs with a total return strategy.

But first, before we go any further, let's welcome Mal Leum with the New York Stock Exchange.

Mal, thank you for joining us.

It's always great to see you.

Great to see you, Stephanie.

I'm excited to join.

So, let's talk about the latest update on ETF launch activity.

What are you seeing?

April was the year's quietest month for ETF launches, which is not entirely surprising given market conditions, but quiet is certainly relative.

We saw over 70 new ETFs come to market.

And to put it into perspective, we have seen more than double the number of new listings in 2025 than there were at this point last year.

This brings the total of US listed ETFs to over 4,200 and still on track to breaks previous records in new issuance for the year.

Amazing.

You know, active ETFs, we've been talking a lot about that.

They are capturing market share as investors seek the guidance of investing professionals.

Um, it seems like the ETF structure has become the preferred delivery mechanism for Wall Street's asset managers.

What are you seeing?

So, you know, nearly half of all ETFs are now actively managed.

Though traditional passive ETFs still hold significantly more assets, active ETFs are gaining a lot of traction, surpassing $1 trillion in asset under management this year with strong net inflows, particularly managed derivative and defined income strategies.

We're also closely monitoring the multi-share class proposal, which if approved, would enable traditional active mutual fund managers to add ETF share classes to existing funds, potentially expanding the number of active ETFs available exponentially.

You know, we have such a great guest lineup today for the show.

What are you looking forward to on today's show?

You know, we have another great lineup of NYC ETF issuers today.

We hear from innovator ETFs, one of the leaders in the defined outcome space about their latest strategies.

TMA, who recently brought to market the first innovation to the S&P 500 in an ETF rapper since, I believe, uh, 2003.

And of course, another active manager, Horizon, who most recently brought their active ETF management strategy to the market in a form of both large cap equity and fixed income strategies.

So much to look forward to.

Mel, thank you so much.

It's great to see you.

We appreciate you joining us.

Thank you.

And just a quick reminder to watch First Look ETF on Apple TV, Amazon Fire TV, and Roku.

We also simoc cast Firstlook ETF on iTunes, Spotify, Amazon Music, and other major podcasting platforms.

So, don't miss it.

Some investors are beefing up their portfolio's income strategy, and they're doing it by seeking income beyond traditional sources like bonds or dividends from equities.

Well, today we examine an ETF with a compelling income solution.

And here to tell us more is Joe Becker, director product management at Innovator ETFs.

Hi Joe, it's great to see you.

Hello.

Thank you for having me.

It's good to be here.

So before we talk about your firm's latest ETF additions, what are some of the challenges facing income focused investors?

Boy, uh where do where do we begin?

Lots of challenges.

Uh certainly the volatility of late, even not just in equities, but the volatility we've seen in interest rates and even just treasuries, right? that people looking to treasuries have have experienced a lot of risk lately.

Um uncertainty around the economy.

Will companies continue to pay their dividends?

What uh this is a huge huge challenge for income investors.

Um and we think we've got a solution that may help with some of these challenges.

All right, let's talk about that solution.

The Innovator Equity Premium Income Daily Putright ETF.

And that ticker is SPUT or SPOut.

It is among your firm's latest ETF launches and we understand that it offers a compelling solution for income seekers that actually goes beyond traditional income strategies like dividends.

So go ahead and dive into that.

So ESP put we launched just in March so it's about 7 weeks old now.

And um you know I like to start by comparing it to a traditional covered call strategy.

Lots of investors are familiar with the idea of holding equities and writing calls against those equities.

What ESPut is doing is something similar.

It's holding equities, but instead of selling calls, ESPUT is writing daily puts on the the the S&P 500.

And that is a way that the fund is generating not only dividend income, but also premium income from the sale of puts.

And really the overall goal of the fund, as I mentioned, we have equity.

So, we're looking to provide potential for capital appreciation, but then also uh meaningful monthly income through the sale of those daily put options.

So, then how do you envision financial advisors or investors potentially using as put inside their diversified portfolio?

We think one way to to use it, a great way to use it is alongside a covered call strategy.

And it's really put simply cover call strategies are selling those calls generally above the market.

We're writing the puts below the market.

And so we think putting these two side by side, getting those two different sources of income uh is a great way to balance out a covered call strategy.

All right, we'll leave it there.

Joe, thank you so much for introducing us to ESPOut.

Uh good luck with it.

We appreciate your time.

Thank you so much.

Well, as we just heard from Mal, active ETFs have been garnering more interest from investors and financial adviserss with an eye on total long-term returns.

How can ETF investors stay focused on what matters most?

Well, helping us to answer this question is Clark Allen, head of ETFs at Horizon Investments.

Hi, Clark.

It's good to see you.

Hi, thank you.

Welcome.

Glad to be here.

Yeah, absolutely.

So, you know, we've seen tremendous market volatility.

Obviously, some investors are still very much on edge.

What are some of the challenges facing investors in this moment as you see it?

Yeah, we work with a lot of adviserss and ultimately end clients and the the biggest thing we see is is how do you stick with a plan in the midst of the volatility?

You have a goal.

You have an objective for your financial plan and how how do you ensure that you're sticking with that plan over the long term despite the short-term volatility?

And that's where we believe educating adviserss, giving them products that really tell a story and connect to the financial plan, utilizing technology in conjunction to present how a product or ETF may connect into that plan and help fulfill that plan is really key at times like this when when investors begin to get nervous and may potentially begin to abandon the products that that are really there to help fulfill their needs and meet their long-term goals.

Yeah.

So on that note, the recently launched Horizon Landmark ETF, your ticker there is BENJ Benji Benjamins and the Horizon Expedition Plus ETF, that ticker HBTA.

These are actually the first ETFs in your lineup.

So congratulations.

Thank you.

Thank you.

We're excited.

Let's break it down.

How do these funds work and what are the potential benefits?

Um start with Benji.

Benjamin.

Yeah, I'll add or begin with the fact that these are our first two.

We we just filed for a number of more.

We expect to launch a handful of products this year to just expand the ways we can partner with adviserss and help fulfill financial plans.

These first two obviously are very important to us because they're the first.

So BENJ or our landmark ETF, this is liquidity focused strategy.

It's focused on total return to fit into a liquidity bucket or if you will a spending reserve bucket for a retirement plan.

Uh the important thing for us is the fact that this is total return focused.

And so it allows the client and ultimately the adviser to determine when do they need to access that cash to meet the spending needs of the client.

Uh we see this fitting really well in the context of model portfolios which is where we we tend to do a lot of our distribution and believe that this ETF will meet a lot of the needs for those clients in the retirement stage of their financial plan.

And then HBTA yeah HBTA this is the expedition plus our high beta strategy.

This is a strategy we had clients for a number of years and advisers saying how do I access more risk other than just buying Nvidia or or some of the other names that that are carrying a lot of risk.

How do I make sure I get upside outperformance?

And so we said let's come to market with something that's thoughtfully designed has has broad market exposure but also is going to target higher risk in the market.

So we're looking at about a 1.2 to 1.4 beta for this strategy.

The key though is is if the market's down this is gonna underperform because we're not trying to time when we have that exposure.

We're just giving a consistent risk profile to the marketplace.

Uh but but importantly, if the market's up quite a bit, this is going to give you that consistent outperformance relative to the S&P 500.

This is really helpful.

Again, this is how we think about all of our products is how do we deliver uh some certainty or some some understanding around an expectation for a client so then they can fit that into a financial plan and know how they use it and know when it underperforms and how it's out out going to outperform and where they can use it in their financial plan.

Yeah.

And again, you touched on this, but uh talk about again how these funds could be used by investors and advisers inside a diversified portfolio.

Yeah, it's key.

We work with a lot of advisers in a lot of different venues, mostly model portfolios or custom models.

Uh the the the bench strategy or Ben give me the Benjamins is going to be in the liquidity sleeve.

It's it's for folks in retirement traditionally is where we're going to see that used the most.

It's it's that spending bucket where you set aside that that money to meet your spending needs.

Despite the volatility in the market, I have money to spend to meet uh my my ongoing spending as traveling, you know, paying for my grandkids college and the like.

And then HBTA, this this can fit across all the different stages of a financial plan in our mind.

Obviously, a younger investor that's accumulating assets wants to have some additional market capture potential over the long term. also potentially somebody that's in retirement that needs to have some extra growth potential when you have a 20 or 30 year planning horizon like retirement.

Taking a little extra risk is is uh potentially a good thing to help you make sure you don't run out of money and mitigate longevity risk.

You just have to be able to understand how it's going to perform and kind of zoom out at times like this when markets are volatile and understand that this is a long-term problem and thus you need to think about the products and the solution set and the outcome it's giving you over that long period of time.

Clark, thank you so much for joining us here on First ETF.

It's great to have you.

Great.

Thank you.

I appreciate it.

Alternative waiting strategies are aimed at diffusing the concentration risk of topheavy indexes that are often dominated by the MAG 7 and other mega cap stocks.

Well, a new ETF has a unique waiting strategy on the S&P 500.

Let's welcome Moritz Pot, founder and CEO at Teima ETFs to tell us more.

Hi Moritz, it's good to have you.

Thank you for having me on the show today.

So the dominance of mag seven stocks over market indexes introduces many potential pitfalls and risks.

What do investors and advisers need to know about this?

It's a good question.

So if you look at the S&P 500 today, its concentration is at the highest level in 50 years.

What does that mean?

When people think about their index fund, they come typically for diversification.

But today, almost 40% of the S&P 500 is concentrated in only 10 companies, which adds concentration risk, industry risk, and frankly, potentially greater volatility to your index portfolio.

And what that means is that investors are exposed to risks they may not be as attuned to.

Now, historically, investors would look at the S&P 500 eco weight as an alternative to the S&P 500 full weight, but the problem with the eco weight solution is that it has below 50% overlap with the S&P 500 full weight.

So, if you're buying the S&P 500 eco weight, you're taking a very active bet against the S&P 500, which is typically not what investors are looking to do.

So, the Teima S&P 500 historical weight ETF strategy and your ticker is DSPY DSPY takes a unique approach to investing in the S&P 500 by aiming to sort of diffuse concentrated positions within the index.

How does a fund work and what are some of the potential benefits?

So, the S&P 500 historical weight ETF is identical to the S&P 500 ETF in every way except for weightings.

So same companies, same order of companies, same rebalancing frequency, same dividend policy.

But the difference is the waitings are based on 35 years of history.

Not of the companies but of the index position.

So let's take an example Apple biggest company in index today roughly 6 and a half% of the S&P 500.

If you look at the number one position in S&P 500 which has been held by many companies over history AT&T, GE, IBM, Microsoft, Nvidia, Apple today over the last 35 years that top position was on average 30 3.5% of the index.

So in our strategy Apple top company is 3.5% of the index. using history to determine waitings applied to the same companies with the same process as the S&P 500.

So then uh with that being said, how might DSPY be deployed by investors and advisers inside their diversified portfolio?

Sure.

So DSPY solves two problems.

One, it reduces concentration risk in S&P 500.

Two, it reduces tracking error in the S&P 500 equal weight.

Those are two growing issues.

Both those issues are at multi-deade highs.

That is what DSPY solves through one simple tax efficient solution.

And also the his S&P 500 historical weight ETF is actually priced below the S&P 500 ecoef.

All right, we will leave it there.

More its pots.

Thank you for sharing more about DSPY.

We appreciate your time.

Keep up the good work.

Thank you for having me.

And that does it for today's episode of First Look ETF.

If you enjoyed the show, tell us in the comment section below and by hitting the like button.

Want to give a big thanks to all of our guests along with Ma Leum at the New York Stock Exchange.

Be sure to check out ETF Central.com to learn more.

I'm Stephanie Stanton with ETFU.

Thank you for watching.

We'll see you next time.