Amplify High Income ETF [YYY] Stock Forecast

It's been a great year for alternative income strategies as inflation, interest rate, and recession risk fears dominated markets. Garrett Paolella of NEOS and Christian Magoon of Amplify ETFs joined VettaFi's Tom Lydon to discuss alternative income opportunities at the Income Strategy Symposium hosted by VettaFi on October 27.

Amplify High Income ETF is structured as an exchange-traded fund and serves as a "fund of funds" in the closed-end fund space. YYY aims to replicate the ISE High Income Index, which selects CEFs ranked highest overall by ISE via the following factors: yield, discount to net asset value and liquidity. The article argues why a rules-based methodology, like the one used by YYY, might not be suitable for the CEF space, with the fund's historic performance confirming this view.

ETFs Of CEFs: Diversification And Higher Distributions

Amplify High Income ETF has underperformed the S&P 500 index, with a -33% price decrease and -11% total return since February 2021. The YYY ETF is a fund of closed-end funds with a high expense ratio of 2.72% and a portfolio heavily weighted towards bonds. A rotational strategy in CEFs may be a better option for preserving capital and income stream against erosion and inflation compared to YYY.

Shakey September ahead?...

Amplify High Income ETF holds a basket of high-income closed-end funds. These include PDI, OXLC, USA, PTY, PAXS, and JPS. This does appear like income on steroids with extreme levels of diversification.

YYY invests in high-yield, highly discounted liquid CEFs but has a history of investing in underperforming CEFs, leading to consistent capital losses and dividend cuts. Despite its strong 12.2% dividend yield and diversified portfolio, YYY's strategy has proven ineffective, with the fund's share price down 41% since inception and dividends declining by 50%. A look at the fund, and its many pitfalls, follows.

Amplify High Income ETF has a current dividend yield of 12% but has underperformed market indices since its inception, with a share price down -42%. The fund holds 45 CEFs in its portfolio, selected based on dividend yield, discount to NAV and liquidity, but this approach can result in picking "yield traps" and underperforming CEFs. The fund's long-term performance shows an annual compounded growth rate of 3.12%, and its total annual return is only a quarter of its annual dividend.

Ampify ETFs' CEO and co-founder Christian Magoon told NYSE's Judy Shaw at Exchange 2023 that the company is “really focused on income this year.” See more: “Amplify's Thematic ETF Lineup Will Soon Be More Diverse” “I know rates are rising, and people are getting a little bit more in their savings account,” Magoon said.

The thematic ETF world will soon have a larger player to watch. Today, Amplify ETFs announced plans to acquire the ETF Managers Group (ETFMG) ETF lineup.

Amplify High Income ETF is a US stock and trading under the symbol YYY

Amplify High Income ETF stock price is $11.425 today.

Yes, Amplify High Income ETF is a publicly traded company.