Amplify ETFs CEO on HYGM, LQDM & Yield-Focused Fixed-Income ETFs

**SPEAKER_1** (0:00)
And joining me right now, Christian Magoon, founder and CEO of Amplify ETFs, rang the bell there at the CBOE. Pretty exciting, and congratulations to you and your Amplify team. I was noting your YieldSmart fixed income suite of ETFs. Tell me a little bit about this group, for example, HYGM, the Amplify HYG High Yield 10% Target Income ETF, and there are a few others.

**Christian Magoon** (0:29)
Yeah, Nicole, it was super exciting to be here at the CBOE, ringing the opening bell, and yeah, our YieldSmart ETFs are really trying to put the fixed back in fixed income ETFs. If you think a lot about fixed income ETFs, you don't really know what kind of yields you're going to get from your investment grade corporate, your high yield, or your treasury ETF over time. What we've designed our products to do is target a certain yield. So like you said, in our HYGM ETF, we're targeting high yield bond ETFs with a 10% distribution target that's achieved through interest income from high yield bonds, through ownership of HYG, but then also option writing so that we hit that 10%, even if rates fall back down and bonds see some dissipation from interest payments, we can subsidize that with option income. So this is all about putting the fixed back and fixed income. We think there's a lot of investors who want more yield and a fixed amount of yield from these types of allocations.

**SPEAKER_1** (1:33)
I also saw the investment grade when you talk about 10%, this one's 12%. LQDM, tell me about that.

**Christian Magoon** (1:42)
Yeah, so LQDM has a higher yield target of 12% vs. HYGM at 10% because the duration of LQD bonds are just longer than the HYG bonds. So there's a little bit more option income to harvest. So we're targeting 12% income from interest and options from LQD ownership. There's many people who own an investment grade ETF like LQD.
We're able to deliver more than double the yield again through interest and option income. We think this makes a lot of sense for investors who are yield starved or simply just want a target of fixed yield.

**SPEAKER_1** (2:23)
You said how there has been a demand for this type of fixed income fund, right? These three income funds that we're talking about, the third one being a TLT fund, that has an overall monthly distribution potential. It's designed this way and it complements what else someone has in their portfolio, right? Do you continue to expect to continue to grow in the fixed income side of funds?

**Christian Magoon** (2:51)
Yeah, you're exactly right, Nicole. This is a great way to, I think, augment existing fixed income exposure and potentially raise your yield and get it from an area besides interest, option income. Oftentimes, option income can be more tax advantage than interest income.
Yeah, we expect to continue to expand this product line at Amplify. We think this is a great way to use options, not just in the equity side, which we have a lot of equity income products that use options, but also in the bond side. We think it's part of the toolbox that's been overlooked, and we're trying to bring these yield smart fixed income products to the market for investors to take advantage of.

**SPEAKER_1** (3:33)
Yeah, and what do you think about when you look at bond yields right now, today? I mean, we're in a moment where this morning we saw yields at the highest point in some time. I'm sure you're watching them tick by tick.

**Christian Magoon** (3:48)
Yeah, we really are, and it's going to be interesting to see. It seems like they're going to be going higher here, and we've got a reprieve with some data, as you know, late last week.
However, it's very uncertain. I mean, remember, we were coming into late last year, thinking we would see maybe some rate cuts. So one of the neat things about these fixed income option ETFs that we offer, is that option income actually acts as a hedge against potentially rates rising or acts as a fuel source for more income should rates go down, and you see less interest from your bond ETF, but you need to create a larger distribution for your retirement or your savings needs. I think these option ETFs in the bond area really give you optionality depending on your concern about rates rising or potentially, seeing things be cut eventually by the Fed.

**SPEAKER_1** (4:45)
Christian Magoon, founder and CEO of Amplify ETFs. Christian, thank you. Nice to see you. Congratulations.