The Infrastructure Capital Bond Income ETF

The Infrastructure Capital Bond income ETF (the "Fund")

BNDS: Complex Problems Require Smart Solutions

In today’s complex fixed income investing environment, it can be very difficult to thread the needle of seeking steady current income while also maintaining a focus on capital appreciation. The Infrastructure Capital Bond Income ETF (BNDS) is an actively managed bond product that aims to help investors do just that. BNDS focuses on investing in undervalued corporate bonds that are carefully screened by the portfolio management team at Infrastructure Capital Advisors before inclusion.

Let’s take a look under the hood at the strategy that BNDS employs and how its current holdings showcase how active management is ideal for this type of allocation.

A Disciplined Approach to Bond Selection

Since launching on January 1st, 2025, BNDS has put together a focused portfolio of fixed income and fixed income-like securities. This portfolio is concentrated in industries known for tangible asset bases and high cash flow generation, energy, real estate investment trusts (REITs), communication services, and financials. These four represent nearly 70% of the portfolio’s weight. While this allocation may seem heavy handed, the team behind the strategy is well known for both their valuation methodologies as well as their macro view of the market.

BNDS Weight by sector as of 3/31/2025.

People:

Jay Hatfield is the portfolio manager for BNDS and has nearly 30 years of experience managing credit and infrastructure portfolios in addition to being heavily focused on macro analysis of credit markets. He’s been refining his strategies to be as robust as possible through all types of market conditions. He and his team have been finding systematic ways of unearthing undervalued companies and taking long-term positions to capitalize on them.

Investment Process:

The team utilizes a multi-factor proprietary valuation model that includes but isn’t limited to debt securities term, credit, and liquidity premium. It also uses industry, sector, market capitalization, and value relative to the characteristics of other ETFs, ELNs, investment companies, or indexes that predominately invest in debt securities in its approach.1 In addition to this careful screening, the fund utilizes a modest amount (20%-30%) of leverage obtained via covered call writing to enhance their short-term income stream. This process comes with a gross expense ratio cost of 0.81% a year (as of 5/31/2025).

The result is a current SEC Yield of 7.23%. This compares to 4.48% for the BBG U.S. Aggregate Index (USD) one of the most heavily benchmarked broad market credit indices. BNDS carries significantly more risk than the benchmark, but that risk may result in overall higher return.

Returns for periods of less than one year are cumulative total returns. The fund commenced operations on January 15, 2025, therefore the performance in the period above reflects only a partial time period.

Performance data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please call 800-617-0004 for performance data current to the most recent month end.

High Yields, Steady Current Income

BNDS’ strategy demonstrates how active management can create value in today's challenging fixed income landscape. By focusing on infrastructure-related sectors with strong asset bases and predictable cash flows, the fund targets securities that traditional broad-market indices often overlook or underweight. The team's ability to identify mispriced opportunities in energy pipelines, telecom infrastructure, and real estate debt has resulted in a portfolio that delivers current income while maintaining potential for capital appreciation.

For investors seeking an alternative to traditional bond allocations, BNDS is a potential consideration. The fund's current 7.23% SEC yield is a premium to broad market benchmarks, while its focus on infrastructure assets provides exposure to services that historically have generated stable cash flows in most economic cycles. However, investors should be mindful of the concentrated sector allocation and credit risk inherent in high-yield moderately leveraged strategies.

As markets continue to evolve, BNDS seems like the type of specialized, actively managed approach that may be necessary to navigate an increasingly complex fixed income environment while still maintaining a stable current income.

Sources:

1. https://www.infracapfund.com/bnds/prospectus

About Us

Infrastructure Capital Advisors, LLC

The Income Specialists

Infrastructure Capital Advisors, LLC (ICA) is a registered investment advisor that manages exchange traded funds (ETFs) and a series of hedge funds. The firm was formed in 2012 and is based in New York City.

The firm seeks current income as its primary objective in most of its investing activities. Consequently, the firm focuses generally on companies that generate and distribute substantial streams of free cashflow.

This approach is based on the belief that tangible assets that produce free cashflow have intrinsic values that are unlikely to deteriorate over time.

Free cash flow indicates the amount of cash generated each year that is free and clear of all internal or external obligations.

Investment Team Leader

Jay D. Hatfield | Founder, CEO, and Portfolio Manager

Mr. Hatfield has almost three decades of experience in the securities and investment industries. At ICA, he is the portfolio manager of InfraCap MLP ETF (NYSE: AMZA), InfraCap REIT Preferred ETF (NYSE: PFFR), Virtus InfraCap U.S. Preferred Stock ETF (NYSE: PFFA), and a series of hedge funds. He leads the investment team and directs the company’s business development.

During his career, Mr. Hatfield has gained a broad perspective on the U.S. financial markets with years as an investment banker, a research director and portfolio manager, and as a co-founder of a NYSE-listed company. A focus on companies that own real or hard assets, like energy infrastructure and real estate, runs through Mr. Hatfield’s career.

Prior to forming ICA, he partnered with senior energy industry executives to acquire several midstream MLPs. These companies were merged to form a company now known as NGL Energy Partners, LP (NYSE: NGL). NGL was an IPO in May 2011. He is a general partner of the publicly-traded company.

In the years prior to forming NGL, Mr. Hatfield was a portfolio manager at SAC Capital (now Point72 Asset Management), running a portfolio focused on income securities. He joined SAC from Zimmer Lucas Partners, a hedge fund focused on energy and utility sectors, where he was head of research. Earlier in his career, he was head of an investment banking unit at CIBC/Oppenheimer and a Principal in an investment banking unit at Morgan Stanley & Co. He began his career as a CPA at Ernst & Young. He holds an MBA from the Wharton School at the University of Pennsylvania and a BS from the University of California at Davis.

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Fund Overview

We believe that our proven, income-focused strategy can be overlayed into the common equity asset class which possesses: a robust investor base, a large investable universe, and, complementary yield-enhancement opportunities.

Liquidity

Small Cap equities can provide investors total return and active managers opportunities to manage risk.
By investing in a diversified portfolio of Small Cap securities, we seek to monitor concentrations to specific stocks and positions sizes.

Large Investable Universe

Equity investments can be made in companies across all sectors allowing the Fund to fully capture diversification benefits
A large investable universe (~2,000 companies) presents a substantial opportunity set for timely and opportunistic investments

Options / Preferreds / Equity Linked-Notes

The Fund will utilize options strategies to both hedge the portfolio and capture additional yield
A deep understanding of preferred stocks presents opportunities for significant investments in low-beta, high-dividend preferred stocks creating a unique investment vehicle

Volatility differences are measured as differences between 2-yr annualized volatilities. Beta (β) is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole (usually the S&P 500). Stocks with betas higher than 1.0 can be interpreted as more volatile than the S&P 500. Data as of August 31, 2023. All data taken from Bloomberg. Treasury (LUATTRUU Index), Municipal (LMBITR Index), Corporate Bond (LUACTRUU Index), Preferreds (SPTREFTR Index, PFF Equity), High Yield (LF98TRUU Index). Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. *See www.infracapfunds.com for more disclosure on indices. Performance data quoted represents past results. Past performance is no guarantee of future results. The distributions among asset classes can vary significantly with respect to the components that make up the distributions. It should be noted that Treasury Assets, Municipal Assets, Corporate Bonds, Preferred Stocks, and High Yield Assets each contains materially different characteristics including risks, expenses, and outcomes not captured by this chart. Key risks of these yield alternative assets include: credit, liquidity and interest rate risks;

Monthly Market Commentary & Economic Outlook Webinar

with Jay Hatfield, InfraCap CEO, CIO and Portfolio Manager

Online Brokers

The inclusion of these links is not an endorsement from any of these firms does not represent a recommendation or solicitation to purchase or sell any securities. Additionally, the inclusion of these links does not represent an endorsement by Infrastructure Capital Advisors, LLC of any of these firms

Fund Summary

Returns for periods of less than one year are cumulative total returns. The fund commenced operations on December 11th, 2023, therefore the performance in the period above reflects only a partial time period. Performance data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please call 800-617-0004 for performance data current to the most recent month end. Shares shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Total Returns are calculated using the daily 4:00pm EST net asset value (NAV). Market price returns reflect the midpoint of the bid/ask spread as of the close of trading on the exchange where Fund shares are listed. Market price returns do not represent the returns you would receive if you traded shares at other times.

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BNDS ETF DISCLOSURE

About Us:

Infrastructure Capital Advisors, LLC (ICA) is an SEC-registered investment advisor that manages exchange traded funds (ETFs) and a series of hedge funds. The firm was formed in 2012 and is based in New York City. ICA seeks current income opportunities as a primary objective in most, but not all, of ICA's investing activities.

DISCLOSURE

The information contained herein represents our subjective belief and opinions and should not be construed as investment, tax, legal, or financial advice. This information does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell, or otherwise transact in any investment including any products or services or an invitation, offer or solicitation to engage in any investment activity. This article is not an offer to sell, or solicitation of an offer to buy any investment product or services offered by Infrastructure Capital Advisors, LLC, (“ICA”) or its affiliates. ICA, will only conduct such solicitation of an offer to buy any investment product or service offered by ICA, if at all, by (1) purported definitive documentation (which will include disclosures relating to investment objective, policies, risk factors, fees, tax implications and relevant qualifications), (2) to qualified participants, if applicable, and (3) only in those jurisdictions where permitted by law. Infrastructure Capital Advisors, LLC nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein. This data includes information based on data and calculations sourced from Bloomberg and third-party sources. We believe that the data is reliable, we have not sought, nor have we received, permission from any third-party to include their information in this article. The preferred market place information and comparative active and passive management information is provided for informational purposes only, actual funds and indices may have different characteristics and risks which are not presented. Many of the assumptions in this illustration reflect our subjective belief and is subject to change without notice. Certain information contained in this document constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or other comparable terminology. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. Additionally, any projections, market outlooks and estimates included herein are based upon certain assumptions, including but not limited to the prior experience of ICA and other factors it deems relevant such as current and expected market conditions These materials are provided for informational purposes only.

Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. For a prospectus with this and other information about the Fund, please click here. Please read the prospectus carefully before investing. For more information about the Fund, Fund strategies or InfraCap, please reach out to Craig Starr at 212-763-8336 (Craig.Starr@icmllc.com).

A word about risk: Investing involves risk, including possible loss of principal. An investment in the Fund may be subject to risks which include, among others, investing in fixed income securities, dividend paying securities, utilities, small-, mid- and large-capitalization companies, real estate investment trusts, master limited partnerships, debt securities, market events, operational, high portfolio turnover, trading issues, active management, fund shares trading, premium/discount risk and liquidity of fund shares, which may make these investments volatile in price. Small and Medium-capitalization companies, and high yielding equity and debt securities may be subject to elevated risks. New Fund Risk. The Fund is a recently organized investment company with no operating history prior to the date of this Prospectus. As a result, prospective investors have no track record or history on which to base their investment decision. Debt Securities Risk. Increases in interest rates typically lower the value of debt securities held by the Fund. Investments in debt securities include credit risk. Credit Risk. An issuer of debt securities may not make timely payments of principal and interest and may default entirely in its obligations. A decrease in the issuer’s credit rating may lower the value of debt securities. Interest Rate Risk. Securities could lose value because of interest rate changes. For example, bonds tend to decrease in value if interest rates rise. Derivatives Risk. Derivatives may pose risks in addition to and greater than those associated with investing directly in securities, currencies or other investments, including risks relating to leverage, imperfect correlations with underlying investments or the Fund’s other portfolio holdings, high price volatility, lack of availability, counterparty credit, liquidity, valuation and legal restrictions. Options Risk. Options transactions involve special risks that may make it difficult or impossible to close a position when the Fund desires. A fund that purchases options, which are a type of derivative, is subject to the risk that gains, if any, realized on the position, will be less than the amount paid as premiums to the writer of the option. Diversification cannot assure a profit or protect against loss in a down market. BNDS is distributed by Quasar Distributors, LLC.