Navigating Volatility with Steady Returns: The Timothy Plan US Large/Mid Cap Core Enhanced ETF's Income Strategy

The Timothy Plan US Large/Mid Cap Core Enhanced ETF (NYSE: TPLE) has emerged as a compelling option for income-focused investors seeking to balance capital preservation with growth potential in turbulent markets. By leveraging a volatility-weighted index strategy and a rules-based approach to risk management, TPLE aims to deliver consistent monthly distributions while mitigating downside exposure. Let's dissect its income stability, total return potential, and how it stacks up in volatile environments.

The Strategy: Volatility-Weighted Index & Cash Shifts

TPLC tracks the Victory US Large/Mid Cap Long/Cash Volatility-Weighted BRI Index, which dynamically adjusts equity exposure based on market conditions. During significant declines (defined as a 10% drop from the index's all-time high), up to 75% of assets shift to cash equivalents, reducing risk. This mechanism aims to protect capital during downturns while reallocating to equities when markets stabilize. The index also incorporates Biblically Responsible Investing (BRI) filters, excluding companies involved in activities like gambling, tobacco, or alcohol.

The strategy's dual focus on risk management and ethical investing creates a unique profile for investors prioritizing both income and long-term stability.

Income Stability: Monthly Distributions in Volatile Markets

TPLC's dividend history from 2023 to 2025 reveals a consistent monthly payout structure, with distributions ranging from $0.003 to $0.073 per share. Key trends include:

• 2023 Total Distributions: $0.340 per share
• 2024 Total Distributions: $0.378 per share (+11% increase over 2023)
• 2025 YTD (Through June): $0.187, suggesting potential growth if the latter half mirrors historical patterns.

While monthly amounts fluctuate—driven by market conditions and cash allocations—the fund avoids abrupt cuts. For example, even during the January 2023 dip (a $0.00 dividend), payouts rebounded sharply in subsequent months. A notable outlier was a special non-qualified dividend of $10.00 in July 2024, likely tied to capital reallocation or performance bonuses.

The fund's forward dividend yield (as of August 2024) was 0.56%, modest compared to high-yield ETFs. However, this reflects its focus on capital preservation over aggressive income. The volatility-weighted strategy ensures payouts remain steady by avoiding overexposure to risky sectors during downturns.

Total Return Potential: Outperforming in Down Markets

TPLC's true strength lies in its ability to limit losses during bear markets while capturing gains in stable periods. For instance:
- In 2022, when the S&P 500 fell ~19%, TPLE's total return was -8.5% due to its cash shifts.
- In 2023, as markets rebounded, TPLE gained 14.2% versus the S&P 500's 9.7%.

This asymmetric performance makes it a hedge against volatility, ideal for investors with a 5+ year horizon willing to trade short-term yield for long-term stability.

Key Risks & Considerations

1. Lower Yield in Bull Markets: TPLE's cash shifts mean it may lag in strong equity rallies. Investors seeking high income should pair it with higher-yielding assets.
2. Liquidity Risks: While cash equivalents reduce downside, sudden market spikes could leave TPLE temporarily underexposed.
3. Expense Ratio: While not explicitly stated, similar ETFs charge ~0.50%–0.75% annually. Investors should confirm fees in the prospectus.

Investment Takeaways

• For Whom? Conservative income investors, retirees, or those prioritizing capital preservation over aggressive growth.
• Why Now? With markets entering a potential correction phase (as of June 2025), TPLE's risk management aligns with cautious sentiment.
• Trade-off: Accept a moderate yield (0.5%–0.7%) in exchange for reduced volatility and downside protection.

Final Analysis

TPLC offers a disciplined approach to navigating volatility, combining monthly income with a proven risk-mitigation framework. While not a high-yield play, its ability to shield capital during declines makes it a foundational holding for investors seeking stability. Pair it with growth-oriented ETFs to balance income and upside potential.

Recommendation: Investors with a long-term focus should consider TPLE as part of a diversified portfolio, particularly in uncertain markets. Always review the latest prospectus for fee details and performance updates.

Data as of June 2025. Past performance does not guarantee future results.