High-Yield ETFs in a Low-Growth World: Why Manulife Strategic Income Plus Fund (PLUS) Stands Out

In a world where central banks are navigating divergent monetary paths and investors grapple with the dual threats of inflation and stagnation, the quest for income-generating assets has never been more critical. For income-focused investors, the Manulife Strategic Income Plus Fund ETF (PLUS) emerges as a compelling solution in a low-growth environment. With a monthly distribution of $0.0585 CAD per unit, a strategic allocation of alternative investments, and a proactive approach to managing market volatility, PLUS offers a unique value proposition that warrants closer examination.

The Yield Landscape in 2025: A Tale of Divergence

The global interest rate environment in 2025 is characterized by stark contrasts. While the U.S. Federal Reserve has paused its easing cycle amid inflationary pressures from tariffs and migration-related costs, the European Central Bank (ECB) and many Asia-Pacific central banks have aggressively cut rates. This divergence has created a fragmented yield landscape, where traditional fixed-income assets struggle to provide competitive returns. Meanwhile, market volatility remains elevated due to trade tensions and fiscal policy uncertainties, further complicating the search for reliable income streams.

Manulife Strategic Income Plus Fund (PLUS): A High-Yield Powerhouse

The PLUS ETF distinguishes itself in this environment through its $0.0585 CAD monthly distribution, the highest among Manulife's ETF lineup. For context, other Manulife income-focused ETFs, such as the Smart Enhanced Yield ETF (CYLD) and U.S. Enhanced Yield ETFs (UYLD series), offer distributions ranging from $0.160000 CAD to $0.160000 USD per unit, but these are either hedged, unhedged, or denominated in foreign currency. The PLUS fund's consistent, CAD-denominated payout provides stability for Canadian investors seeking predictable cash flows.

The fund's strategic appeal lies in its diversified, alternative-driven approach. Unlike conventional bond ETFs, PLUS employs tactics such as derivatives, short selling, and leverage to optimize returns in volatile markets. These strategies allow the fund to hedge against interest rate fluctuations and capitalize on inefficiencies in the fixed-income and equity markets. For example, while the Fed's delayed rate cuts may pressure traditional bond yields, PLUS's use of derivatives can offset some of this risk by dynamically adjusting exposure to interest rate-sensitive assets.

Cost Efficiency vs. Yield: A Balancing Act

With a net expense ratio of 1.04%, PLUS is not the cheapest option in Manulife's lineup—its peer, the Smart Core Bond ETF (BSKT), carries a lower expense ratio of 0.023755 CAD per unit. However, expense ratios must be weighed against the fund's ability to generate income in a low-yield world. The 1.04% cost is justified by the fund's active management and alternative strategies, which aim to enhance returns while mitigating downside risk. Investors should consider this as part of a broader cost-benefit analysis: for every $10,000 invested, the annual expense would be $104, but the monthly distribution of $0.0585 CAD translates to an approximate 7.02% annual yield—a compelling trade-off in a market where many fixed-income assets offer less than 3%.

Positioning in a Diversified Income Portfolio

PLUS's strategic value is amplified when integrated into a diversified income portfolio. Its exposure to a mix of fixed-income, equities, and alternative assets creates a buffer against sector-specific downturns. For instance, while trade tensions and geopolitical risks may weigh on equities, the fund's bond and derivative allocations can provide stability. Similarly, its ability to short securities allows it to profit from declining markets, a feature that becomes increasingly valuable in volatile environments.

The Case for PLUS: Key Considerations

1. Income Consistency: The $0.0585 CAD monthly distribution is a standout feature, particularly for retirees or investors prioritizing regular cash flow.
2. Alternative Strategies: The use of derivatives and short selling enhances risk-adjusted returns, making PLUS a hedge against market downturns.
3. Diversification: The fund's multi-asset approach reduces reliance on any single sector or asset class.
4. Resilience in Divergent Policies: As central banks diverge in their rate paths, PLUS's dynamic strategies position it to adapt to shifting conditions.

Final Thoughts: A Strategic Inclusion for Income-Driven Portfolios

While no investment is without risk—PLUS's use of leverage and derivatives introduces volatility—its high yield, strategic flexibility, and alignment with 2025's market dynamics make it a standout option for income-focused investors. In a landscape where traditional fixed-income assets underperform and economic growth remains muted, the Manulife Strategic Income Plus Fund ETF offers a compelling blend of income generation and risk management.

As always, investors should conduct due diligence, reviewing the fund's prospectus and aligning its strategies with their risk tolerance. For those seeking to bolster their income streams in uncertain times, PLUS represents a strategic inclusion in a well-constructed, diversified portfolio.