Mulvihill SPFD ETF Maintains Steady Distributions Amid Market Volatility

The Mulvihill Enhanced Split Preferred Share ETF (TSX: SPFD) has reaffirmed its commitment to consistent income generation with its latest monthly distribution announcement. The fund, which targets a 10% annual yield, declared a $0.08333 per unit payout for May 2025, payable on May 7 to shareholders of record as of April 30. This marks the sixth consecutive month of stable distributions since the fund’s December 2024 launch, underscoring its role as a steady income vehicle in a volatile market environment.

Distribution Details and Key Dates

The May 2025 distribution aligns with SPFD’s monthly payout schedule, with ex-dividend dates falling on the last trading day of each month. Shareholders must own units by April 30 to qualify for the May 7 payment. At the current distribution rate, the annualized yield stands at 10.7% (as of May 2, 2025), slightly above the fund’s 10% target, based on its March NAV of $9.99.

Fund Strategy and Risk Considerations

SPFD’s strategy revolves around investing in Canadian split-share preferred and Class A equities, with a focus on capital preservation and income generation. The fund employs limited leverage (up to 50% of NAV) to enhance returns, a tactic that can amplify gains in rising markets but also magnify losses during downturns.

Management fees amount to 0.65% annually, while the broader Management Expense Ratio (MER) remains undisclosed. Investors should note that distributions are not guaranteed and may fluctuate with market conditions. The fund’s prospectus emphasizes risks such as volatility in preferred share markets, liquidity constraints, and the non-guaranteed nature of ETF returns.

Performance Analysis

Since its inception on December 6, 2024, SPFD has delivered $0.333320 per unit in distributions through February 2025. The fund’s NAV has shown resilience despite market headwinds, fluctuating between $9.87 (early January) and $10.16 (late February) before settling at $9.99 by March 5. This stability suggests the fund’s portfolio is well-hedged against short-term volatility.

Tax Efficiency and Liquidity

All distributions to date have been classified as 100% dividend income, a favorable tax treatment for Canadian investors. The fund’s liquidity is supported by its $7.41 million net asset value as of December 2024, though its small market cap ($0.02 billion as of May 2) may lead to wider bid-ask spreads.

Conclusion: A High-Yield Option with Caveats

Mulvihill SPFD ETF offers a compelling income opportunity for investors seeking Canadian preferred share exposure with a targeted 10% yield. Its consistent monthly distributions and disciplined leverage use (capped at 50% of NAV) align with its capital preservation mandate. However, the fund’s reliance on leverage and narrow focus on split-share corporations introduce sector-specific risks, particularly in a rising interest rate environment.

With a current yield of 10.7% and a NAV hovering near $10, SPFD appears attractively priced for income-focused investors willing to tolerate moderate volatility. That said, its short operating history (launched in December 2024) and management discretion over distributions warrant caution. Investors should pair this ETF with diversified equity holdings to balance risk and ensure alignment with their long-term financial goals.

In a landscape of low bond yields and uncertain equity returns, SPFD’s blend of income generation and Canadian market exposure makes it a niche but viable tool for aggressive income seekers—provided they understand the trade-offs.