Navigating Volatility: How CI Marret Absolute Return Bond ETF Balances Income and Risk

The CI Marret Alternative Absolute Return Bond ETF (CMAR.TO) has recently distributed a CAD $0.067 per unit dividend, reaffirming its reputation as a resilient income generator in a market where traditional fixed-income assets struggle to keep pace with inflation and rising interest rates. For investors seeking stability amid volatility, CMAR's blend of alternative strategies and disciplined distribution practices offers a compelling case study in balancing risk and reward.

A Dividend That Stands Out

With a current yield of 4.27% for its USD-denominated shares (CMAR.U), CMAR's recent payout underscores its appeal to income-focused investors. This yield, calculated based on the fund's $18.83 share price as of August 13, 2025, outpaces many conventional bond funds and even some high-yield corporate debt offerings. The consistency of these monthly distributions—maintained even during challenging years like 2021 (-8.33% total return) and 2022 (4.97% rebound)—demonstrates the fund's ability to adapt to shifting market conditions.

Alternative Strategies in Action

CMAR's secret to consistent income lies in its non-traditional approach. Unlike conventional bond funds that passively track indices, CMAR employs active strategies such as:
- Long/Short Credit Exposure: The fund dynamically adjusts its positions in government, investment-grade, and high-yield debt, capitalizing on mispricings across the credit spectrum.
- Derivatives and Hedging: Credit default swaps and interest rate futures are used to hedge against market downturns or to amplify returns in favorable conditions.
- Short Selling: By shorting overvalued debt instruments, the fund can generate income even in declining markets.

These tactics allow CMAR to mitigate downside risks while maintaining a low correlation to broader equity and bond markets. For instance, during the 2022 interest rate surge, the fund's use of derivatives and short positions helped limit losses, enabling it to post a 4.97% return when many bond funds plummeted.

Risk Management in a Volatile Landscape

While alternative strategies enhance returns, they also introduce complexity. CMAR's 10-year standard deviation of returns—calculated using a reference index due to its relatively short history—highlights the potential for volatility. However, the fund's focus on low-volatility absolute returns and its diversified credit portfolio act as buffers. For example, its exposure to cash and government debt during periods of market stress provides liquidity and stability, while high-yield and corporate debt offer income potential.

The Cost of Complexity

CMAR's expense ratio of 2.43% is notably higher than that of traditional bond funds, reflecting the costs of active management and derivative usage. While this may deter some investors, the fund's ability to generate consistent income and navigate market cycles often justifies the premium. For context, the fund's 3.58% year-to-date return as of August 2025 outperforms many low-cost bond ETFs in the same period, particularly in a rising rate environment.

Investment Considerations

For investors, CMAR presents a unique opportunity to diversify income streams while managing risk. Key takeaways include:
1. Income Stability: The monthly dividend schedule and 4.27% yield make CMAR a reliable source of cash flow, especially for retirees or those seeking regular income.
2. Diversification: Its low correlation to equities and traditional bonds can enhance portfolio resilience during market downturns.
3. Risk Awareness: The use of derivatives and leverage requires careful monitoring, as these tools can amplify losses in extreme scenarios.

However, investors should also consider the fund's liquidity and market cap ($37.80 million as of August 2025). While ETFs typically offer liquidity, smaller-cap funds may experience wider bid-ask spreads during periods of market stress.

Conclusion: A Strategic Play for Income Seekers

The CI Marret Alternative Absolute Return Bond ETF exemplifies how alternative strategies can be harnessed to deliver consistent income in a volatile market. Its recent $0.067 dividend is not just a payout but a testament to its adaptive, risk-conscious approach. For investors willing to accept a higher expense ratio in exchange for a diversified, income-focused portfolio, CMAR offers a compelling proposition. As fixed-income markets continue to grapple with uncertainty, funds like CMAR may become increasingly valuable in navigating the challenges ahead.