Grant’s Income Strategy - An Explanation

Mark Grant, Chief Global Strategist

Colliers Securities

 Grant’s Income Strategy - An Explanation

 In accordance with the SEC regulation best interests standards and other client regulatory requirements, the first step in considering Grant’s Income Strategy for clients is to carefully assess the client’s specific financial situation, goals, objectives, investment time horizon, and most importantly, their respective risk tolerances. Following this analysis, I compare the client profile with the parameters of my income strategy. If they do not match, I will respectfully suggest the client seek financial services elsewhere.

 Assuming the client financial goals, objectives and risk tolerances match up with Grant’s Income Investment Strategy, I use various securities, including exchange traded funds, exchange traded notes, closed-end funds, and some real estate investment trusts (REIT’s), to secure monthly income. This is critical. All the securities I currently use pay monthly income, so you should regularly receive cash to use as you wish. All of these securities are listed on public stock exchanges, no hold backs, of any kind, and there is usually plenty of liquidity.

There are thousands of these types of funds, and I regularly watch the markets performance for these securities. I am currently following about 70 securities, utilizing around 17 in client portfolios. They all currently pay income monthly, providing cash flow to use each month for expenses, or money to reinvest each month, or a combination of both, allowing the account holder to make that monthly decision, depending upon their respective needs.

 Every month, unlike some dividend reinvestment products, it is not only your choice to reinvest some, or all of the money, but where to reinvest it, as the holders of these securities should receive cash. I check with my institutional and individual clients to see what they want to do, as their cash becomes available.

 Two things must be stated. One, past performance does not guarantee future results. Two, the funds and notes can raise or lower their dividends, or pay-outs, at will. I keep a close eye on this but there are no guarantees. I currently favor covered call products as they do not own the underlying assets, but just write calls upon their movement and most do not utilize leverage, of any sort. Money, therefore, can often possibly be made regardless of the appreciation or depreciation of the asset, depending upon the manager’s abilities.

 An income stream, in my opinion, is quite valuable, for seniors, retirees, pension funds, university endowments, or any other entity that has liabilities as part of its structure. While it should be noted that the securities that I use have expense ratios, or internal fees, that I do not receive any part of those fees. Since I do all of the homework, personally, I charge everyone a commission for execution, but no monthly fee.

 While the current market value is down in most of these securities, given the markets these days, this does not affect your cash flow, unless you need to sell for some reason. Consequently, unless there is some major problem, the principal value can rise, month after month, resulting in the compounding of interest, although can possibly fall in value as well. Assuming there is more income next month than last month, it is possibly a growth proposition.

 This is also why I am very focused upon diversification of the securities as issues have arisen such as oil going to zero some two years ago in March. Everyone’s portfolio requires diversification, in my viewpoint, and plenty of it, meaning a careful examination of what produces the income.

The goal of my strategy is income.

Also, it should be pointed out that almost none of the securities that I utilize are covered by the rating agencies, and so I dig down, and further down, to assess the quality of the securities that I decide to use. A tremendous amount of homework is required, and I do it day after day, and week after week. I am quite aware of my responsibilities to my clients.

It is odd, in a way, that Wall Street focuses so much on appreciation and so little on income. Of course, in the past, income was the purview of the bond markets but with inflation at present levels almost no bonds, of any sort, pay out at levels higher than our current rate of inflation and, if they do, it is with a large amount of “credit risk,” in my opinion. Perhaps this will change, and then I will readjust my strategy, but that is where we are, in my estimation, at the present time.

 Finally, at least annually, I review with the client their specific financial situation, goals, objectives, investment time horizon, and most importantly, their respective risk tolerances, making sure their best interests are still being met by the Grant’s Income Investment Strategy.  

If their profiles have changed, so as to not match my income strategy, I will respectfully suggest the client seek financial services elsewhere.

What can be said, with certainty, is that after 48 years on the playing field, I am still here, and I have no intention of going anywhere. God willing.

Any questions, or comments, you are welcome to contact me. I hope this helps to explain “Grant’s Income Investment Strategy.”

 Mark J. Grant

Chief Global Strategist

Colliers Securities

[email protected]

U.S. 954-999-0933

Exchange-Traded Funds (“ETFs”) and Exchange-Traded Notes (“ETNs”) Disclosures: To the extent this communication contains information pertaining to ETFs or ETNs, consider the investment objectives, risks, and charges and expenses of the ETFs and ETNs carefully before investing. Each U.S. Registered ETF and ETN has filed a registration statement (including a prospectus) with the SEC which contains this and other information about the ETF or ETN as applicable. Before you invest in an ETF or ETN, you should obtain and carefully read the prospectus in the registration statement and other documents the issuer has filed with the SEC for more complete information about the product. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, you may obtain a copy of the prospectus for specific ETFs and ETNs by contacting your Colliers Securities LLC, representative.

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Real Estate Investment Trust (REIT) Disclosure: A REIT is a company that owns, operates, or finances income-generating real estate. REITs pool the capital of numerous investors, making it possible to pool capital of numerous investors. REITs typically have low growth, dividends are taxed as regular income, are subject to market risk, and typically have high management and transaction fees. Investors should consider all investment risks, fees, objectives, suitability, and risk tolerance before investing, and talk to their financial representative about if this investment is right for you.

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