Honestly, I’m sick of writing about asset-allocation exchange-traded funds (ETFs) and the same, old S&P 500 ETFs. Even dividend ETFs, as great as they are, are starting to feel a little stale.
Sure, boring is good, and these should absolutely form the core of any diversified portfolio. But if that’s all you hold, you’re missing out on some really unique opportunities.
That’s my goal today—to introduce you to two unconventional yet fascinating ETFs you’ve probably never heard of. Both are optimized for generating monthly income and hold portfolios filled with high-quality assets.
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Berkshire with income and leverage
First up, we have Berkshire Hathaway (BRK) Yield Shares Purpose ETF (NEOE: BRKY).
This ETF takes Warren Buffett’s flagship conglomerate—famous for its diverse portfolio of private and public businesses, as well as its massive cash pile—and transforms it into a monthly income powerhouse.
How does it work? The fund uses leverage to hold 125%, or 1.25 times, exposure to Berkshire shares via cash margin. On top of that, it sells covered calls on 50% of the portfolio, effectively turning a non-dividend-paying stock like Berkshire Hathaway into a passive-income generator. The distributions are highly tax-efficient and classified as a mix of capital gains and return of capital.
As of December 10, BRKY is yielding 4.36%. Unlike many covered call ETFs, however, your upside potential isn’t entirely capped. Over the past year, BRKY has delivered an impressive total return of 34.58%.
A higher-yielding cash substitute
Interest rates in Canada and the U.S. are trending downward, which means the days of juicy yields from high-interest savings accounts (HISAs) and Treasury bills may be numbered.
One way to offset this decline is with Hamilton U.S. T-Bill YIELD MAXIMIZER ETF (TSX: HBIL).
Here’s how it works: 80% of the ETF is invested in ultra-safe U.S. Treasury bills via an ETF, providing monthly interest at the prevailing risk-free rate.
The remaining 20% is allocated to a long-term Treasury ETF with an average maturity of around 20 years. While long-term Treasurys are more volatile and sensitive to interest rate changes, they offer the potential for greater yields.
To turn that volatility into income, HBIL sells covered calls on the long-term Treasury portion, generating monthly premium income. This creates a barbell strategy, with 80% of the portfolio providing stability and 20% driving higher income potential.
It’s not as risk-free as a HISA or Treasury bills alone, but it’s a smart step up the risk-to-return ladder. As of December 10, HBIL is yielding 7.45% with monthly payouts.
