Huntington Dividend Capture Fund
An intriguing dividend fund out there is the Huntington Dividend Capture Fund (HDCTX), which mixes a trading strategy with dividend stocks — entering positions before the ex-dividend date, capturing the payout, then rotating into another income opportunity.
In fact, the fund turnover is 109% annually — meaning the entire portfolio changes in less than a year. That’s in stark contrast to other income funds that are between 10% and 15% as they park cash in stocks for the long haul. HDCTX’s current top holding is another fund — the SPDR S&P Dividend ETF (SDY), at 2.5% — followed by General Electric (GE) and Exxon Mobil (XOM) … but that can and will change in a hurry.
Now, this trading comes at a price. Expenses are a steep 1.37% — much higher than other funds listed here — and there are additional transaction fees associated with this fund to boot.
But the current yield is 4.8% and the 10-year returns are almost 6.4% overall.
This kind of investment doesn’t work in a market that is rallying broadly, since obviously simply being in index funds was the best move in 2013 so far. However, if the market gets choppier or more selective in the coming months, then a trading angle in your income portfolio might be the best way to minimize downside risk while still capturing significant yield.