ALPS Strategic Income Fund (RIGS)

The ALPS Strategic Income Fund (ticker RIGS) is an exchange-traded fund that pursues a multi-asset approach to income generation. It combines dividend-yielding common stocks with preferred shares — a category that sits between bonds and equities in the capital structure — and the manager allocates between the two buckets based on relative value and market conditions rather than following a fixed index.

What the fund holds

RIGS targets yield through two main avenues. The first is equity dividends — shares of companies with strong, established payout records, typically large or stable-earnings firms in sectors like utilities, energy, and consumer staples where dividend payments are a defining feature. The second is preferred stock, which is a hybrid security: it pays a fixed coupon (like a bond) but sits junior to debt in a company’s capital structure, making it riskier than bonds but often offering higher current income than either common shares or investment-grade bonds.

The blend between these two buckets is not fixed by a formula or an index; the fund’s manager adjusts the allocation based on their view of value. When preferred shares look attractive relative to dividend stocks, the fund may tilt toward preferreds. When common equities offer better risk-adjusted yield, it shifts the other way. This discretionary rebalancing is what makes RIGS an actively managed fund rather than a passive tracker.

How it differs from passive dividend funds

Many dividend-focused ETFs are passive products — they track a dividend index (such as the Dividend Aristocrats or high-yield screens) and rebalance mechanistically. RIGS is different. An active manager makes the day-to-day purchase and sales decisions, hunting for what the manager deems undervalued income opportunities and avoiding areas the manager sees as expensive or risky. That discretion can be an advantage — a skilled manager may navigate downturns in dividend stocks or preferred shares better than a mechanical index tracker would. But it also introduces cost (active management fees are higher than passive tracking fees) and the risk that the manager’s judgment simply does not pan out.

The mix of common dividends and preferreds is itself a significant tactical choice. Preferred shares appeal to income investors because they offer fixed coupons and higher current yield, yet they behave more like bonds than stocks — they are sensitive to interest-rate moves, and in a rising-rate environment they typically fall in price more sharply than dividend stocks do. A fund that overweights preferreds when rates are rising could suffer capital losses even if the coupon income stays steady.

Trading, costs, and liquidity

As an ETF, RIGS trades on an exchange like a stock, so shares can be bought or sold during market hours at the current bid-ask price. This differs from a traditional mutual fund, where shares are priced once at the end of the day. The expense ratio is quoted and has the typical structure of an actively managed fund — higher than a passive index fund but lower than many traditional managed mutual funds.

Liquidity in RIGS itself depends on the volume of shares trading; most strategic-income ETFs have moderate trading volume, making them less liquid than mega-cap funds but adequate for most individual investors. The underlying holdings (dividend stocks and preferred shares) are typically highly liquid, so the fund itself does not face liquidity crises if the manager needs to raise cash.

Risks and pressures

Dividend stocks and preferred shares carry distinct risks. Dividend stocks are equities — they fluctuate with stock-market sentiment and company performance, and a dividend can be cut if earnings fall. Preferred shares are sensitive to interest rates; when rates rise, the fixed coupon they pay becomes less attractive relative to alternatives, pushing their prices down. Because preferred shares are junior to debt in a bankruptcy, they are riskier than bonds, yet their upside is capped by their fixed coupon — they lack the equity upside of common shares.

The active-management risk is real. The manager’s job is to spot value in one or both of these categories and avoid overpaying. In a long bull market for equities, a dividend-focused fund will underperform the broader market because dividends are only a portion of total return. Similarly, if preferred shares enter a period of weakness (as they do in rising-rate environments), both the income and capital returns can disappoint.

The fund’s allocation between common dividends and preferreds is another source of risk. If the manager gets this call wrong — say, overweighting preferreds just as interest rates begin to rise — the fund’s performance will suffer not from company-specific missteps but from a macroeconomic bet that did not work.

Who holds it and how to research

RIGS appeals to investors hunting for current income who are comfortable with both equity risk and preferred-stock risk and believe an active manager can outrun a mechanical index. The prospectus and fund fact sheet (available from the fund sponsor and through common brokerage platforms) spell out the investment objective, the manager’s authority to allocate between dividends and preferreds, the expense ratio, and the tax characteristics of the fund’s income.

To evaluate the fund, a reader should track the trailing yield, the composition of holdings over time, and whether the fund has outperformed a simple benchmark (such as a 70-30 blend of a dividend-stock index and a preferred-stock index) after subtracting the higher fees. Over longer periods, the question becomes whether the manager’s active calls have justified the extra cost relative to a passive alternative.