Risk-Managed Income: Bonds + Options | Joe Benoit, Grimes & Co.

In a recent episode of “Behind the Ticker,” Joe Benoit, portfolio manager at Grimes & Company, discussed the firm’s collaboration with Little Harbor Advisors on their ETF, the LHA Risk Managed Income ETF (ticker: RMIF). Benoit, who began his career with Grimes, now oversees portfolio management and research for the firm. Grimes & Company, a Massachusetts-based RIA managing over $5 billion in assets, follows a holistic approach to client portfolios, integrating stock, fixed income, and alternative strategies. Grimes’s partnership with Little Harbor Advisors, known for tactical equity ETFs, stemmed from a mutual interest in providing a tactical fixed income solution, ultimately leading to RMIF.RMIF, as Benoit explains, aims to generate consistent income while preserving capital and managing downside risk. This strategy originated in response to the post-2008 low-interest environment, as Grimes sought alternatives to traditional high-quality bonds. The ETF applies a fully tactical, unconstrained approach to fixed income, allocating based on positive price trends and yield. RMIF can shift entirely into areas like high yield, bank loans, or even cash, depending on market conditions. This flexible allocation model allows the ETF to adjust risk exposure as trends change, making it a versatile solution for income-focused investors.Benoit details RMIF’s approach to asset allocation, explaining that it prioritizes ETFs offering the highest yield within the current positive trends. Currently, the portfolio includes five ETFs, with equal weighting, primarily focusing on bank loans and short-duration high yield bonds. The strategy is momentum-based, utilizing price trends, volatility assessments, and yield comparisons to determine allocations. In periods of heightened volatility, RMIF can de-risk quickly, shifting allocations to safer assets like short-duration Treasuries or cash.Designed as an alternative to core fixed income, RMIF fits into portfolios as either a substitute for or complement to traditional bond investments. For advisors seeking “conditional credit,” RMIF’s ability to tactically adjust to market shifts provides a reliable source of income with an added layer of risk management.Get Brad's daily market research: Subscribe to The Signal at thorft.com/newsletterMore episodes: thorft.com/podcast