A Global Multi-Asset ETF Yielding 7%
September 16th, 2013 at 3:41pm by Tom Lydon
Many have sought out targeted markets as they expand their search for yield, but this may leave many overexposed to riskier areas. Instead, investors can look at a multi-asset exchange traded fund strategy to diversify exposure while generating attractive yields.
For instance, the Arrow Dow Jones Global Yield ETF (NYSEArca: GYLD) holds a basket of income-generating equity and fixed-income securities from non-traditional sources, and the fund has provided a 12-month yield of 6.97%, according to Morningstar.
The underlying Dow Jones Global Composite Yield Index has a 60.8% stock and 39.2% bond breakdown.
The fund equally weights its 151 components, and the index equally weights its five sub-categories, including global alternative 19.2%, global corporate debt 19.7%, global equity 21.6%, global real estate 19.9% and global sovereign debt 19.5%.
Most investors have a home bias, investing solely in U.S. assets. The multi-asset ETFs diversifies with overseas exposure. The U.S. makes up 40.4% of GYLD, followed by Portugal 6.6%, Hungary 6.6%, Italy 5.2%, Spain 5.1%, Venezuela 5.0%, South Africa 4.8%, Turkey 4.7%, Colombia 3.3% and Brazil 1.8%.
Overseas assets have shown better yields than in the U.S. Developed markets make up 83.8% of the portfolio, and greater Europe accounts for about 33.0%. The developing economies are also have a better long-term growth outlook than developed economies. Emerging markets make up 16.2% of the fund. [International Dividend ETFs]
Multi-asset portfolios “are typically designed to be truly tactical in nature, having the ability to shift assets into equities, fixed income, and even alternative investments depending on market views, momentum factors, and such,” Paul Weisbruch of Street One Financial said. [Multi-Asset ETFs Building Track Records]
ArrowShares is also hosting a panel on multi-asset income investment strategies on Sept. 24. Financial advisors can register for the webast here. Accepted for 1 CFP and CIMA CE Credit.
For more information on multi-asset asset funds, visit our multi-asset ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.