ETF Income Portfolio

Many investors are scrambling for yield in a low-rate market for bonds and the Federal Reserve seems committed to keeping it that way.

There are ETFs that can provide exposure to income-generating sectors with low costs and liquidity. However, investors just need to be careful and understand the risks when stretching for yield.

“The scramble for yield is the understandable outcome of years of rock-bottom interest rates. But understandable doesn’t mean sensible,” according to Morningstar ETF analyst Samuel Lee.

He warns against stretching into “junkier assets” to reach a desired level of income. “Avoiding the garbage does mean sacrificing yield,” he said.

Lee offers some suggestions from the ETF Income Portfolio from Morningstar’s ETFInvestor newsletter. They include emerging market equities, high-yield bonds with short durations, and low-volatility stocks.  [Junk Bond ETFs For Yield in 2013]