Some exchange traded funds, including some that made their debuts just this year, are ETF fund of funds. That is to say these funds hold other ETFs.
Various issuers employ the ETF fund of funds approach across an array of strategies. One of ETF of ETFs that merits consideration among income investors is the aptly-tickered SPDR SSgA Income Allocation ETF (NYSEArca: INKM).
INKM, which launched over two years ago and today has over $100 million in assets under management, is an actively managed fund that can also be viewed as multi-asset income-generating tool. The ETF was one of the first active offerings from State Street Global Advisors, the second-largest U.S. ETF issuer. [State Street Introduces Active ETFs]
INKM holds ETFs that track yield producing assets like convertible bonds, debt securities, global equities, preferred stocks and real estate securities. Translation: More than several of INKM’s 20 holdings are likely familiar to a wide range of advisors and income investors.
INKM’s top-five holdings include the SPDR S&P Dividend ETF (NYSEArca: SDY), one of the largest U.S. dividend ETFs, and the SPDR Barclays High Yield Bond ETF (NYSEArca: JNK), the second-largest junk bond ETF.
Although INKM has fallen 1.6% in the past month, partially the result of the fund’s 7.4% allocation to JNK, the ETF is up 6% this year. As is the case with most multi-asset ETFs, INKM has benefited from this year’s tumble in 10-year Treasury yields, par for the course with ETFs with exposure to rate-sensitive assets like preferred stocks, real estate investment trusts (REITs) and long-date Treasuries. [Big Yield Multi-Asset ETFs]
INKM’s exposure to those assets comes by way of the SPDR Dow Jones REIT ETF (NYSEArca: RWR), the SPDR Barclays Long Term Treasury ETF (NYSEArca: TLO) and the SPDR Wells Fargo Preferred Stock ETF (NYSEArca: PSK), among others.