Moreover, Blair Ridley, director and portfolio manager for municipal bonds at Deutsche Asset & Wealth Management, argues that with higher tax rates, tax-exempt municipal bonds are more valuable and offer attractive diversification benefits.
For example, investors can take a look at the Deutsche X-Trackers Municipal Infrastructure Revenue Bond Fund (NYSEArca: RVNU), which seeks to reduce exposure to public pension risk, not avoid or eliminate it, by focusing solely on bonds that fund, state and local infrastructure projects such as water and sewer systems, public power systems, toll roads, bridges, tunnels, and many other public use projects. The interest and principal repayments are generated from dedicated revenue sources as opposed to general obligation bonds that have come under greater scrutiny. [The Right Municipal Bond ETF Right Now]
Additionally, ETF investors have many more income-generating options to choose from. According to a press release, DeAWM launched four new high-dividend-yield, currency-hedged ETFs Wednesday, including the Deutsche X-trackers MSCI EAFE High Dividend Yield Hedged Equity ETF (NYSEArca: HDEF), Deutsche X-trackers MSCI Eurozone High Dividend Yield Hedged Equity ETF (NYSEArca: HDEZ), Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (NYSEArca: HDEE) and Deutsche X-trackers MSCI All World ex-US High Dividend Yield Hedged Equity ETF (NYSEArca: HDAW). [Currency Hedged ETFs Power Deutsche AWM’s ETF Ascent]
The international dividend ETFs provide attractive yields than most liquid asset classes – the high-dividend-yield indices select companies with dividend yields greater than or equal to 1.3 times the yield of the parent index. Additionally, the new funds also utilize forward currency contracts to diminish the negative effects of an appreciating U.S. dollar or weakening foreign currencies.
Deutsche Asset & Wealth Management’s push into alternative, smart-beta index-based ETFs has been very popularly received by investors, with the provider’s X-trackers platform holding $20 billion in assets under management as of August 7.
Financial advisors who are interested in learning more about ETF income strategies can listen to the webcast here on demand.