Investors who are seeking out additional income options may take a look at attractive yield-generating opportunities in international exchange traded funds.
Across the globe, bond market yields have been sliding as foreign central banks try to weaken their currencies, engage in loose monetary policies and add quantitative easing. The nominal yields for the benchmark 10-year notes of the U.S., U.K., Germany and Japan have trended lower over the past 15 years, according to a recent Deutsche Asset and Wealth Management research note.
While international investors have chased after yield-generating assets, foreign dividend yields are still higher than payouts from U.S. companies.
“Overseas markets have historically tended to be higher dividend payers than those in the United States,” according to DeAWM. “The dividend yields of the S&P 500 Index (U.S.), FTSE 100 Index (United Kingdom) and DAX (Germany) over the last fifteen years or so, averaging 1.9%, 3.6% and 2.9%, respectively. Not only are dividend yields currently higher abroad, but this trend has also been very consistent over time. For an investor motivated by an absolute level of income, accessing these higher levels via an international perspective could be attractive.”
However, when accessing international equities, people will be exposed to currency risks. Consequently, investors seeking equity income might consider a high-dividend-yield hedged ETF options.
For instance, Deutsche Asset and Wealth Management recently launched four new high-dividend-yield, currency-hedged ETFs, 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). [Alternative Income ETF Strategies for a Shifting Environment]