VYM charges just 0.09% per year, making it less expensive than 92% of comparable funds. For a “high yield” ETF, VYM’s exposure to the sectors investors view as yield destinations is relatively light, a feature that helps this fund remain firm even when Treasury yields rise.
Given President Donald Donald Trump’s campaign promises, the markets believe a Trump administration could foster growth and fuel inflationary pressures, adding to speculation that the Fed would hike interest rates to rein in an overheating economy.
Consequently, many expect higher yields and a steeper yield curve are on the horizon. While income seekers may welcome the prospects, bond market yields may continue to remain in the low end of the spectrum.
“Second, those low Treasury rates make dividend yields that much more attractive. The High Dividend Yield ETF holds around an 80 basis point advantage over the 10-year note. That’s probably enough of a difference for yield seekers to stick with equities for now but watch for what the Federal Reserve does. If it follows through on its forecast to raise rates two more times in 2017, that gap will likely close and could cause investors to move back to fixed income,” according to Seeking Alpha.
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