With inflation, volatility, and uncertainty abounding, income is very much on most investors’ minds. To truly ready your portfolio for the storms ahead, you need quality. Fortunately, there is a pair of ETFs that deal in quality income: the SmartETFs Dividend Builder ETF (DIVS) and the SmartETFs Asia Pacific Dividend Builder (ADIV).
Quality is a factor that is universally admired but often overlooked in favor of other factors. A quality company will typically have a dynamic management team, a healthy balance sheet, and low levels of debt. Quality companies are often liquid, versatile, and able to navigate even complex and dangerous economic climates. It is no surprise that the quality factor tends to deliver regardless of the market’s overall trajectory.
You Need Quality Now
Market conditions are currently such that every portfolio could stand to use more quality. As economies began to open following the roll-out of the vaccine and the end of lockdowns, the global recovery boomed. The market rapidly regained its 2020 losses and then continued feasting. But now, it seems like a drawdown is inevitable. The Evergrande saga continues to rear its head, inflation is looking more and more likely to be persistent, new variants are threatening lockdowns, and the world is grappling with ongoing political instability in the wake of an ongoing pandemic. These multi-tiered times of crisis are precisely when quality shines brightest.
Both DIVS and ADIV are built around quality companies with long track records of consistent returns and growing dividends. These are firms with strong business models that have been tested and weathered storms in the past. They are long-term plays that will keep your portfolio stable in times of instability, and generate growing levels of income in the future.
Income is particularly important during inflation because it tends to grow at a faster rate than inflation, due to the fact that costs for goods and services can be placed back on consumers, so as inflation rises, so too does the payout these companies can make for their investors.
DIVS looks at company fundamentals, with a focus on the dividend history of the firm. ADIV uses a similar strategy to capture growth in one of the fastest-growing regions on Earth, presenting investors with a unique opportunity to generate more income.
DIVS has an expense ratio of 0.65%, and ADIV has an expense ratio of 0.78%.
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