Bonds aren’t the only fixed income prospect in town, especially if investors are looking for extra yield. In the current market environment, where a lot of unknowns exist, getting diversification is almost a must.
With rising interest rates abound, it’s more than just getting yield that can outpace inflation. With talks of a recession forthcoming amid stagnant growth as the U.S. Federal Reserve pushes rates higher, income diversification can help mitigate risk and reduce volatility.
Furthermore, depressed prices in areas like the bond market could be presenting value options. Getting prices of fixed income assets at low prices will also help in price appreciation as well as yield.
“It has the least amount of negative sentiment,” said Commonwealth portfolio manager Peter Essele. “It is a good entry point for investors because it presents a good long-term investment option.”
All the Diversification in 1 ETF
Rather than hold various fixed income positions, there’s an easier way with one exchange traded fund (ETF) that provides this broad-based exposure. As such, investors can take a look at the Global X SuperDividend Alternatives ETF (ALTY), especially with its 30-day SEC yield of almost 7% as of August 8.
As opposed to safe-haven debt like Treasury yields, ALTY gives fixed income investors exposure to a variety of sources, such as real estate and business development companies (BDCs). ALTY seeks to track the price and yield performance of the Indxx SuperDividend® Alternatives Index, which is comprised of securities that rank among the highest dividend-yielding securities in each eligible category of alternative income investments, at the time of index reconstitution, as defined by the index provider.
- High income potential: ALTY invests in among the highest-yielding securities across a variety of alternative asset classes, potentially increasing a portfolio’s yield.
- Monthly distributions: ALTY makes distributions monthly, providing a regular source of income for a portfolio.
- An alternative solution: ALTY invests in four different alternative income segments: real estate, MLPs and infrastructure, private equity and BDCs, and fixed income and derivative strategies, potentially serving as a portfolio’s entire alternatives allocation.
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