Getting targeted fixed income exposure can help extract more yield in the current market, which is inherent to both the Global X TargetIncome 5 ETF (TFIV) and the Global X TargetIncome® Plus 2 ETF (TFLT).
Both funds offer investors an alternate income stream that outdoes Treasury yields. TFIV seeks to achieve a 5% yield, net of fees, while TFLT seeks to achieve the yield on the current 10-year US Treasury Note, plus 2%, with both funds expected to pay monthly distributions.
Getting that added income can help investors obtain the yield they seek beyond the current rates. Rather than selecting individual ETFs, investors can take advantage of the fact that both funds already do the heavy lifting by incorporating selected funds as part of their strategies.
With the current state of the market dominated by rising COVID-19 infections and threats of inflation, fixed income investors can get analysis paralysis. Furthermore, moves by the Federal Reserve are also affecting yields.
“Investors are busy scaling back their expectations for the Federal Reserve’s annual symposium this week, which is normally held in the Wyoming resort of Jackson Hole but has now been moved to an online format because of the rise in COVID infections,” an Investing.com article said. “With trading already thinned out by vacations, the market for U.S. Treasuries remains jumpy and volatile.”
Achieving Targeted Income Levels
By utilizing an outcome-based approach, TFIV and TFLT help investors achieve targeted income levels. Both funds track indexes that were developed by Wilshire Associates (Wilshire®), and allocate across 11 ETFs that represent various income-paying asset classes.
The ETFs seek their targeted income levels while simultaneously optimizing their exposures in order to mitigate risk. Below are the highlights for each fund.
Highlights of TFIV:
- 5% Income Target: In aiming for an annualized 5% yield, net of fees, TFIV seeks to offer investors a specific outcome.
- Dynamic Risk Management: TFIV’s index looks to minimize portfolio risk by optimizing allocations across 11 potential asset classes while attempting to meet its stated yield target.
- Monthly Distributions: TFIV makes distributions on a monthly basis.
Highlights of TFLT:
- Floating Income Target: In aiming to exceed the 10-Year U.S. Treasury yield by 2%, net of fees, TFLT seeks to offer investors a specific outcome.
- Dynamic Risk Management: TFLT’s index looks to minimize portfolio risk by optimizing allocations across 11 potential asset classes while attempting to meet its stated yield target.
- Monthly Distributions: TFLT makes distributions on a monthly basis.
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