With investors hungry for yield-generating options, the exchange traded fund industry is quickly firing off new products for the income-minded.
On Tuesday, four new ETFs hit the market, and all of them offered some kind of focus toward high income.
The First Trust Preferred Securities and Income (FPE) is an actively managed fund that holds preferred stocks and corporate, high-yield and convertible bonds. Preferred shares are senior to common stocks in dividend payments but subordinate to bond holders. [First Trust Lists Active ETF for Income]
“This ETF is poised for steady, but slow to moderate growth and should be included in the fixed-income portion of your portfolio,” Ronald Lang, principal at Atlas Wealth Management, said in an Investor’s Business Daily article. “FPE will be very attractive to longer-term investors along with a healthy anticipated yield of 5.5%-6%. If this ETF is well managed, it appears that First Trust has added a potential gem to their already high-quality roster of ETFs.”
The Market Vectors BDC Income ETF (BIZD) tracks business development companies that help provide capital to privately held firms that are not rated or below investment grade and thinly traded public companies. BDCs can generate robust yields. [Market Vectors Adds Specialized Income ETF]
Also, PIMCO Foreign Currency Strategy ETF (FORX) holds foreign currencies and bonds denominated in their respective local currencies that the managers anticipate will appreciate against a weaker U.S. dollar. Higher-yielding currencies relative to the U.S. dollar may also be attractive. [PIMCO to List Active Currency ETF on Tuesday]
“2013 is going to be a year of ‘currency wars’ as the central banks of most developed countries seem be competing with each other in devaluing their currencies,” Neena Mishra, ETF research director at Zacks Investment Research, said in the IBD article. “Muddle-through growth in the U.S. coupled with continued massive easing by the Fed will likely result in the weakening of the U.S. dollar.”
The Yorkville High Income Infrastructure MLP (YMLI) includes master limited partnerships that engage in developing pipelines, storage and processing systems for the U.S. energy industry. The ETF is structured as a “C” corporation and will have to pay taxes on income. MLPs are also known for their above-average yields. [Yorkville Launches Infrastructure MLP ETF]
For more information on dividend funds, visit our dividend ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.