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5 Multi-Asset ETFs to Consider Now

Sanghamitra Saha

Markets have been edgy since the start of August, thanks to renewed U.S.-China trade tensions and China’s yuan devaluation. Trump announced plans to levy a 10% tariff on $300 billion of Chinese imports that aren’t subject to U.S. duties yet. The new tariff will be put into effect on Sep 1. Another $250 billion of Chinese goods are subject to a 25% U.S. tariff. Trump also indicated that the new round of tariffs might rise beyond 25%.

Beijing has so far retaliated with tariffs on $110 billion of American goods, including agricultural products. But as a retaliatory move to the new round of tariffs, China devalued its currency to an 11-year low on Aug 5 and stopped purchases of U.S. farm products. Post China’s action, stocks experienced the worst day of this year on Aug 5.

No wonder, such uncertainty caused a crash in the market. iPath S&P 500 VIX ST Futures ETN VXX has gained about 24.4% in the past 10 days (as of Aug 9, 2019) while SPDR S&P 500 ETF SPY, Invesco QQQ Trust QQQ and SPDR Dow Jones Industrial Average ETF DIA have lost about 3.4%, 4.5% and 3.2%, respectively.

Investors will definitely want to know about ways that could save them in case of a market bloodbath. In this regard, we highlight a few multi-asset ETFs that could offer investors great returns in the form of capital appreciation and income.      

Notably, the multi-asset strategy looks to boost returns and lower overall volatility in portfolios. These products normally provide a high level of current income and take care of downside risks of a specific asset class. These also cater to various asset classes (equity, fixed income, and alternative securities), which have low correlation to each other (read: Play Global Bond ETFs to Join Central Banks' Rate Cut Euphoria).

YieldShares High Income ETF (YYY)

This fund yields about 8.76% annually. It holds 30 closed-end funds ranked the highest by the ISE on the basis of three criteria, namely, fund yield, discount to net asset value and liquidity. Around 75% of the fund is targeted at debt securities while the rest are in equities (read: 6 Defensive ETFs to Beat an Edgy Market in August).

Arrow Dow Jones Global Yield ETF GYLD

This fund provides almost equal-weight exposure across five global areas — equities, real estate, alternatives, sovereign debt, and corporate debt. This is easily done by tracking the Dow Jones Global Composite Yield Index. The fund offers an annual dividend yield of 8.25%.

iShares Morningstar Multi-Asset Income ETF IYLD

The fund is broadly diversified and seeks to deliver high current income while maintaining long-term capital appreciation. The product yields about 5.25% annually. The U.S. takes the top spot with 52.50% allocation followed by 4.30% in U.K. and 2.58% in Australia. The fund charges 5.25% annually.

Invesco DWA Tactical Multi-Asset Income ETF (DWIN)

The underlying Dorsey Wright Multi-Asset Income index may invest in both fixed income and equity income ETFs, including those holding investment grade and high yield bonds, fixed-rate preferred shares, dividend paying equities, US Treasuries, MLPs and real estate investment trusts. It rotates between income-oriented segments, depending on market momentum as well as yield criteria. The fund yields 5.71% annually.

Principal Spectrum Preferred Securities Active ETF PREF

The fund is active and does not track a benchmark. It yields around 5.10% annually. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in preferred securities at the time of purchase. It charges 55 bps in fees.

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SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
iShares Morningstar Multi-Asset Income ETF (IYLD): ETF Research Reports
Arrow Dow Jones Global Yield ETF (GYLD): ETF Research Reports
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX): ETF Research Reports
Invesco QQQ (QQQ): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
Invesco DWA Tactical Multi-Asset Income ETF (DWIN): ETF Research Reports
Principal Spectrum Preferred Securities Active ETF (PREF): ETF Research Reports
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Zacks Investment Research
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