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Generate Attractive Yields with Multi-Asset ETFs


Fixed-income investors won’t don’t meticulously and religiously follow the slightest market shifts should consider an all-encompassing, multi-asset exchange traded fund to generate income and growth.

“Most investors are better off choosing multi-asset ETFs over individual stocks,” David Blanchett, head of retirement research at Morningstar, said in a CNBC article. “It’s very hard to build a portfolio without investment knowledge. So professionally managed funds that are diversified are better places to be.”

Paul Britt, senior analyst with FactSet Research Systems, also argued that these multi-asset ETFs make sense for those who want a way to generate yields and diversify a portfolio since these fund strategies track various dividend-paying assets so that an investor is not putting all of his or her eggs in one basket.

“All dividend-payers will still have some rate sensitivity, but you might get less sector risk, for example, as opposed to getting yield via all MLPs,” Britt said in the article.

Investors have a number of ETF options to choose from. The First Trust NASDAQ Multi-Asset Diversified Income Index Fund (MDIV) is the largest with almost $1.1 billion in assets under management and comes with an attractive 6.11% 12-month yield. Additionally, the iShares Morningstar Multi-Asset Income Index ETF (IYLD) has a 5.08% 12-month yield, Guggenheim Multi-Asset Income Index ETF (CVY) has a 6.27% 12-month yield, Arrow Dow Jones Global Yield ETF (GYLD) has a 7.91% 12-month yield and YieldShares High Income ETF (YYY) has a 9.44% 12-month yield.

Potential investors should be aware that these multi-asset ETFs are pumping up yields with their exposure to master limited partnerships and real estate investment trusts, which are typically more risky and volatile. [Multi-Asset ETFs Offer High Yields, But Exposed To Rate Risk]

Nevertheless, the various multi-asset ETFs will have varying levels of risk as no two funds are created alike. For example, CVY includes heavy positions in financials at 36.4% and energy at 21.9%. MDVI includes about a 20% split in junk bonds, preferreds, dividend stocks, MLPs and REITs. IYLD also includes a good tilt toward junk bonds, corporate bonds, mortgage REITs and emerging market bonds. GYLD also includes a 20% split between global alternatives, corporate debt, equities, real estate and sovereign debt. Lastly, YYY, which includes closed-end funds, includes a 70% fixed-income and 30% equity mix. [CEF ETFs to Augment Your Income Portfolio]

“Spend some time looking,” Blanchett said. “And don’t just look at the highest performers.”

For more information on multi-asset strategies, visit our multi-asset 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. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.