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Global X Unveils Two Income ETFs Of ETFs

Global X added to its lineup of income-oriented exchange traded funds Tuesday with the debut of two new products, both of which use the ETF of ETFs structure.

The new funds are the Global X TargetIncome 5 ETF (CBOE: TFIV) and the Global X TargetIncome Plus 2 ETF (CBOE: TFLT).

What Happened

The Global X TargetIncome 5 ETF follows the Wilshire TargetIncome 5% Plus Index. The objective of the new ETF is to deliver an annualized yield of 5 percent by offering investors exposure to 11 asset classes.

TFIV's index currently allocates just over 20 percent of its weight to global stocks and another 20 percent to high-yield bonds, according to issuer data. Senior loans, emerging markets debt, preferred stocks and U.S. stocks are the other assets featured in the new ETF.

TFIV debuted holding six other ETFs, including two existing Global X products. The Global X SuperDividend ETF (NYSE: SDIV) and the Xtrackers USD High Yield Corporate Bond ETF (NYSE: HYLB) are TFIV's top two holdings.

Why It's Important

The Global X TargetIncome Plus 2 ETF targets an annualized yield of 2 percent and tracks the Wilshire TargetIncome 10-Year Treasury +2% Plus Index.

TFLT holds six other ETFs, providing exposure to six income-generating asset classes. Junk bonds and senior loans each represent about 20 percent of the new ETF's weight. Emerging markets bonds, preferreds, global stocks and U.S. equities are also featured in TFLT.

TFLT's holdings also include the aforementioned HYLB and SDIV as well as two other Global X funds, the Global X U.S. Preferred ETF (NYSE: PFFD) and the Global X SuperDividend U.S. ETF (NYSE: DIV).

What's Next

“The funds rebalance on a quarterly basis to realign their exposures to their target levels of income as well as to optimize their risk. Allocations to each underlying holding are made in 5-percent increments, with a maximum weight of 20 percent in any one asset class,” according to Global X.

TFIV has an annual fee of 0.38 percent, or $38 on a $10,000 investment, while TFLT charges 0.39 percent per year. Both ETFs are expected to pay monthly dividends.

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