As 2012 comes to an end and we head into the new year, exchange traded funds that generate income and investments that cover the international and emerging markets will continue to attract a lot of interest, an S&P Capital analyst says.
"Despite potentially higher taxes, dividend-themed equity ETFs should continue to garner attention," Todd Rosenbluth, S&P Capital IQ ETF Analyst, said in a recent webcast. "Inflows to fixed income ETFs should continue and at rapid pace as investors hunt for yield, with lost cost structures."
Some dividend ETFs include:
- Vanguard Dividend Appreciation ETF (VIG): 2.55% 30-day SEC yield
- iShares Dow Jones Select Dividend Index Fund (DVY): 3.57% 30-day SEC yield
- SPDR S&P Dividend ETF (SDY): 2.88% 30-day SEC yield
Corporate bond ETFs include:
- iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD): 2.75% 30-day SEC yield
- SPDR Barclays Capital High Yield Bond ETF (JNK): 5.5% 30-day SEC yield
- PowerShares High Yield Corporate Bond Portfolio (PHB): 3.72% 30-day SEC yield
Moreover, Rosenbluth believes that once the dust settles at the start of the year, "diversified international and emerging market products should have success as risk tolerance returns."
A few internationally focused equity and bond ETFs include:
- SPDR Barclays Capital International Treasury Bond ETF (BWX): 1.42% 30-day SEC yield
- iShares JPMorgan USD Emerging Markets Bond Fund (EMB): 3.27% 30-day SEC yield
- Vanguard Emerging Markets ETF (VWO): 3.72% 30-day SEC yield
- Vanguard FTSE All-World ex US Index Fund (VEU): 4.93% 12-month yield
Looking at the overall ETF industry, he also points to the continued growth in the actively managed fund space as an interesting area to watch, especially given the huge success of the PIMCO Total Return Bond ETF (BOND), which attracted close to $4 billion in assets in just nine months.
Max Chen contributed to this article.
Full disclosure: Tom Lydon's clients own BOND, LQD, DVY, JNK and EMB.