When it comes to income, traders can browse through fixed-income and equity assets. Exchange traded fund investors, though, can hold an all-encompassing, multi-asset that covers multiple income producing investments.
The Guggenheim Multi-Asset Income ETF (NYSEARCA:CVY) tracks the Zacks Multi-Asset Income Index, which includes both domestic and international common stocks, American depositary receipts paying dividends, real estate investment trusts, master limited partnerships, closed-end funds, Canadian royalty trusts and traditional preferred stocks. The underlying index follows a computerized model that focuses on high yields, low prices and earnings growth. CVY has a 0.60% expense ratio and a 5.15% 12-month yield.
Stan Luxenberg for TheStreet points out that CVY keeps at least 50% of its assets in dividend-paying equities and currently has about 9% of its holdings in MLPs.
This multi-asset approach has also provided investors with a diversified approach to income investments. As one asset class slowed, other areas would take the lead. Over the past five years, CVY has gained an annualized 7.7%, compared to the 6.2% return from the S&P 500.
Top holdings include Northern Tier Energy 2.4%, BP Prudhoe Bay Royalty Trust 1.1%, Wells Fargo Advantage Global Dividend Opportunity Fund 1.1%, Pengrowth Energy Corp 1.1% and Penn West Petroleum 1.1%.
Sector allocations include financials 35.9%, energy 19.3%, health care 8.3%, utilities 7.7%, materials 7.2%, information technology 6.5%, consumer discretionary 6.5%, telecom services 4.2%, industrials 2.5% and consumer staples 1.8%.
The SPDR SSgA Income Allocation ETF (NYSEARCA:INKM) is an actively managed fund that invests in other ETFs, focusing on income and yield-generating assets. The portfolio managers are currently leaning away from bonds and toward stocks, with 44% in equities, 32.8% in investment grade bonds, 11.1% in hybrids, 9.1% in global real estate and 2.5% in high-yields. INKM has a 0.70% expense ratio and a 3.98% 12-month yield. The fund is up 1.6% year-to-date.
In light of the historically low yields, the fund has been holding bonds with lower credit qualities. If rates climb, the managers can shift over to bonds with shorter maturities.
The iShares Morningstar Multi-Asset Income Index Fund (BATS:IYLD) tries to reflect the performance of the Morningstar Multi-Asset High Income Index, which consists of 60% fixed income, 20% equity and 20% alternative income assets. The fund has a 0.60% expense ratio, a 5.09% 12-month yield and is up 0.4% year-to-date.
IYLD is comprised of a number of ETFs, most of which are from iShares. The top holdings include iShares Barclays 20+ Year TR Bond (NYSEARCA:TLT) 15.4%, iShares iBoxx High Yield Corporate Bond (NYSEARCA:HYG) 15.0% and iShares JP Morgan Emerging Markets Bond Fund (NYSEARCA:EMB) 15.0%.
Asset allocations include domestic fixed-income 40.5%, domestic equity 22.9%, international fixed income 19.9%, domestic real estate 14.6% and international equity 2.2%.
Max Chen contributed to this article.