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A wide range of uncertainties caused many investment assets to struggle in the April-June period. Foreign stocks, foreign bonds and currencies suffered sizable declines in the second quarter. And while the losses for major U.S. stock benchmarks were not quite as grim, falling prices still rattled confidence.

Granted, the majority of market anxiety emanates from Europe’s endless debt debacle. However, the concerns are hardly confined to shoring up the balance sheets of developed world banks and bankrupt nations. The potential for a Middle East flare-up remains high, whether it is the nuclear capabilities of Iran or the ongoing civil war in Syria.

And then there’s the well-being of the U.S. economy. Perhaps ironically, many economists were speaking about the U.S. economy in glowing terms prior to April. Even now, many blame the unwillingness to hire on corporate greed or slowing demand out of China and Europe.

Yet that’s more of a smokescreen.

In truth, the partisan divide on tax policy (a.k.a. “fiscal cliff”) has created intolerable levels of uncertainty in the minds of job creators. Neither small businesses nor larger ones know which way the government ball is going to bounce. Not in an election year like 2012.

Think back to 2010 and the popularized ”economic soft patch.” It wasn’t just QE2 that got the ball rolling again, but rather, clarity in tax policy after the 2010 elections.

Here in 2012... same thing. Job creators are, once again, waiting for more certainty in tax policy before they will commit whole-heartedly to bringing new hires aboard.

The reality that politicians and technocrats understate joblessness makes matters worse. That is, Congress and the White House are not going to meet the business world’s needs for greater tax policy clarity because the people aren’t demanding action prior to November. And they’re not demanding action because both sides are content to work with a number like “8.2% unemployment.”

Perhaps the people would be a little more incensed if they understood the concept of labor participation. Specifically, 36.4% of working-age persons between 16-64 are unemployed and not looking for work. That’s a 30-year high for non-participation. And while some of those folks have genuinely retired from the “baby boom” ranks, millions more have simply given up on the notion of providing for themselves. An astonishing 3.1 million people added themselves to Social Security disability ... more than the 2.6 million new jobs added to payrolls in the same three years.

How does this relate to exchange-traded funds and portfolio allocation? Simply stated, we won’t get enough certainty about the future until after the November election. Sure, we can place bets based on polling data. We might try to sell S&P 1420 and buy at S&P 1280. However, few investors wish to trade within a narrow 10% band.

If you’ve been paying attention to my columns for the last 6 months, then you already have a pretty keen idea where I have been making money ... on the moderately conservative portion of the risk spectrum. This includes, but it is hardly limited to: (1) diversified high yield corporate bonds, (2) emerging market bonds, (3) preferred shares, (4) real estate investment trusts as well as (5) dividend stocks.

Even as the broader stock market indexes of the world struggle for direction, many of the my top holdings for clients keep hitting 52-week highs for total return. In diversified high yield, iShares High Yield Corporate (NYSEARCA:HYG) remains a “fave.” PowerShares Emerging Market Sovereign (NYSEARCA:PCY) gets the nod for this asset class because it is dollar-hedged. And there’s little reason to look further than PowerShares Preferred (NYSEARCA:PFF) if you’re not comfortable picking individual securities.

Dividend stocks? iShares High Dividend Equity (NYSEARCA:HDV) will give you more exposure to healthcare, though Vanguard High Dividend Yield (NYSEARCA:VYM) would be difficult to beat over time due to its cost structure. And iShares FTSE NAREIT Mortgage REIT (NYSEARCA:REM) has been a remarkable cash flow generator, in spite of Europe and perhaps because of it.

Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.

Source: Income-Generating ETFs While Waiting Out The Fiscal Cliff