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  • You Should Get A High Yield Fund With A Monthly Pay Out 0 comments
    Nov 27, 2012 3:07 AM

    Growing affinity for the highest dividend paying stocks and funds exists for a reason. More and more investors are taking this route under their retirement strategy, at a time when current interest rates are generally low with a bleaker forecast.

    On a historical measure, net sum of the reinvested dividends since the beginning of 1900s account for more than 90% of Standard and Poors [S&P] net returns.
    A better dividend yield is essential for the projected retirement sum especially amid the low returns from bank deposits and elsewhere dismal performance of capital markets. Seasoned investors are already testing foreign waters for the top yielding stocks available anywhere outside America and an increasing number of people are buying in to the high dividend table through Global Super Dividend Index backed high income ETF and funds.

    The benchmark index simply catapults 100 highest regular income churning stocks listed globally and moves and shakes as per their performance on their respective exchanges. The most ideal feature for the measure is that each stock has an equal weight age making it virtually risk free from volatility which may be trend or news based. The fairly new bench mark has performed very well, bestowing the followers with a regular payouts and good annualised returns. The downside here means that index moves a little slower than the movements of the actual securities held.

    Cash Sharing Stocks v/s Super Dividend Funds

    Needless to say that index funds offer a much uniform exposure world-wide, which is otherwise not feasible for an average investor to create through equities. The company wise risk is discounted automatically due to a homogenous allocation pattern; also it is not possible to buy 15-20 stocks individually, when most of them are listed on foreign markets and require time consuming research.

    Highest Income ETF will expose you to a close to 100 best dividend paying companies available globally with one single move and to top it all you are able to make decisions on the spot prices with your money being majorly liquid. Although expense ratios are involved upwards of 60% due to the limited operations of the issuing bodies.

    En-route the Regular Income Highway:

    When driving this road, investors today have pure play options and modified choices as well. Global SDIV is an index replication and has provided for a 7.72% 30 day yield in the background of a 7.97% 12 months yield after expenses. A similar fund Vanguard's VYM etf reflects the FTSE high dividend yield index, is available but the output is lesser at about 3%. VYM's good pointers are a much lesser expense rate of .025% as compared to SDIV's 0.58% and lesser overall volatility.

    The risk - reward with Super Income ETFs

    The underlying dependence of these highest income producing funds in the REITs [Real Estate Investment Trusts] and emerging economies adds to the risk exposure and orthodox investors may not be comfortable with it. An expensive management fees is also a hindrance for active participants.

    If past performance is of any value, then +7% returns, which were duly performed and delivered to the investors in the past twelve months, cut down a lot of that volatility induced risks.

    One looking for a regular monthly income and higher year on year return may find riches if the appetite for risk is there.

    Global X Superdividend ETF follows the benchmark of the Solactive Global Super Dividend Index. USA and Australian Companies share close to 60% of its assets, followed by UK, Singapore and Canada. About 20% of the assets are invested in the stocks from rest of the world markets. Telecom and REITs are the heaviest sector. The fund has given a twelve month yield of 7.97%.

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