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  • Buy Income Funds For High Yield And Value Growth 0 comments
    Jan 4, 2013 5:37 AM

    A visible paradox to the world capital markets are the Super Dividend Income funds duly posting a +7% yield for 2012. In current times of low interest rates environ where bonds and other popular fixed income products have totally failed to enrich investors, these highest income ETFs have outperformed the S&P [Standard and Poors] index with a natural ease and with much lesser volatility.

    As compared to S&P 2.11% yield, SDIVETF has produced 7.77% yield accompanied with a value growth.

    Super Income ETFs empower investors with an equal weight age of 100 listed securities that produce the highest yield in the world.The past performance and an ability to continuously maintain a Beta lower than 1 is a fitting reply to all critics who have till now ignored the asset class citing reasons that the performance is too good to be true or in other words were wary of the supposed high risk strategies of the fund managers. For once, the facts and figures do not agree with them.

    The Solactive Global Super Dividend Index functions as per the algorithms developed by the renowned AG & G Structured Solutions, Germany andensures that a safe strategy is carried out to protect investors' interests.

    A common myth that needs to be debunked is that the high yields are possible only due to the higher risks involved. Valid research shows that vis-à-vis bonds, in case of high income funds, a higher payout must in fact result in lower volatility and a higher net return.

    A uniform spectrum that means a 1% allocation to each of the 100 equities held eliminates most risks that may arise from a particular company based downside or even due to a geopolitical reason because the chosen companies are spread through out the world.

    It is common knowledge that Australia has very fair tax laws when it comes to dividends, but along with high interest rates in the country, this makes it mandatory for the corporations to announce regular dividends and for this reason alone, it has maximum country wise holdings in this index followed by USA and Singapore.

    A sizable mid-cap portfolio at 47% of the holdings means acquiring stocks where prices have not yet factored in the income sharing capabilities of these companies. So along with expected monthly payouts a considerable value addition is also a possibility. A high payingdividend fund replicating the benchmark will ideally have Large Caps and Blue-Chip stocks accounting for 21% and small and micro players representing about 31% of the net holdings.

    Baby Boomers, in all probability are most sincere than any other age category when it comes to retirement investments and plans. However with an ineffective Eurobond and slower economic growths world wide, performance of most fixed income plans and bond yields have deteriorated, lowering the value of their retirement funds. Individuals seeking high and regular imbursements are just warming up to the idea and cash flows to the top income generating stocks still have a considerable amount of steam left in them. Some may even look at it as hedging to inflation when included with other state run retirement plans that generally churn out a much lesser yield but provide higher stability and tax benefits.

    A limited investment in a highest paying dividend ETF is possibly one of the best choices in a grim economic setting. Markets too have been preparing for the trend with most ETF majors floating their products in this category. I-shares manage country specific products on Australia, Singapore and United Kingdom; Vanguard too has a similar fund tracking the FTSE benchmark. A pure play on the asset is the Global X SDIV which is also the top yield producer cruising past the likes of it in this division.

    Global X Highest Yield ETF closely replicates the performance and the holding patterns of the name sake index. SDIV ETF has a 6.7% 30 day SEC pay-out and the 12 month dividend yield above 7.6%, cruising past the likes of it in this division. Notable assets include Polska Meidz, Navitas Ltd, Standard Life PLC ad Provident Financial PLC among other stocks.

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