A Global Multi-Asset ETF Yielding 7%

Includes: GYLD
by: Tom Lydon

Many have sought out targeted markets as they expand their search for yield, but this may leave many overexposed to riskier areas. Instead, investors can look at a multi-asset exchange traded fund strategy to diversify exposure while generating attractive yields.

For instance, the Arrow Dow Jones Global Yield ETF (NYSEARCA:GYLD) holds a basket of income-generating equity and fixed-income securities from non-traditional sources, and the fund has provided a 12-month yield of 6.97%, according to Morningstar.

The underlying Dow Jones Global Composite Yield Index has a 60.8% stock and 39.2% bond breakdown.

The fund equally weights its 151 components, and the index equally weights its five sub-categories, including global alternative 19.2%, global corporate debt 19.7%, global equity 21.6%, global real estate 19.9% and global sovereign debt 19.5%.

Most investors have a home bias, investing solely in U.S. assets. The multi-asset ETFs diversifies with overseas exposure. The U.S. makes up 40.4% of GYLD, followed by Portugal 6.6%, Hungary 6.6%, Italy 5.2%, Spain 5.1%, Venezuela 5.0%, South Africa 4.8%, Turkey 4.7%, Colombia 3.3% and Brazil 1.8%.

Overseas assets have shown better yields than in the U.S. Developed markets make up 83.8% of the portfolio, and greater Europe accounts for about 33.0%. The developing economies also have a better long-term growth outlook than developed economies. Emerging markets make up 16.2% of the fund.

Multi-asset portfolios "are typically designed to be truly tactical in nature, having the ability to shift assets into equities, fixed income, and even alternative investments depending on market views, momentum factors, and such," Paul Weisbruch of Street One Financial said.

ArrowShares is also hosting a panel on multi-asset income investment strategies on Sept. 24. Financial advisors can register for the webcast here. Accepted for 1 CFP and CIMA CE Credit.

Max Chen contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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