An Assault on Yield-Oriented ETFs
NEW YORK ( ETF Expert) -- Are we tiring of the fiscal cliff story? Is it becoming cliche to state the obvious… that uncertainty over the resolution of expiring tax breaks and potential spending cuts is adversely affecting the stock market?
Perhaps. Yet one avenue that hasn’t received as much digital ink is the possibility that “yield” is turning into a dirty word. (It may have five letters, but yield-oriented assets have been performing like four-letter losers!)
Consider what we might typically expect when economic growth is weak; that is, sub-par expansion usually favors income producers. Dividend stocks, utility stocks, master limited partnerships, REITs — each tends to rely less on economic cycles and more on reliable income streams.
However, the current uncertainty surrounding future tax policy is wreaking havoc on income producers. Many have been hit every bit as hard as the broader S&P 500 SPDR Trust (SPY).
|High-Yielding ETFs Since Post-Election Selling Spree (11/7-11/15)|
|Annual Yield %||Drawdown %|
|iShares Mortgage REITs (REM)||12.6%||-6.4%|
|KBW High Dividend Yield Financial (KBWD)||10.6%||-8.5%|
|CEF Income Composite Portfolio (PCEF)||8.1%||-7.3%|
|E-TRACS Wells Fargo Business Dev Co (BDCS)||7.8%||-6.4%|
|Global X Super Dividend ETF (SDIV)||7.2%||-4.8%|
|iShares High Yield Corp Bond (HYG)||6.8%||-1.9%|
|iShares S&P Preferred (PFF)||5.8%||-2.1%|
|Guggenheim Multi-Asset Income (CVY)||5.4%||-6.3%|
|JP Morgan Alerian MLP (AMJ)||5.2%||-8.6%|
|S&P 500 SPDR Trust (SPY)||2.0%||-5.0%|
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