This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Guggenheim ETF Delivers Reliable Income

The SPDR income allocation fund, which yields 4.0%, invests in a broad collection of ETFs. The portfolio recently had 18% of assets in SPDR Barclays Long Term Corporate Bond (LWC), 6% in SPDR S&P Emerging Markets Dividend (EDIV), and 3% in SPDR Barclays High Yield Bond (JNK). The portfolio managers use quantitative models and their own judgment to set allocations. Fearing that government bonds are overpriced, the managers have been emphasizing corporate issues. The managers have also been tilting away from bonds and toward stocks. The portfolio currently has 44% of assets in equity funds, up from the neutral weighting of 35%. During the past year, the fund returned 13.4%, compared to 30.5% for the S&P 500 and 0.8% for the Barclays U.S. Aggregate.

To limit the impact of rising interest rates, the SPDR fund has been emphasizing bonds with lower credit qualities. Those can be relatively resilient during periods when Treasuries fall. If rates continue climbing, the portfolio managers can add bonds with shorter maturities. Short-term bonds tend to suffer limited losses during periods of climbing rates.

The iShares income ETF, which yields 5.1%, tracks the Morningstar Multi-Asset Income Index. The benchmark holds about 60% of assets in fixed income, 20% in equity, and 20% in alternative income sources, such as REITs and preferred shares. The portfolio invests in a collection of iShares ETFs. Recently the fund had 6% of assets in iShares High Dividend Equity (HDV), 15% in iShares Barclays 20+ Year Treasury Bond (TLT), and 5% in iShares S&P U.S. Preferred Stock Index (PFF). The allocations are adjusted by a Morningstar model that aims to maximize yields and returns while controlling risk. During the past year, the ETF returned 8.4%.

At the time of publication the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
INKM $28.14 -1.10%
IYLD $22.30 -0.76%
CVY $16.32 -2.00%
EDIV $22.32 -1.70%
AAPL $93.05 -1.30%


Chart of I:DJI
DOW 15,546.16 -368.58 -2.32%
S&P 500 1,818.83 -33.03 -1.78%
NASDAQ 4,230.0980 -53.4940 -1.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs