Skip to main content

NEW YORK (ETF Expert) -- Throughout 2012, I chose exchange-traded-fund assets that offered twice the annual cash flow of what the 10-year Treasury yielded. This meant pursuing capital appreciators and/or yield producers with a 3.0%-4.0% annualized income stream.

In the stock world, many client portfolios contained

iShares MSCI Australia

(EWA) - Get iShares MSCI Australia ETF Report


WisdomTree Dividend Ex Financials

(DTN) - Get WisdomTree U.S. Dividend Ex-Financials Fund Report


Vanguard High Dividend Yield

(VYM) - Get Vanguard High Dividend Yield Indx ETF Report


iShares MSCI Malaysia

(EWM) - Get iShares MSCI Malaysia ETF Report

. Real estate investment trusts (REIT) like

Plum Creek Timber


Scroll to Continue

TheStreet Recommends

and REIT ETFs like

SPDR Dow Jones Global Real Estate

(RWO) - Get SPDR Dow Jones Global Real Estate ETF Report

also fit the bill.

From the land of higher-yielding income, clients benefited from funds like

iShares Preferred



SPDR High Yield

(JNK) - Get SPDR Bloomberg High Yield Bond ETF Report

as well as

Guggenheim Multi-Asset Income

(CVY) - Get Invesco Zacks Multi-Asset Income ETF Report

. Even investment-grade bond ETFs like

PowerShares Emerging Market Sovereign

(PCY) - Get Invesco Emerging Markets Sovereign Debt ETF Report


Vanguard Intermediate Corporate

(VCIT) - Get Vanguard Intermediate-Term Corporate Bond ETF Report

figured prominently.

Simply put, when the return on cash is 0%, and when the return on a 10-year Treasury is less than a realistic index for inflation, one should expect the demand for viable alternatives to remain strong. And throughout the past 12 months, selecting investments with twice the annual yield of the 10-year proved to be a venerable approach.

In truth, I do not expect investor demand to change all that much in 2013. Central banks around the world will continue to suppress developed-country bonds, forcing investors to move further up the risk ladder.

That said, there are reasons to believe that some of the least income-friendly stock ETFs are about to see super-sized price gains. And for those who enjoy challenging conventional wisdom, the

WisdomTree Japan Hedged Equity Fund

(DXJ) - Get WisdomTree Japan Hedged Equity Fund Report

may worthy of a look.

Japan has a spending problem such that its budget as a percentage of GDP rivals Greece and Egypt. Yet the world's third largest economy may still find a way to grow, now that the country has a new prime minister. Shinzo Abe is determined to weaken the yen through aggressive monetary policy, theoretically making Japan's exports more competitive worldwide.

In truth, the anticipation of monetary policy intervention has had a strong hand in propping up Japanese equities already. Unfortunately, hedged stock ETFs like

iShares MSCI Japan

(EWJ) - Get iShares MSCI Japan ETF Report

have been hindered by the currency declines.

Enter the dollar-hedged alternative, WisdomTree Japan Hedged Equity. In the same manner that WisdomTree Europe Hedged Equity takes the euro out of play for

investors intrigued by European brand name biggies

, DXJ is doing the same for Japanese corporations. In fact, DXJ has returned 16% on the year, twice the 8% return of EWJ.

Assuming the yen continues to weaken in 2013, DXJ may be the ideal ticket to profit from the "Land of the Rising Sun." Still, DXJ's vertical move higher over the last five weeks might lead some investors to wait for a 4% to 5% pullback.

You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can follow me on

Twitter @ETFexpert


This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

Gary Gordon reads:

Real Clear Markets

Jeff Miller


Charles Kirk

On Twitter, Gary Gordon follows:

Jonathan Hoenig

Doug Kass

Hard Assets Investor