Displaying items by tag: ETFs

(New York)

Where is the best place to find inexpensive income? That is a great question for any portfolio. With that in mind, here is a list of seven funds that can help investors get solid yields via inexpensive ETFs: iShares Core High Dividend ETF (HDV), SPDR Portfolio S&P 500 High Dividend ETF (SPYD), Invesco Dow Jones Industrial Average Dividend ETF (DJD), Vanguard High Dividend Yield ETF (VYM), JPMorgan U.S. Dividend ETF (JDIV), Xtrackers MSCI EAFE High Dividend Yield Equity ETF (HDEF). All the funds have expense ratios of between 0.07% and 0.20% and average yields ranging up to around 4%.

FINSUM: These are very core funds with good awareness, but always nice to have them all in one place. We particularly like the Xtrackers internationally-focused income fund because it can help get income from differing rate environments.

(New York)

As our readers will know, we have been covering some of the best funds we met at February’s Inside ETFs conference. Today we want to profile a great service we found that we think would be useful to our readers. The service is a new ETF screener and research tool called ETF Action. The service was built by an experienced team from a major distributor and their experience shows in the design of the system. We were offered a free trial for their screener and found the user interface and functionality of the system very appealing. It was not only fast, but it was also useful to compare different funds side by side and search for new ones. For instance, we compared various dividends funds to help choose the best for our purposes, and the platform offered easy-to-access and multifaceted information for doing so. We preferred the system to the numerous other ETF screeners we have used. The company is building out the tool as a paid service and they have promotional pricing for advisors.

FINSUM: We really liked ETF Action and were impressed with the functionality. The management team clearly knows what they are doing and have in-depth industry experience, which is invaluable when it comes to thoughtfully building the system.

(New York)

“Cheap dividend” is a welcome phrase for many advisors. Income investments are precious, especially as clients age, but inexpensive and good-performing dividend funds are not quite as easy to find as one might expect. With that in mind, here are few names to consider: the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD), the Oppenheimer S&P Ultra Dividend Revenue ETF (RDIV), and the Wisdom Tree US Quality Dividend Growth ETF (DGRW). The first two average just under 4% yields and have fees well under 40 bp. The Wisdomtree fund seeks dividend growth names, has lower yields, and costs 28 bp.

FINSUM: We are fans of the high dividend and low volatility approach, so quite like the Invesco fund here. LeggMason also has another good option with that theme, LVHD.

(New York)

The move towards passive management has been worthy of the term “flood”, with investors pouring funds into ETFs and out of mutual funds. Fees have been a major part of that shift, but performance has been too, as active management performance has been broadly weak over the last decade. However, there are some areas where mutual funds have significantly outperformed passives—international funds. Especially in emerging markets (e.g. India and Mexico), but also in developed ones like the UK and Italy, 10-year track records show significant outperformance for active managers. The opposite is true in US funds.

FINSUM: Sifting through market opportunities gets harder and harder (and finding alpha alongside it) as you move into less liquid markets. Accordingly, we think there is a lot of benefit to using actively managed funds for international stocks.

(New York)

Fund fees are a hot area, and not just in terms of them falling in absolute terms. While everyone is aware of Fidelity’s new zero fee index funds and the price war going on in top line fees, there are also new and interesting fund structures emerging. One kind of new fee model is called a fulcrum structure, where fees are low (ETF-like) unless the funds outperforms its benchmark, in which case the provider gets a performance fee. This kind of structure is more popular with mutual funds and can offer the best of both worlds—low fees for ordinary performance, or outperformance that comes with active management.

FINSUM: We think these kinds of funds offer a better alignment of interest while offering multi-sided benefits. However, the risk is that managers are incentivized to take excess risk in an effort to boost performance over the fulcrum threshold.