Displaying items by tag: income

(New York)

Barron’s has been running a series of articles outlining the best dividend funds by different category. They have also put out a piece outlining the best performing dividend funds overall. The funds mentioned below have all provided top performance over the last half decade. The three top funds are the Vanguard Dividend Growth Fund (VDIGX), The Bishop Street Dividend Value Fund (BSLIX), and the Madison Dividend Income Fund (BHBFX). The Vanguard fund has achieved an annual 10.19% average return over the last five years, just under the S&P 500’s 10.67%. Its fees are much lower than the others at only 0.26%.

FINSUM: VDIGX is a great option for solid dividends and returns, but the field of these kinds of funds is growing and diverse.

(New York)

Today we wanted to write a story covering the topic of rate hedged ETFs. We have been examining these lately and feel they are in high demand because of the need for stable income for retirees and the still-relevant threat of higher rates. Mortgage REIT ETFs, such as iShares’ REM really caught our eye with 9%+ yields. However, they are very rate sensitive, so we wanted to find a better option. Enter ProShares’ HYHG, or the High Yield-Interest Rate Hedged ETF. The fund yields over 6% in a highly hedged manner, it goes long high yield US and Canadian debt and simultaneously shorts US Treasuries. The expense ratio is 0.50% and the fund has $127 under management.

FINSUM: This seems like a great fund to us—6% income with only 50 basis points in fees, all in a rate hedged package.

(New York)

If you are of the opinion that rates are not going to move higher, or if just want some great yields and aren’t too worried about rates, take a look at mortgage REIT ETFs. Mortgage REITs are a special subsector of the REIT industry, and have recently become greatly more accessible because of ETFs. For instance, consider the iShares Mortgage Real Estate ETF (REM). The fund has a 30-day SEC yield of 9.36%. It is obviously rate sensitive, but even during last year’s brutal hiking cycle, it only lost 3.75%.

FINSUM: If the Fed stays put this year, which it likely will, these could be a great investment as we head into a downward rate cycle.

(New York)

With all the newfound reticence of the Fed, one important fact remains—they could hike at any time. The Fed was hawkish for a long time, and as dovish as they have suddenly become, a position shift on rates could be quick. Accordingly, when considering income-focused investments, advisors need to be very mindful about rate risk. One way to earn good income while also hedging against rates is to look at short term bond funds. Zero and short duration bond funds have little to no rate/duration risk, which means they can earn income without the threat of big losses coming from movements in rates and yields. Some funds to consider are the ProShares Interest rate hedge family or the Fidelity Limited Term Bond (FJRLX), the latter of which yields 2.89% and has a duration of 2.4 years.

FINSUM: Short-term yields have come up so much that limited term bond funds now look like a great buy for stable income without so much capital risk.

(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.