Surprising Global ETF Sources of Yield
Investors have an increasing number of ETF options for generating income and finding decent yields.
The proliferation of dividend ETFs and scores of new bond funds has certainly helped matters.
No longer are investors forced to view the 2.07 trailing 12-month yield on the SPDR S&P 500 (NYSE: SPY) as "good." Likewise, enduring a negative 30-day SEC yield with the iShares Barclays TIPS Bond Fund (NYSE: TIP) is not necessary, either.
Along those lines, the hunt for yield can, and arguably should, extend beyond bond funds or those ETFs with "dividend" or "income" in their titles. In fact, investors can find some decent yields in a number of surprising ETF destinations, such as the following.
Guggenheim Frontier Markets ETF (NYSE: FRN) The Guggenheim Frontier Markets ETF is by no means an unknown or small ETF. FRN has almost $164 million in assets under management and the broadening appeal of the frontier markets investment theme has turned some attention to FRN and comparable funds.
However, one thing that FRN is known is not being all that heavy on frontier markets. Chile and Colombia, both classified as emerging markets by most major index providers, combine for 68 percent of the fund's weight. Egypt and Peru, another pair of emerging markets, combine for 19 percent. Argentina at 7.92 percent is FRN's largest true frontier market weight.
Those that can passed the name deception with FRN will be rewarded with a trailing 12-month yield of three percent and a beta of just 0.75 against the S&P 500.
SPDR FTSE/Macquarie Global Infrastructure 100 ETF (NYSE: GII) Investing in the international infrastructure spending boom with select infrastructure ETFs has proven to be a vexing proposition for some investors.
In some cases, a country-specific fund with industrial and materials exposure has proven to be the better bet.
GII has not been an exception, having lost almost six percent in the past two years. In defense of this fund, it has recently shown signs of life, rising 4.1 percent in the past 90 days.
The yield of almost 3.2 percent provided some compensation to the patient investor while the heavy emphasis on utilities allows for a beta of just 0.43 and annualized volatility of 11.79.
For example, EWJ's trailing 12-month yield of 1.89 percent puts it behind SPY and the comparable Canada and Germany ETFs.
Comparing Japanese dividend yields to developed markets in the Asia-Pacific region leads to an even more glaring chasm. Bolstered in large part by strong currencies, Australian and New Zealand dividend yields are impressive. Those two countries combine for nearly 65 percent of the iShares MSCI Pacific ex-Japan Index Fund's weight.
Singapore, another 12.6 percent of EPP's is a fair yield destination as well, proven by the almost four percent trailing 12-month yield on the iShares MSCI Singapore Index Fund (NYSE: EWS). Combine those factors and EPP, which has $4.3 billion in assets under management, features a trailing 12-month yield of almost 4.1 percent.
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