The highest yielding diversified ETF is the YieldShares High Income ETF (NYSEARCA:YYY). This newly launched ETF sports an out-sized dividend yield of 10%. The fund tracks the 30 highest overall ranked equity and bond closed-end funds (CEFs) based on yield, discount to net asset value and liquidity. YYY charges a 50bps management fee in addition to the 1.15% assessed by the CEFs it holds. The fund pays distributions on a monthly basis.
The Arrow Dow Jones Global Yield ETF (NYSEARCA:GYLD) is second place on the yield ranked list with a 6.67% dividend yield. The fund tracks a group of 150 global securities selected from five equally weighted categories: equities, real estate, alternatives, corporate debt and sovereign debt. The fund charges a management fee of 75bps and pays dividends on a monthly basis.
Rounding out the top three highest yielding diversified ETFs is MDIV, the First Trust Multi-Asset Diversified Income Index Fund. This ETF tracks a basket of approximately 125 securities comprised of stocks, individual bonds, a bond ETF and alternative assets including MLPs. MDIV charges a 68bps management fee. The fund pays distributions on a monthly basis.
YYY, GYLD and MDIV are leading examples of the ETF industry combining the needs of many investors – in this case income and diversification – into one solution. These funds offer attractive income while avoiding the sector and asset class concentration risks many income funds are exposed to.
