The Highest Yielding Diversified ETFs

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November 20, 2013 6:38pm NASDAQ:MDIV NYSE:GYLD

yieldThe ETF industry has produced several funds that blend attractive yield with convenient portfolio diversification.  Let’s examine the top three highest yielding diversified ETFs in the United States today.

yield etfs

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.

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