We’ve been writing about it for a while, but despite the concerns of how much investors seem to be overly chasing income in the form of high yield ETFs, there is no denying investors have been right to keep pouring money in them — for now.
One of the better performing ETFs in 2016 is the PowerShares High Yield Equity Dividend Achievers Portfolio ETF (NYSE:PEY), which is up over 18% year-to-date. In looking at some of the ETF’s top holdings it’s no surprise to find big telecom names like Verizon (NYSE:VZ) and AT&T (NYSE:T), as well as tobacco plays like Altria Group (NYSE:MO) and smaller tobacco companies like Vector Group (NYSE:VGR). Sector-wise, utility stocks make up 20% of the overall ETF holdings, followed by financial services at 17%, and consumer-defensive stocks like Procter & Gamble (NYSE:PG), Kellogg (NYSE:K)and General Mills (NYSE:GIS), with that group making up 16% of the ETF’s overall holdings.
This market environment’s current yield-buying frenzy focus comes as Treasury bond yields have fallen to record lows. When the obsession with yield will end is anyone’s guess. Perhaps the Federal Reserve actually raising interest rates will be the remedy to offset set what appears more and more to be a yield-chasing bubble which has resulted in record-highs in terms of valuation. We’ll certainly be keeping tabs on this ETF and plenty more like it.
Here are the top 10 holdings currently in the PowerShares High Yield Equity Dividend Achievers Portfolio ETF:
PEY closed at $15.82 per share on Friday, up $0.14 (+0.89%). PEY has gained 18.5% year-to-date, compared with a 7% rise in the benchmark S&P 500 index.