Posted on 03/29/2011
Dividend income is often a key piece in a portfolio, and with today's lackluster yield on most money market vehicles, it seems the search is always on for "yield plays." Undeniably, it is the higher beta asset classes such as equities and commodities that have been the best performing areas of the market. But if you are a professional in this business, you know that there are few clients who can stomach the volatilty in these markets. Most investors these days have a moderate risk profile and are looking for income-oriented strategies built around respectable yields and reasonable risk. That means a portfolio full of equities and commodities would not fit the bill. With that in mind, we thought we would gather some ideas within the Fixed Income space.
Below is a list of ideas for fixed income ETFs that meet the following criteria: trade at least $10 a share, have an average daily volume greater than or equal to 30,000 shares, and are yielding more than 5%. By selecting funds that meet these guidelines, we were able to eliminate a number of ETFs from a list of 137 down to only 13, all of which are shown below. While most of these funds are pure fixed income plays, there are three funds (PFF,PGF, and PGX) that are not technically classifed as fixed income ETFs, as they invest in stocks of companies that have weightings in Preferred Securities Index. However, they are very similar to fixed income funds, and have impressive yields to boot. The highest yield play that we were able to identify is the SPDR Barclays Capital High Yield Bond (JNK) with a dividend of 8.78%.