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5 Multi-Asset ETFs to Counter Volatility & Enjoy Solid Yields

Sanghamitra Saha

Markets have been edgy since the start of the New Year, thanks to rising geopolitical tensions in the Middle East. New Year’s Eve first witnessed an attack by Iran-backed militias on the U.S. Embassy in Baghdad, which was hit back by a U.S. drone strike near the Baghdad international airport that killed an Iranian military leader. Iran struck back by launching missiles at American bases in Iraq on Jan 7.

After this, there was the passage of a resolution at the Iraqi parliament that demanded expulsion of all foreign troop’s present and Iran pulled back from the 2015 nuclear deal. All of this heightened geopolitical tension (read: Good Tidings Await Oil in 2020: 5 Soaring Energy ETFs).

Wall Street recorded losses, reacting to the news of Iran’s missile launch. SPDR S&P 500 ETF (SPY), SPDR Dow Jones Industrial Average ETF DIA, Invesco QQQ Trust QQQ and all-world ETF iShares MSCI ACWI ETF ACWI lost about 1.6%, 1.4%, 1.7% and 1.2%, respectively, in after-hour trading on Jan 7. Volatility ETN iPath Series B S&P 500 VIX Short-Term Futures ETN VXX gained about 9.9% in the extended hours. The benchmark U.S. Treasury yield fell to 1.83% on Jan 7 from 1.88% recorded at the start of 2020, thanks to a safe-haven rally.

Should You Diversify Through Multi-Asset ETFs?

Investors will definitely want to know about ways that could save them in case of a widespread market selloff. In this regard, we highlight a few multi-asset ETFs that could offer investors great returns in the form of capital appreciation and income.      

Notably, the multi-asset strategy looks to boost returns and lower overall volatility in portfolios. These products normally provide a high level of current income and take care of downside risks of a specific asset class. These also cater to various asset classes (equity, fixed income and alternative securities), which have low correlation to each other.

Below we highlight a few multi-asset ETFs that could offer investors great returns in the form of income as well as offer diversification.

YieldShares High Income ETF (YYY

This fund yields about 9.07% annually. It holds 30 closed-end funds ranked the highest by the ISE on the basis of three criteria, namely, fund yield, discount to net asset value and liquidity. Around 75% of the fund is targeted at debt securities while the rest are in equities.

Arrow Dow Jones Global Yield ETF GYLD

This fund provides almost equal-weight exposure across five global areas — equities, real estate, alternatives, sovereign debt and corporate debt. This is easily done by tracking the Dow Jones Global Composite Yield Index. The fund offers an annual dividend yield of 7.78%.

iShares Morningstar Multi-Asset Income ETF IYLD

The fund is broadly diversified and seeks to deliver high current income while maintaining long-term capital appreciation. The product yields about 5.25% annually. The U.S. takes the top spot with 52.34% allocation followed by 2.86% in United Kingdom and 2.46% in Russia.

Invesco DWA Tactical Multi-Asset Income ETF DWIN

The underlying Dorsey Wright Multi-Asset Income index may invest in both fixed income and equity income ETFs, including those holding investment grade and high yield bonds, fixed-rate preferred shares, dividend-paying equities, U.S. Treasuries, MLPs and real estate investment trusts. It rotates between income-oriented segments, depending on market momentum as well as yield criteria. The fund yields 4.78% annually.

Principal Spectrum Preferred Securities Active ETF PREF

The fund is active and does not track a benchmark. It yields around 4.66% annually. Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in preferred securities at the time of purchase. It charges 55 bps in fees (see all Convertibles/CEFs/Preferred Stock ETFs here).

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Amplify High Income ETF (YYY): ETF Research Reports
 
SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
 
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX): ETF Research Reports
 
Arrow Dow Jones Global Yield ETF (GYLD): ETF Research Reports
 
iShares MSCI ACWI ETF (ACWI): ETF Research Reports
 
iShares Morningstar Multi-Asset Income ETF (IYLD): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
Principal Spectrum Preferred Securities Active ETF (PREF): ETF Research Reports
 
Invesco DWA Tactical Multi-Asset Income ETF (DWIN): ETF Research Reports
 
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Zacks Investment Research
 
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