It’s been a good year for US equity investors, with the Dow Jones Index
(INDEXDJX:.DJI) having hit an all-time high this month, while the S&P 500
(INDEXSP:.INX) was, at one point, also within 10 points of its all-time closing high of 1,565.15 set on Oct. 9, 2007.
Investors have turned to equities for a better return since the Federal Reserve’s quantitative easing and low interest rate policies have killed the yields of many asset classes like investment-grade and government debt. But given the gloomy economic environment globally, it seems all but inevitable that the music will stop
at some point in the near future.
Thus, income investors seeking diversification have poured assets into high-yield ETFs like the iShares iBoxx High Yield Corporate Bond ETF
(NYSEARCA:HYG) and the SPDR Barclays Capital High Yield Bond ETF
(NYSEARCA:JNK). For those looking for alternative high-yield ETFs, however, here are five to consider:
iShares MSCI Singapore Small Cap Fund
Though it is a more mature and developed Asian economy compared to the likes of China and India, Singapore continues to deliver strong growth. With its low taxes and pro-business policies, Singapore is rapidly becoming the new Asian financial capital, attracting global elites like Facebook
(NASDAQ:FB) co-founder, Eduardo Saverin, who gave up his American citizenship to reside there.
EWSS will give investors exposure to Singapore’s small-cap stocks, especially the nation’s financial/real estate sectors, with REITs comprising over 50% of the fund. Industrials, at 17%, is the next largest sector.
The ETF has a 12-month yield of 20.11%. It has an expense ratio of 0.59% and a net asset value of $9.17 million. Its current market cap is $9.21 million. Because it is so thinly traded, EWSS has wide bid-ask spreads such that your order could take a longer time to be filled.
Year-to-date, EWSS is up 0.59%.
iShares MSCI Hong Kong Small Cap Fund
Like Singapore, Hong Kong is positioning itself as the financial hub of Asia, and the pearl of the Orient has a distinct advantage thanks to its proximity and access to the booming Chinese market.
Similar to EWSS, EWHS will provide investors exposure to Hong Kong small-cap and mid-cap stocks. The ETF tracks the performance results of the MSCI Hong Kong Small Cap Index, which is comprised of the bottom 15% Hong Kong public companies in terms of market capitalization. The majority of its holdings are in the financials, industrials and consumer discretionary sectors.
The ETF has a 12-month yield of 14.38%. It has an expense ratio of 0.59% and a net asset value of $2.73 million. Its current market cap is $2.75 million.
Year-to-date, EWHS is up 1.12%. Global X Junior Miners ETF
Introduced as recently as September 2012, JUNR, as its name suggests, offers broad exposure to small-cap mining companies all over the world. “The mining industry relies on junior mining companies to provide additional supply of key commodities – as large miners exhaust existing resources, junior miners are often poised to explore, develop and monetize new mines to bring additional supply to the market,” says fund provider Global X
The ETF tracks the Solactive Global Junior Miners Index, which measures the performance of small miners of an array of commodities, including coal, copper, gold, iron, nickel, silver and titanium. It has a very diversified portfolio, with 93 components and only a 3.06% weight to its largest holding.
JUNR has a 12-month yield of 14.14%. It has an expense ratio of 0.69% and a net asset value of $3.13 million. Its current market cap is $3.18 million.
Year-to-date, JUNR is down 17.91%.
Multi-Asset Diversified Income Index Fund
That MDIV lands on the list should not be much of a surprise, given that the ETF was designed specifically to target income-seeking investors. The fund seeks investment results that correspond to the NASDAQ Multi-Asset Diversified Income Index, which is composed of all the major yield-producing asset classes, such as dividend-paying stocks (25%), MLPs (20%), REITs (20%), preferred stocks (20%) and high-yield corporate bonds (15%).
MDIV’s top holding is its sole ETF, the iShares iBoxx $ High Yield Corporate Bond ETF, which accounts for 14.77% for the fund’s allocation.
The ETF has a 12-month yield of 10.33%. It has an expense ratio of 0.60% and a net asset value of $182.27 million. Its current market cap is $182.60 million.
Year-to-date, MDIV is up 6.01%.
iShares MSCI Asia ex Japan Small-Cap ETF
While the rest of Asia has experienced tremendous growth in the past few decades, Japan’s economy remains stuck in neutral years after its lost decade. For investors looking to profit from the Asian growth story, then, AXJS represents a conduit where economic laggard Japan can be excluded.
This ETF exposes investors to a whopping 705 small-cap dividend-paying equities from both developed and emerging Asian markets, though Taiwan, South Korea, Hong Kong and China make up close to two-thirds of the fund’s weight.
AXJS has an annual yield of 9.03%. It has an expense ratio of 0.75% and a net asset value of $5.63 million. Its current market cap is $5.81 million.
Year-to-date, AXJS is up 1.96%.
No positions in stocks mentioned.
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