Guidelines for
Multi-Asset Exchange Traded Funds (ETFs)
Fine-tuning a near-retirement investment portfolio can be
tricky. Yields—even amid a recent rally and expectations for an eventual
Federal Reserve rate hike—remain at historically low levels, and growth stocks
can be fickle. Multi-asset exchange-traded funds (ETFs) offer a structure that
allows the fund manager to diversify among more asset classes, including
high-yield areas such as master limited partnerships and real estate investment
trusts (REITs). Multi-asset ETFs have grown from less than $500 million in 2010
to more than $6 billion today. As with any investment, there are risks
which you should discuss with your financial advisor beforehand.
What are multi-asset ETFs? - Multi-Asset ETFs build portfolios that contain
multiple asset types. These types can include real estate, commodities, bonds,
equities, and more. These ETFs have the freedom to go across different asset
classes to achieve a higher yield.
How multi-asset ETFs work - By customizing portfolios to balance income and
growth, multi-asset ETFs can offer investors allocations that are more
appropriate as retirement looms. Within multi-asset class ETFs, there has
been further specialization. This is good for “do-it-yourself” investors because
you can sift through ETFs that are labeled to suit your risk profile. So if,
for example, you are a conservative investor, you can opt for a multi-asset
conservative fund. You may want a higher risk multi-asset ETF if you want
better returns and do not mind a bit of volatility. Multi-asset class ETFs can
build a portfolio by putting together other ETFs, for example one tracking an
equity index and another tracking a fixed interest index. However, some are
more complex and can use leverage. There are also multi-asset class ETFs that
track a basket of assets designed to cater to specific target retirement dates.
Where to find multi-asset ETFs - One excellent source of information on various
multi-asset ETFs can be found at ETFdb.com. The site includes information
on historical performance, dividends, holdings, expense ratios, technical
indicators, analysts reports, and more. You can click on an ETF ticker symbol
or name to go to its detail page, for in-depth news, financial data and graphs.
By default the list is ordered by descending total market capitalization.
The benefits of multi-asset ETFs - Multi-asset ETFs offer the opportunity for greater
yield because of their ability to invest in multiple relatively high yield
asset classes as master limited partnerships. This type of
diversification also helps reduce overall volatility. Income investors
can fall into the trap of being over-allocated to one asset class such as:
dividend equities, high yield bonds, preferred stocks, closed-end funds, master
limited partnerships, and mortgage REITs. While these investments can have
excellent short term gains and sky-high dividends, they also have proven to be
susceptible to periods of extreme price corrections.
The risks of multi-asset ETFs - To perform well, a multi-asset ETF must have the right
balance of asset types. These investments can pump up yields, but
holdings such as master limited partnerships and mortgage REITs are riskier
than typical yield instruments. They can be subject to significant price drops
if rates go up. In this case, higher yields do not just mean higher risk,
but greater volatility. Also, holding lots of bonds means that a fund may
underperform in a bull market.
If you'd like an in depth protfolio evaluation please call me.
Citations
·
http://etfdb.com/type/multi-asset/all/
- EFTdb.com
·
http://bit.ly/1cUXfKG -
BrightScope.com
Thanks,
Beehive Insurance Retirement Planning Services
302 West 5400 South #101
Murray, UT 84107
801-685-6875 Office Direct
801-685-2899 Fax
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