In the hunt for yield, all that glitters is far from gold. That
is to say a high yield does not always mean a "good" stock or ETF
is attached to that yield. Using yield as one of the primary
determinants of value is risky business to say the least.
The iShares MSCI Spain Index Fund (NYSE:
) is a prime example. EWP's high yield may have looked alluring a
few months ago, but
ignoring the accurate calls that the yield was
headed to the double digits
would have proven foolhardy.
In a volatile market, there is no shortage of stocks and ETFs
sporting high yields
, but there is a dearth of good high yielders. Look at this list of
ETF yield traps to get up-to-date on some must-avoid funds.
iShares MSCI Belgium Investable Market Index Fund (NYSE:
) The iShares MSCI Belgium Investable Market Index Fund now sports
a trailing 12-month yield of 5.91 percent, according to iShares
data. On the surface, that is attractive, but this is Belgium. The
same Belgium that is smack dab in the middle of Europe.
Geographic guilt by association is important with Europe ETFs
because EWK has performed only moderately less worse than the
Vanguard MSCI Europe ETF (NYSE:
) over the past 90 days. EWK is within spitting distance of a new
52-week low, but there is one stock that can save this ETF:
Anheuser-Busch InBev (NYSE: ). If that stock rallies again, EWK
might be worth a look because the ETF allocates 27.2 percent of its
weight to the beer giant.
iShares MSCI Emerging Markets Financials Sector Index Fund
(NASDAQ: ) The iShares MSCI Emerging Markets Financials Sector
Index Fund is a good news/bad news situation. On the bright side,
the fund shows investors can still find some decent yields with big
bank stocks. They just need to look outside the U.S. to do
The bad news is there are legitimate reasons why EMFN has a
yield that is approaching that is approaching seven percent,
according to Finviz data
. Primarily, the combination of emerging markets and financial
services equities has proven to be less-than-pleasant this
EMFN allocates 29 percent of its weight to China, but that may
not be the problem. The drag on this ETF's performance, at least
part of the drag, has been the combine 28 percent allocation to
South Africa, Brazil and India.
iShares S&P Global Clean Energy Index Fund (NASDAQ: )It may
sound surprising that an alternative energy fund appears on any
list regarding ETFs with robust yields, but consider this: Solar
ICLN has plenty of solar exposure. The ETF also has plenty of
problems, having plunged 60 percent in the past year. That explains
the trailing 12-month yield of
almost 5.3 percent
For more yield trap ETFs, click .
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