The wave of ETF launches has now hit the multi asset space, with
First Trust rolling out a product targeting the global multi asset
International Multi-Asset Diversified Income Index Fund
provides exposure to the multiple asset classes across the globe
through a single investment.
Multi asset ETFs are in high demand of late, as the global markets
are likely to stay volatile in the coming months due to concerns
over the Fed's QE3 tapering and its impact on interest rates as
well as slowing growth in major emerging markets (read:
Senior Loan ETFs: The Best Bet for Rising
What are Multi Asset ETFs?
Multi asset ETFs are the funds that invest in a combination of
diverse asset classes such as investment grade and high yield
bonds, domestic and international markets stocks, preferred stocks,
REITs and MLPs.
These funds offer great diversification benefits by investing
across different asset classes. These aim to provide a high level
of current income with stability and potential for long-term
appreciation while simultaneously avoiding downside risk (read:
What Does Your Income ETF Focus On?
By investing in diverse asset classes, which have low correlations,
these ETFs actually reduce volatility and provide stability to the
portfolio. Diversified portfolios in general deliver superior
risk-adjusted returns over the long term.
YDIV in Focus
The new ETF looks to track the NASDAQ International Multi-Asset
Diversified Income Index, holding above 120 stocks in the basket.
The ETF will charge investors 79 basis points a year in fees for
According to the
, the product puts 25% of the total assets in dividend paying
equities, 15% in fixed income securities and the rest equally in
REITs, preferred securities and infrastructure companies (read:
High Dividend ETFs to Buy Even If the Fed
In terms of regional exposure, North America and Europe take the
top two spots at 38% and 37%, respectively. Asia Pacific, Latin
America, Asia, Africa, and Middle East also get decent allocations
in the basket.
Basically, YDIV is the international counterpart of First Trust's
most popular Multi-Asset Diversified Income Index Fund (
). This ETF has accumulated nearly half a billion in AUM within one
year of its debut.
Can it Succeed?
There is still an appetite for such securities despite a good
number of choices already in the space (see
all the Zacks ETF Categories here
The international multi asset ETF faces tough competition from the
Guggenheim International Multi-Asset Income ETF (
), which has roughly $115.3 million in AUM. The fund holds 155
securities in its basket while charges investors 70 basis points a
year in fees for this service.
The next is the Arrow Dow Jones Global Yield ETF (
), which has amassed over $77 million in assets. The portfolio is
equally weighted across global equities, corporate debt, sovereign
debt, real estate and alternatives. It cost investors 75 bps in
annual fees (see more in the
Among domestic counterparts, the popular multi-asset income ETFs -
Guggenheim Multi-Asset Income ETF (
), iShares Morningstar Multi-Asset Income ETF (
) and SPDR SSgA Income Allocation ETF (
) - also provide stiff competition to the new First Trust product.
However, given the huge success for the First Trust's MDIV, it
would not be much difficult for its international counterpart,
YDIV, to see big inflows and solid investor interest given the
global market uncertainty.
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GUGG-MULTI-ASST (CVY): ETF Research Reports
ARROW-DJ GL YLD (GYLD): ETF Research Reports
GUGG-INTL MULTI (HGI): ETF Research Reports
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