Amid the yield hunt brought on by the Federal Reserve's
near-zero interest rate and loose monetary policies, multi-asset
income ETFs have soared in popularity and number of available
The First Trust International Multi-Asset Diversified Income
Index Fund (
), which debuted Friday, is the newest member of the group.
YDIV is the international answer to the First Trust
Multi-Asset Diversified Income Index Fund (NASDAQ:
). MDIV is just over a year old and has $486.1 million in assets
under management. YDIV is linked to the NASDAQ International
Multi-Asset Diversified Income Index.
"The Fund provides international exposure to a diversified mix
of asset classes in a single investment portfolio that has
built-in volatility screens. Yield is the main driver behind the
index; however, within each asset class a maximum volatility cap
is used that seeks to limit securities that have high yields
strictly due to poor price performance. The portfolio is further
diversified within each asset class. As a result, the Fund
provides the potential for a lower-risk total return alternative
to investing solely in one asset class,
said First Trust in a statement
Under The Hood: An Heralded Mutli-Asset ETF
MDIV invests in common stocks and/or depositary receipts
(25%), real estate investment trusts ("REITs") (20%), preferred
securities (20%), master limited partnerships ("MLPs") (20%) and
an exchange-traded fund (15%),
according to Illinois-based First Trust
YDIV will also invest in
, non-U.S. infrastructure firms and a non-U.S. junk bond ETF.
Dividend equities represent 25 percent of the index while REITs,
infrastructure companies and preferred stocks each have
allocations of 20 percent with a high-yield bond ETF
getting a weight of 15 percent
"The Fund will seek to deliver a relatively high level of
income for investors, while also providing diversification
benefits to traditional fixed income portfolios," said Ryan
Issakainen, Senior Vice President and ETF Strategist at First
Trust, in the statement. "This diversified approach, with
built-in rebalancing, may also help income-seeking investors
maintain discipline during periods of volatility."
MDIV, the domestic multi-asset product, has a 30-day SEC yield
of 6.48 percent. Other
popular multi-asset income ETFs
include the Guggenheim Multi-Asset Income ETF (NYSE:
), the iShares Morningstar Multi-Asset Income ETF (NYSE:
) and the SPDR SSgA Income Allocation ETF (NYSE:
For more on ETFs, click
Disclosure: Author is long MDIV.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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