As major averages try to find a bottom, investors' insatiable
appetite for yield is bigger than ever. Strangely enough, the
exchanged-traded fund (
ETF
) market is often overlooked as a place to get bang for your
investment dollar.
The U.S bond market isn't all that compelling with the yield
on the 10-year note currently around 1.62 percent and the yield
on the 30-year bond around 2.76 percent. But Dow components like
Johnson & Johnson (NYSE:
JNJ
) at 3.5 percent, Merck (NYSE:
MRK
) at 3.8 percent, Pfizer (NYSE:
PFE
) at 3.7 percent and Verizon (NYSE:
VZ
) at 4.8 percent continue to tempt investors with decent
yields.
At a time when good yield is hard to find, a screen of
ETFs
under accumulation revealed plenty of compelling opportunities.
One of the most common mistakes investors make is to seek out
yield without paying any attention to price performance. The
ideal situation is to have both, and the following ETFs fit the
bill.
Powershares Emerging Markets Sovereign Debt Portfolio (NYSE:
PCY
): The fund currently yields 4.7 percent and continues to show
relative price strength. It's very liquid with an average daily
volume of 1.1 million shares. It's based on the DB Emerging
Market USD Liquid Balanced Index which tracks the potential
returns of a theoretical portfolio of liquid emerging markets
U.S. dollar-denominated government bonds issued by approximately
22 emerging-market countries. The fund tends to keep its price
swings on a tight leash and continues to hold above its 50-day
simple moving average (
SMA
), a near-term support level.
Powershares Build America Bond Portfolio (NYSE:
BAB
): If you're a believer that the U.S. economy has made it through
the worst of it and 2013 will be a better year than 2012 in terms
of growth, this is a compelling ETF. With a current yield of 4.8
percent, BAB is less liquid than PCY with an average daily volume
of 272,000, but it's still acting well. The fund is based on the
BofA Merrill Lynch Build America Bond Index which tracks the
performance of U.S. dollar-denominated Build America Bonds
publicly issued by U.S. states and territories. As of Tuesday's
close, it was less than one percent from a 52-week high but
recent price and volume price and volume trends also point toward
a fund under accumulation which can often lead to higher
prices.
Powershares Financial Preferred Portfolio (NYSE:
PGF
): The recent market pullback has dragged financial stocks down
with it, but this this fund continues to hold up relatively well.
PGF is based on the Wells Fargo Hybrid and Preferred Securities
Financial Index which tracks the performance of U.S.-listed
securities issued by financial institutions. It yields a nifty
6.5 percent and continues to hold near highs. The fund's
top-three holdings are preferred stock from HSBC Holdings (NYSE:
HBC
), Bank of America (NYSE:
BAC
) and ING Groep (NYSE:
ING
).
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.