New ETFs Keep Beating the Yield Drum

by Kyle Woodley | May 14, 2012 12:35 pm

Considering the increasing popularity of yield-targeting exchange-traded funds[1], last week’s two new ETF launches shouldn’t surprise anyone.

Joining that parade were the inceptions of Arrow Investment Advisors’ first-ever ETF — the Arrow Dow Jones Global Yield ETF (NYSE:GYLD[2]) — and Van Eck’s Market Vectors Emerging Markets High-Yield Bond ETF (NYSE:HYEM[3]).

The Arrow Dow Jones Global Yield ETF is a shotgun-blast approach to finding high yield involving equal weightings among:

Each of those subindexes comprises 30 equally weighted holdings, which give GYLD a total of 150 securities, rebalanced quarterly.

Arrow CEO Joseph Barrato said of the fund’s makeup: “The prevailing low interest rate environment has made it extremely challenging for income-oriented investors to generate substantial yield via traditional means.”

GYLD is far from the first fund launched with this trend in mind. For instance, State Street (NYSE:STT[4]) in April launched the SPDR SSgA Income Allocation ETF (NYSE:INKM[5]) — a fund-of-funds targeting income through bond, dividend and preferred-stock ETFs, among others.

INKM tracks the Dow Jones Global Composite Yield Index, which has a competitive yield range of about 7% to 9% over the past year, and charges 0.75% in expenses.

Meanwhile, HYEM is the latest fund trying to sate a growing hunger for emerging-market bonds.

Van Eck’s product, which charges 0.4% in expenses, deals in U.S. dollar-denominated debt for issuers with risk exposure to countries other than the FX G10, defined as including Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the U.K. and the U.S., as well as all Western European countries and territories of the U.S. and Western European countries.

The HYEM will go up again products such as the Wisdom Tree Emerging Markets Corporate Bond Fund (NASDAQ:EMCB[6], more here[7]) and the iShares Emerging Markets Corporate Bond Fund (BZX:CEMB[8], more here[9]). It also represents Van Eck’s latest product targeting high yield, which recently has included launches of the Market Vectors International High Yield Bond ETF (NYSE:IHY[10], more here[11]) and the Market Vectors Fallen Angel Bond ETF (NYSE:ANGL[12], more here[13]).

Last week’s additions join the PIMCO Global Advantage Inflation-Linked Bond Strategy Fund (NYSE:ILB[14]) — which went it alone to start the month[15] — as the only funds to go live in May. To date, 108 new funds have been launched this year, according to XTF.com.

Kyle Woodley[16] is the assistant editor of InvestorPlace.com[17]. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley[18].

Endnotes:
  1. increasing popularity of yield-targeting exchange-traded funds: http://investorplace.com/2012/05/income-etfs-led-aprils-fund-inflows/
  2. GYLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=GYLD
  3. HYEM: http://studio-5.financialcontent.com/investplace/quote?Symbol=HYEM
  4. STT: http://studio-5.financialcontent.com/investplace/quote?Symbol=STT
  5. INKM: http://studio-5.financialcontent.com/investplace/quote?Symbol=INKM
  6. EMCB: http://studio-5.financialcontent.com/investplace/quote?Symbol=EMCB
  7. more here: http://investorplace.com/2012/03/new-etf-wisdom-tree-emerging-markets-corporate-bond-fund-emcb/
  8. CEMB: http://studio-5.financialcontent.com/investplace/quote?Symbol=CEMB
  9. more here: http://investorplace.com/2012/04/pipeline-profits-highlight-latest-batch-of-etfs-amlp-cemb-tchi/
  10. IHY: http://studio-5.financialcontent.com/investplace/quote?Symbol=IHY
  11. more here: http://investorplace.com/2012/04/income-junk-in-the-new-etfs-trunk/
  12. ANGL: http://studio-5.financialcontent.com/investplace/quote?Symbol=ANGL
  13. more here: http://investorplace.com/2012/04/2-new-etfs-track-angels-and-aggies/
  14. ILB: http://studio-5.financialcontent.com/investplace/quote?Symbol=ILB
  15. went it alone to start the month: http://investorplace.com/2012/05/pimcos-alone-in-the-new-etf-spotlight/
  16. Kyle Woodley: http://investorplace.com/author/kyle-woodley/
  17. InvestorPlace.com: http://investorplace.com/
  18. @KyleWoodley: https://twitter.com/#%21/kylewoodley

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