Year: 2014

First Trust Multi-Asset Diversified Income Index Fund: The Largest Multi-Asset ETF

First Trust Multi-Asset Diversified Income Index Fund: The Largest Multi-Asset ETF

A Seeking Alpha Contribution

Summary

  • MDIV is the largest of the multi-asset ETFs.
  • MDIV diversifies its holdings across 5 asset classes.
  • MDIV selects holdings based on income and volatility.

Multi-asset ETFs offer investors diversification within a single ETF. Stocks, bonds, preferred stock, REITs, MLPs and commodities are some of the assets that can be found in a multi-asset fund. These funds are attractive to investors due to the promise of diversification and sometimes high yields, but investors need to dig into the details to figure out how the fund is constructed.

First Trust Multi-Asset Diversified Income Index Fund (NASDAQ:MDIV)is the largest of the multi-asset ETFs, on its way to $800 million in assets.

Index & Strategy

MDIV tracks the NASDAQ Multi-Asset Diversified Income Index; the goal of the index is to generate high-yield with low volatility, while maintaining diversification. To continue reading, please Click Here.

*Please note, this article was written and published as a contribution for Seeking Alpha. To finish reading the article you will be redirected to their site.

 

 

 

 

 

Playing Defense with ETFs

Playing Defense With ETFs

A Seeking Alpha Contribution

Summary

  • Many defensive assets are highly correlated to the broader stock market, offering at best the possibility of smaller losses.
  • The best defensive move is to increase cash.
  • Leveraged and short ETFs are high risk if timing is even slightly off.
  • ETFs such as UUP offer upside potential during corrections, but less downside risk than short or leveraged ETFs.

There’s isn’t a single definition of defensive stocks, but most investors agree that defensive stocks are those in non-cyclical industries such as consumer staples, healthcare and utilities. Defensive stocks also include those stocks with relatively high dividends, which makes them attractive to income-oriented investors who are likely to hold through a bear market. Defensive stocks are supposed to outperform during market corrections

Defensive stocks are predicted to perform better during the late stages of a bull market when investors rotate out of cyclical sectors and into non-cyclical sectors. The argument is that investors sell one sector with volatile earnings tied to the business cycle, such as energy, and buy another with more stable earnings, such as healthcare…. To continue reading, please Click Here.

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Limited Upside For Convertible Bond ETF

Limited Upside For Convertible Bond ETF

A Seeking Alpha Contribution

Summary

  • Convertible bonds are highly correlated with stocks making them riskier than regular bonds.
  • Convertible bonds have slightly higher income and lower volatility than the S&P 500 Index.
  • CWB is the only convertible bond ETF and it stacks up well against mutual fund competition.

An option for investors in search of higher income while maintaining equity exposure, but taking on slightly less risk, is the convertible bond ETF: SPDR Barclays Convertible Securities (NYSEARCA:CWB). The fund offers a higher yield, along with significant correlation to the equity markets, to make it a solid option for investors who may be over weighting assets such as dividend funds in search of income.

Index

CWB tracks the Barclays U.S. Convertible Bond >$500 Million Index. As the name says, bonds must have outstanding issue sizes greater than $500 million…. To continue reading, please Click Here.

*Please note, this article was written and published as a contribution for Seeking Alpha. To finish reading the article you will be redirected to their site.