Long gone are the days when investors options for income were limited to high dividend stocks and bonds and the corresponding exchange-traded funds. While the ETF industry has recently been criticized, perhaps rightfully so, for bringing too many new products to market, issuers have also introduced some unique and viable ways of generating income.
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Yet Another New Name
The PowerShares DWA Tactical Multi-Asset Income Portfolio (DWIN) is an example of a new, income-oriented ETF that merits consideration.
DWIN follows the Dorsey Wright Multi-Asset Income Index. That index invests its assets in the shares of other, underlying exchange-traded funds eligible for inclusion in the Index, rather than in securities of individual companies. The Index is designed to select investments from a universe of income strategies with the criteria for inclusion based on a combination of relative strength and current yield, according to PowerShares.
In plain English, DWIN's selection universe is quasi-limited to the PowerShares ETFs with income strategies. That really is not all that limiting because PowerShares, the fourth-largest U.S. ETF sponsor in terms of assets, has one of the largest lineups in terms of total number of products. That includes an expansive group of fixed income funds, including hot emerging markets and preferred stock ETFs.
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DWIN came to market in March, and in just over three months on the market, the ETF has already shuffled constituents. The ETF is now home the Alerian MLP (AMLP), the largest MLP ETF and not a PowerShares fund. The PowerShares KBW Premium Yield Equity REIT Portfolio (PowerShares Exchange-Traded Fund Trust II (KBWY)) is another new addition to DWIN's lineup.
When DWIN first came to market, it held a Build America bonds ETF and a common stock ETF, which means those are the funds that have subsequently departed DWIN.
Approach To Income
There is something to DWIN's approach to income because figuring out what income-generating asset class will lead at the start of a given year is not easy. As PowerShares data indicate, since 2007, only two income asset classes have been annual leaders on multiple occasions: MLPs and preferred stocks.
DWIN has another nifty feature. Should markets go completely haywire, the ETF can allocate up to 80 percent of its lineup to conservative U.S. Treasurys.
While the ETF has not yet crossed the much ballyhooed $100 million in assets under management mark, data suggest investors are warming to the fund. In just over three months on the market, DWIN has nearly $73 million in assets with $25.4 million of that total arriving over the past month.
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