Two new income-oriented ETFs launched in August, offering investors yet another avenue to generate dividends in a low yield environment. The two ETFs join an already long list of income options for investors, but with investors clamoring for dividends they may become successful.
First Trust Strategic Income ETF (NASDAQ:FDIV)
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The First Trust Strategic Income ETF aims to be a one stop for investors looking for income while adding diversity from around the globe. Its current composition gives exposure to equities, currencies, and bonds.
FDIV has 146 holdings with its top positions being the First Trust Senior Loan Fund at 15.6 percent, the First Trust Preferred Securities and Income ETF at 5.2 percent and the iShares J.P. Morgan USD Emerging Markets Bond ETF at 4.3 percent.
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Dividend paying equities make up 26.8 percent, MLPs come in at 20.3 percent, high yield bonds and senior loans account for 15.5 percent and preferred securities are also at 15.5 percent. The ETF is highly diversified throughout various income-producing asset classes.
Since FDIV's inception on August 13, the fund is up 0.7 percent. The new ETF has an expense ratio of 0.87 percent.
ProShares Trust ProShares MSCI EAFE Dividend Growers ETF (NYSE: EFAD)
The ProShares Trust ProShares MSCI EAFE Dividend Growers ETF is also a new ETF on the market. EFAD aims to offer international dividend exposure to investors.
The ETF tracks an index that incorporates companies that have consistently increased their dividends over the last ten years. With 53 holdings and the top ten making up just over 20 percent of the total allocation, the ETF is considered diversified.
Since August 21 when the ETF began trading it is down 3.5 percent. EFAD has an expense ratio of 0.50 percent, which is acceptable for a niche income ETF.
While the two ETFs are vastly different in their approaches they both are going after the investor that wants yield. With the 10-year Treasury near 2.5 percent, well below where it was a decade ago, the two new products should be greeted with open arms.
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