| Normally it would be next to impossible for average investors to buy some of the world's highest-yielding securities, but now you can access them all in one simple transaction. | This Simple Tool Unlocks The World's Highest Yielders
By Michael Vodicka
January 7, 2014
There are about a thousand of them listed on the U.S. exchanges.
They track everything from the S&P 500... to gold... to Treasury bonds... and much more.
They are basically nothing more than portfolios of stocks, bonds or commodities that trade on the major exchanges as a single security. But underneath a placid exterior, one of America's fastest-growing asset classes reached a key milestone just two years ago: Total assets invested in U.S. exchange-traded funds (ETFs) surpassed $1 trillion for the first time.
That represents the culmination of a remarkable episode of growth. The first U.S.-traded ETF was launched on January 29, 1993 -- so it took fewer than 19 years for the ETF industry to crack the $1 trillion barrier.
To put that in perspective, it took the mutual fund industry (first launched in 1924) 66 years to surpass $1 trillion in assets.
This "Legacy Asset" Raised Dividends for 25 Years in a Row
This "Legacy Asset" hasn't missed a dividend payment since 1895.and increased payments to common shareholders every year for 25 years in a row. Click here to see.
Assets invested in ETFs grew at a 31% annualized pace from 2000 to 2011 compared to just 6% annual growth for mutual funds. And alongside the growth of ETFs is the growth in closed-end funds (CEFs).
The differences between CEFs and ETFs are small -- both allow you to buy into a basket of securities with one simple transaction. And you can buy them throughout the day, just like a stock.
Yet many investors don't realize just how powerful a tool ETFs and CEFs can be for income investors.
Let me give you an example. If you've been reading StreetAuthority Daily recently, you've heard me tell you before (here and here) about the abundance of high-yielding stocks around the world -- at last count, we found 93 companies based outside the U.S. paying more than 12%.
And there are hundreds of foreign stocks listed on the major U.S. exchanges. But there are tens of thousands of foreign stocks that don't trade in the U.S. Buying these stocks can be difficult for the average investor.
ETFs and CEFs break down all these barriers, allowing investors to buy broadly diversified baskets of dividend-yielding foreign stocks without paying higher commissions to their broker or dealing with foreign currencies.
In short, they can make buying a portfolio of high-yielding stocks from say, Brazil, as simple as buying a share of Walmart (NYSE: WMT).
And thanks to these funds, investors can capture some pretty significant returns and yields that would otherwise be untouchable.
In my High-Yield International portfolio, we hold shares of the AllianceBernstein Global High Income Fund (NYSE: AWF). AWF invests in bonds from around the world -- including foreign-government bonds from emerging markets and U.S. corporate high-yield bonds.
Normally it would be next to impossible for average investors to buy the securities AWF holds. But with the fund, you can access them all in one simple transaction.
In High-Yield International, we locked in a 17.1% yield when we purchased AWF in March of 2009. And since then the fund has brought a total return of more than 225%, including dividends, to anyone who followed our lead.
Today, even after the rebound, the shares still trade with at least an 8.1% dividend yield (Its forward dividend yield usually turns out to be significantly higher than that, as the fund usually pays shareholders with a special dividend each December).
Despite these positives, these funds aren't perfect. Investors can often earn higher returns by picking individual stocks and there are management fees that cut into returns.
But by allowing serious income investors to access some of the highest-yielding securities on the planet as simply as a share of General Electric, Walmart, or Apple, the extra costs are usually worth it.
Note: As I said, there are enormous numbers of high-yielding investments outside U.S. borders. I've found more than 90 of these "other" companies paying 12%-plus yields... and thousands more paying above 6%. But most U.S. investors have no idea that these securities even exist.
Meanwhile, many of the world's wealthiest investors -- including Warren Buffett -- have been quietly cashing in on them for decades. Watch this free presentation to get more details about these 12%-plus yields.
Good Investing,
Michael Vodicka
Chief Investment Strategist
High-Yield International
| To ensure that you receive these emails, please add us to your address book.
Disclosure: StreetAuthority owns shares of AWF in one or more of its real-money portfolios. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any "real money" model portfolio. Members of our staff are restricted from buying or selling any securities for one week after being featured in our advisories or on our website, as monitored by our compliance officer.
StreetAuthority, LLC is a publisher of financial news and opinions. StreetAuthority, LLC is not a securities broker/dealer or an investment advisor and we do not recommend or endorse any brokers, dealers or investment advisors. This work is based on SEC filings, current events, interviews, corporate press releases and publicly available information which may contain errors. All information contained in our newsletters and/or on our website(s) should be independently verified with the companies or sources mentioned. You are responsible for your own investment decisions and should always conduct your own research and due diligence and consider obtaining professional advice before making any investment decision.
StreetAuthority welcomes your comments, feedback or suggestions. Please email us at: feedback@streetauthority.com. For questions about your subscriptions or to speak with a customer service representative, please call 888-560-4728 between 9 AM to 5 PM Eastern Standard Time Monday-Friday, or via email at: customerservice@streetauthority.com. Please note that we are prohibited by law from providing any individual or personalized investment advice. As such, we cannot respond to any emails or phone calls requesting this type of information.
To update your subscription preferences, please click here.
Published by: StreetAuthority, 4601 Spicewood Springs Road, Austin, TX 78759. Copyright (c) 2013 StreetAuthority. All rights reserved. Any reproduction or redistribution in whole or in part without StreetAuthority approval is prohibited. | | |
No comments:
Post a Comment
Keep a civil tongue.