Stocks have been on an absolute tear this week with major U.S. equity benchmarks soaring to all-time highs amid renewed stimulus hopes. Bullish momentum permeated the marketplace on Wednesday after the Federal Reserve surprised many with its decision to hold off from scaling back on bond-repurchases this time around; as a result, cyclical securities have been rallying because of the continuation of the Fed’s “accommodative” monetary policy [see also 101 High Yielding ETFs For Every Dividend Investor].
Diversified High Income ETN Hits The Street
The new ETN is linked to the NYSE Diversified High Income Index, which looks to track the performance of a diversified basket of 138 publicly-traded securities that historically pay significant dividends or distributions. The underlying benchmark is split roughly 60/40 between stocks and bonds, while a number of the components are actually ETFs – including the PowerShares Emerging Markets Sovereign Debt Portfolio (PCY, B+) and the iShares iBoxx High Yield Corporate Bond ETF (HYG, A) [see our Monthly Dividend ETFdb Portfolio].
DVHI’s equity component focuses on:
- Business Development Companies
- Energy MLPs
- Mortgage REITs
- Dividend paying equities (domestic & foreign)
Digging deeper, the ETN’s fixed-income component is made up of:
Meet the Competition
DVHI joins the Diversified Portfolio ETFdb Category, which is made up of over 20 ETPs with an average expense ratio of 0.85%; this places DVHI in the middle of the group’s cost-spectrum, seeing as how the new offering charges 0.84% in annual fees. This ETN will face some stiff competition from more established players in the space, including:
- First Trust Multi-Asset Diversified Income Index Fund (MDIV, A+) with over $480 million in assets under management
- iShares S&P Growth Allocation Fund (AOR, A) with over $200 million in AUM
- iShares S&P Moderate Allocation Fund (AOM, A-) with over $185 million in AUM
- iShares S&P Aggressive Allocation Fund (AOA, A) with over $180 million in AUM
- iShares S&P Conservative Allocation Fund (AOK, A-) with nearly $135 million in AUM
- State Street SPDR Income Allocation ETF (INKM, A-) with over $105 million in AUM
- iShares Multi-Asset Income ETF (IYLD, A-) with over $105 million in AUM
DVHI warrants a closer look under the hood from anyone looking to beef up their portfolio’s current-income stream while at the same time diversifying across multiple asset classes.
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Disclosure: No positions at time of writing.