Just as yields were rising steadily, they’ve dipped again, giving fixed income investors a lack of direction, but one constant is the continued search for yield.
The 10-year benchmark Treasury note sits right around 1.6%, while the longer-duration 30-year yield sits right around 2%. The debt market is essentially stuck in wait-and-see mode when it comes to the Federal Reserve’s next moves.
In the meantime, worries about the economic condition of stagflation, a period marked by low growth and rising inflation, are causing investors to fret.
The prevailing sentiment is that the central bank will eventually taper off its stimulus measures and ease off on asset purchases to help prop up the economy. 2022 could also be the year that the Fed begins to raise rates after holding steady since the onset of the ongoing pandemic in 2020.
“I think that, simply, we’re going to see a continuation of the long-end creeping up. And the short end is just basically going to trade based off of what the market expects for next year as far as rate hikes go,” said John Luke Tyner, a fixed income analyst and portfolio manager at Aptus Capital Advisors.
Diversified, High-Yielding Dividends
With the low-rate environment, what fixed income investor doesn’t want more yield? With that in mind, here’s a dividend-focused ETF worth considering: the Global X SuperDividend Alternatives ETF (ALTY ).
As opposed to safe haven debt like Treasury yields, ALTY gives fixed income investors exposure to a variety of sources, such as real estate and business development companies (BDCs). This gives the added benefit of diversified income exposure.
ALTY seeks to track the price and yield performance of the Indxx SuperDividend® Alternatives Index. The underlying index is comprised of securities that rank among the highest dividend-yielding securities in each eligible category of alternative income investments, at the time of index reconstitution, as defined by the index provider.
ALTY offers:
- High income potential: ALTY invests in among the highest-yielding securities across a variety of alternative asset classes, potentially increasing a portfolio’s yield.
- Monthly distributions: ALTY makes distributions on a monthly basis, providing a regular source of income for a portfolio.
- An alternative solution: ALTY invests in four different alternative income segments: real estate, MLPs and infrastructure, private equity and BDCs, and fixed income and derivative strategies, potentially serving as a portfolio’s entire alternatives allocation.
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