FMD Capital Management

Income Investing

New ETF Takes A Smart Look At Small Cap Dividend Stocks

Written by David Fabian, March 21st, 2017

Small cap stocks are traditionally known as centers of growth in the global capital markets.  These companies often demonstrate greater risk due to their diminished market footprint.  However, they also offer compelling performance and diversification dynamics for investors with a higher risk tolerance.

Most exchange-traded funds that track this segment are focused on broad swaths of the small cap category.  They typically own hundreds, if not thousands, of individual stocks with market capitalization’s of less than $2-$3 billion.

Read the complete article at NASDAQ.com

Preferred Stock ETFs Face New Test

Written by David Fabian, March 13th, 2017

Preferred stocks offer the distinction of being unique hybrid instruments with qualities of both stocks and bonds.  In that manner, they offer healthy dividend yields alongside a favored position in the capital structure of many companies that issue these securities.

The reason company’s issue preferred shares are to raise capital from investors that are seeking an attractive yield without adding traditional debt (bonds) that carry strict maturity dates and covenants.  Preferred stocks can also be “callable” from the issuer, who has the right to redeem them at a certain price or time at their discretion.   Read more

ETF Investors Seek Shelter In Investment Grade Corporate Bonds

Written by David Fabian, March 07th, 2017

Rising interest rates are making many bond fund investors nervous about the prospects for weakening future returns and unstable risk dynamics.  This fear is putting some fuel behind ETF strategies that short Treasuries or sectors such as bank loans that have historically performed well in a rising rate environment.

The PowerShares Bank Loan Portfolio (BKLN), which invests in a basket of floating rate notes and senior loans, has accumulated more than $2.4 billion since the U.S. election.  That confidence has so far been rewarded with a steadily rising price trend versus the volatility that has pervaded most aggregate bond benchmarks.

Read the complete article at NASDAQ.com

Defensive ETFs Are Surging Despite All-Time Highs In Stocks

Written by David Fabian, February 28th, 2017

The strength of broad domestic stock market indices in 2017 has been the dominating story in global financial markets.  The expectation of new government policies, coupled with the lack of risk asset volatility, has many investors feeling confident in a continuation of the bullish trend.

As of last week, ETFs trading in the United States have accumulated over $75 billion in fresh capital inflows since the start of the year.  The majority of that money has gone towards stock-focused index funds such as the SPDR S&P 500 ETF (SPY).

Read the complete article at NASDAQ.com

Are High Yield ETFs Becoming Too Hot To Handle?

Written by David Fabian, February 17th, 2017

Love is in the air this Valentines week and many income investors are smitten with the returns of their high yield investments.  The steady march higher in assets like junk bonds, preferred stocks, emerging market debt, and even leveraged closed-end funds has remunerated shareholders for their faith.

The poster child of this strength may well be the iShares iBoxx $ High Yield Corporate Bond ETF (HYG).  This well-known fund, which invests in a passive index of high yield U.S. corporate debt, has gained more than 22% over the last year.  That jump includes both price gains and income distribution over a 52-week period.  It also bests every corner of the U.S. fixed-income sector map by a wide margin.  Read more