This week’s ETF column was spawned by a thought-provoking statement on Twitter from one of my favorite follows @econompic. He deftly pointed out the disparity in current yield between a risk-free savings account in the United States versus the paltry income derived from broad-based international bond ETFs.
For example, one can now easily earn 1.25% (or greater) in a savings or money market account versus the 0.73% current yield of the Vanguard International Bond ETF (BNDX). This exchange-traded fund is considered one share class of the broader Vanguard International Bond mutual fund series, which combined house over $94 billion in total assets.
The high yield credit markets have been a smooth ride for income investors throughout 2017. The combination of a steady global equity market uptrend, low volatility, and an abundant thirst for yield has been a tailwind for riskier fixed-income securities.
While many investors have been fixated on the risks and opportunities for owning U.S. corporate debt, the international markets have been steadfastly climbing to new heights. This trend has produced some impressive total return statistics for exchange-traded funds that track these assets.
Dividend growth stocks are public companies that have shown a track record of successive year-over-year increases in their dividend payments to shareholders. They represent an attractive way for income investors to augment and further diversify their portfolios away from a strict high yield focus.
One of the easiest ways to own this group is through a low-cost and liquid exchange-traded fund. If you’ve been around the ETF space for a while, you have probably heard of the Vanguard Dividend Appreciation ETF (VIG) or the ProShares S&P 500 Dividend Aristocrats ETF (NOBL). Both funds own a basket of stocks with dividend growth characteristics and have proven to be sound investment vehicles in their own ways. Read more
International stocks have made a big run through the first half of 2017 and one region that’s spearheading the charge is Asia. Countries like Japan, India, South Korea, and Taiwan continue to exhibit dominant momentum driven by a combination of technical and fundamental factors. The depreciation of the U.S. dollar versus regional foreign currencies is one of the more prominent stories driving this thrust, in addition to favorable corporate growth forecasts.
An excellent market capitalization weighted benchmark for tracking the Pacific Rim is the Vanguard FTSE Pacific ETF (VPL). This low-cost index fund has exposure to over 2,200 securities spread throughout the Asia region.
In this month’s video, I look at the technical trends developing in growth versus value stocks. Chart review includes analysis of large-cap, small cap, international, Treasury bonds, and high yield bond ETF prices. Observations of risk and reward are noted throughout, with an emphasis on trend following and sensible portfolio management. Recorded on May 31, 2017.