2 ETFs for Investors Seeking High Yield Without Credit Risk


IIt’s a constant struggle for investors who are looking for yield, but don’t want to take on a high degree of risk. Fortunately, Vanguard offers a pair of fixed income ETFs that can help.

When it comes to a high-yield fund, the advantage is that when rates rise, yield is already a step ahead. When bond prices fall, the yield is high enough to recoup the loss.

“It’s certainly an attractive feature in a higher rate environment,” said certified financial planner Howard Pressman, a partner at Egan, Berger & Weiner in Vienna, Va.

Another option is to focus on dividends to help eliminate credit risk. One ETF to consider is the Vanguard High Dividend Yield Index Fund ETF Equity (VYM).

The fund uses an index investing approach designed to track the performance of the FTSE High Dividend Yield Index, which consists of common shares of companies that generally pay above-average dividends. The advisor attempts to replicate the target index by investing all or substantially all of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

In summary, VYM:

  • Seeks to track the performance of the FTSE® High Dividend Yield Index, which measures the investment performance of common stocks of companies characterized by high dividend yields.
  • Provides a convenient way to track the performance of stocks that are expected to have above average dividend yields.
  • Follows a passively managed full replication approach.

For an international exhibition

For investors looking to gain international exposure, there is the Vanguard International High Dividend Yield ETF (VYMI). Other parts of the globe can offer higher dividend yields if investors are willing to accept more risk.

VYMI offers an all-in-one option, allowing investors to navigate international debt markets without having to sift through large amounts of financial data to find the best opportunities. Plus, international investing has its own set of nuances, and VYMI can help you take that guesswork out.

Overall, VYMI:

  1. Seeks to replicate the performance of the FTSE All-World ex US High Dividend Yield Index.
  2. Provides a convenient way to gain exposure to international equities which are expected to have above average dividend yields.
  3. Employs a passively managed sampling strategy.
  4. Has strong performance with a year-to-date gain of 4% and a return of 4% as well

For more news, insights and strategy visit the Fixed income channel.

Learn more at ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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