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Chicago, IL – May 18, 2012 - Stocks and funds in this article include: iShares S&P National Municipal Bond Fund ( MUB - ETF report ) ), Vanguard Dividend Appreciation ETF ( SDY - ETF report ) ), iShares FTSE NAREIT Mortgage REIT ETF ( REM - ETF report ) ). Eric Dutram looks at three ETFs which can help regular investors match the portfolio techniques that are often popular among the ultra-rich.
Invest Like the One Percent with These Three ETFs written by Eric Dutram of Zacks Investment Research:
With income inequality issues and economic protests dominating the headlines as of late, the so-called ‘one percent’ have been in focus. These wealthy individuals—in case you have been living under a rock the past few months—consist of the richest 1% of the populace in the country and control a disproportionate amount of the nation’s wealth.
In fact, some reports suggest that this small group of people possesses more than 40% of all financial assets in the country including half of all stocks, bonds, and funds. Furthermore, they only have just 5% of the debt and are taking home more of the national pay than any time in the past 90 years.
Yet despite these trends and the growing backlash against these ultra-wealthy, little seems likely to be done in order to change the status quo. The major political parties seem unwilling and unable to compromise on any economic issues, especially in an election year, so it looks as though these trends will continue at least into the foreseeable future (see more in the Zacks ETF Center).
While this certainly isn’t good news for those in any of the protest ‘movements’ across the country, there are definitely ways for investors to play the scenario. After all, many of the techniques and strategies being used by the 1% are well known and easy to employ in a personal portfolio and could be great choices for investors seeking to make a similar play with their assets.
This is especially true given the vast proliferation of ETFs over the past few years and all the strategies that these products have opened up to regular investors. Now, mom and pop investors can use many of the techniques that were once reserved for the ultra rich of the country that have millions in liquid assets (One Percenters should also read the Complete Guide to Preferred Stock ETF Investing).
Below, we have highlighted three ETFs in order to help people invest like the one percent. These products look to target many of the methods that ultra-high net worth investors have been using for years in their own portfolios, but in a way that is accessible and cheap to buy for the ’99%’ of investors out there.
Municipal bonds are securities that are issued by local and state governments in order to build or finance any number of projects ranging from infrastructure improvements to general budget uses as well. Often times, in order to encourage investment, these securities are exempt from federal income tax and are often free from inclusion in AMT calculations as well.
Since regular taxable bonds are taxed at 35% for the top bracket, this can be a huge selling point for rich investors who are seeking to keep their tax liabilities low while still participating in the fixed income world. Luckily for investors looking to apply this strategy with funds, there are a number of muni bond ETFs available.
For the rest of this ETF article, please visit Zacks.com at: http://www.zacks.com/stock/news/75336/invest-like-the-one-percent-with-these-three-etfs
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