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4 Multi-Asset ETFs to Beat Volatility & Enjoy Solid Yields

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The year 2022 as a whole could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries after an upbeat 2021. No wonder, such worries caused an upheaval in the market in the first half of 2022.

The S&P 500, the Dow Jones, the Nasdaq and the Russell 2000 are down 10.3%, 6.4%, 17.3% and 11.2%, respectively, this year. Talks were doing rounds that the U.S. economic recession will be rife.   

But the global market is in a critical juncture this year. The central banks (including the Fed) of the developed world opted for a faster policy tightening to fight scorching inflation (caused by the Russia-Ukraine war, China’s zero-COVID policy and the COVID-led supply chain woes).

The Fed has hiked rates by several basis points since March. The U.S. treasury yield curve inverted several times from late March. But the trend of bond yields has been quite volatile. Notably, commodities had a great 1H as the escalation in tensions between Russia and Ukraine sparked a rally in a broad range of commodities. Both countries are commodity-rich, ranging from agriculture to minerals and energy products. The tensions have led to constrained supply concerns in an already-tight commodity market.

Talks are rife a global soft landing is expected. Multinational companies are drawing up contingency plans in the event of a U.S.-China military conflict after Beijing launched an unprecedented series of exercises around Taiwan this month.

Federal Reserve officials at their July meeting indicated they likely would not consider stopping on interest rate hikes until inflation came down considerably, according to minutes from the session released Wednesday, as quoted on CNBC.

Should You Diversify Through Multi-Asset ETFs?

Investors will definitely want to know about ways that could save them in case of a widespread market selloff. In this regard, we highlight a few multi-asset ETFs that could offer investors great returns in the form of capital appreciation and income.     

Notably, the multi-asset strategy looks to boost returns and lower overall volatility in portfolios. These products normally provide a high level of current income and take care of downside risks of a specific asset class. These also cater to various asset classes (equity, fixed income and alternative securities), which have low correlation to each other.

Below we highlight a few multi-asset ETFs that could offer investors great returns in the form of income as well as offer diversification.

YieldShares High Income ETF (YYY - Free Report)

This fund yields about 10.71% annually. The underlying ISE High Income Index is comprised of 30 closed-end funds ranked highest overall by the ISE in three criteria: fund yield, discount to net asset value and liquidity.

Arrow Dow Jones Global Yield ETF (GYLD - Free Report)

This fund provides almost equal-weight exposure across five global areas — equities, real estate, alternatives, sovereign debt and corporate debt. This is easily done by tracking the Dow Jones Global Composite Yield Index. The fund offers an annual dividend yield of 4.54%.

iShares Morningstar Multi-Asset Income ETF (IYLD - Free Report)

The underlying Morningstar Multi-Asset High Income Index is broadly diversified and seeks to deliver high current income while maintaining long-term capital appreciation. The fund charges 59 bps in fees and 4.02% annually.

Principal Spectrum Preferred Securities Active ETF (PREF - Free Report)

This ETF is active and does not track a benchmark. The Principal Spectrum Preferred Securities Active ETF seeks to provide current income. It invests at least 80% of its net assets, plus any borrowings for investment purposes, in preferred securities at the time of purchase. The fund charges 4.37% annually.


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