VanEck launches income ETF model portfolio
VanEck has released a new exchange traded fund (ETF), the Income ETF Model Portfolio, which aims to generate income of at least 2% per annum more than the consumer price index (CPI).
It would draw on Lonsec’s research and portfolio construction experience to provide recommended strategic asset allocations to yield income in an era of prolonged low interest rates.
The new model portfolio would offer a greater skew towards Australian equities versus global equities, due to historically higher dividend yields and franking credits.
Inside the global equities allocation, there would be a greater weighting to higher yielding stocks, as well as the portfolio including a greater weighting to higher yielding corporate bonds.
Arian Neiron, VanEck managing director and head of Asia Pacific, said investors were struggling to gain income from their investments as interest rates were likely to stay low.
"Asset allocation will be key in helping investors to achieve a decent income return, because it is no longer going to come from cash,” Neiron said.
“With interest rates at historic lows, Australia has caught up to the rest of the world in having ultra-low interest rates.
“That situation is not likely to reverse anytime soon, with another official rate cut expected in the next few months, so investors seeking income will need to allocate more to income producing equities and fixed income securities to achieve a decent return.”
AUTHOR
Chris Dastoor
Recommended for you
The possibility of a private credit ETF is looking unlikely for now with US vehicles seeing limited uptake, according to commentators, but fixed income alternatives exist that can provide investors with a similar return.
Ahead of the approaching end of the financial year, State Street has shared five tips for advisers who are using ETFs in their client portfolios.
The use of active ETFs in model portfolios by financial advisers is a key factor in the growth of the products for iShares, according to BlackRock.
Global asset manager BlackRock has identified bringing private markets to the wealth channel as a key business area for the firm that could generate US$500 million in revenue in the future.
