In a recent interview with Fidelity Bank, Matt Reiner shared some helpful tips on how to earn up to 7% in ETFs. Fidelity recently explored ETF products offering decent yield and potential growth. Of the six funds worth considering, Reiner commented specifically on the PowerShares Preferred Portfolio (PGX) with a 30-Day SEC Yield of 6.4% and Expense Ratio of 0.5%.
With many banks and financial companies reporting stronger earnings and improving their balance sheets, default risks have come down, and the ETF has a higher average credit rating than some other preferred ETFs, making it a good option, says financial adviser Matt Reiner of Capital Investment Advisors in Atlanta.
Right now preferred shares aren’t cheap, trading at a premium to historical averages. With a 13.3% return so far this year, the ETF isn’t likely to post another year of double-digit returns in 2013, and preferred stock prices can tumble when interest rates rise sharply. Still, the ETF’s 6.4% yield beats most bonds, and it generates a decent income stream, says Reiner, who recommends the ETF for about 5% of his clients’ portfolios.
The ETFs mentioned that offer decent yields and potential growth include:
PIMCO 0-5 Year High Yield Corporate Bond Index Fund (HYS)
SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB)
PowerShares Senior Loan Portfolio (BKLN)
SPDR S&P International Dividend ETF (DWX)
iShares FTSE NAREIT Mortgage Plus Capped Index Fund (REM)
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