ETFs for Global Income


Nicholas Vardy Image Nicholas Vardy Editor, Bull Market Alert, The Alpha Investor Letter, and The Global Guru

Just as U.S. investors have a “home country” bias by investing the bulk of their equity investments in U.S. stocks, they are also reluctant to invest the income portion of their portfolio in foreign bonds, observes Nicholas Vardy, editor of The Global Guru.

That’s ironic because foreign debt -- when you take both sovereign and corporate debt together -- is the single-largest asset class in the world.

While U.S. investors are tip-toeing back into international stock investments in 2017, foreign bond investments remain the red-headed stepchild in international investing.

U.S. investors often point to currency risk as the reason for avoiding foreign income investments. But there are ways to invest in foreign income investments without exposing yourself to currency risks.

Some international bond ETFs, especially those targeting emerging markets, hold foreign debt securities denominated in U.S. dollars. These offer some of the highest yields you can earn and come with no currency risk attached.

Global X SuperDividend ETF (SDIV)

This ETF tracks the Solactive Global SuperDividend Index, an equally weighted index consisting of 100 equally weighted companies that rank among the highest-dividend-yielding equity securities in the world.

Now, remember that “global” doesn’t mean international. SDIV has about one-half of its investments in U.S. stocks.

As U.S. dollar-based investments, you are not taking in any currency risk in this section of the portfolio. The remainder is invested in high-dividend-yielding companies in Europe, Australia, Asia, Canada and Latin America.

In terms of sectors, it’s no surprise that SDIV focuses on financial services and consumer cyclicals, which together make up about 60% of its portfolio.

SDIV yields an impressive 6.77%, pays dividends monthly and charges a fee of 0.58% annually.