In the same time, the cumulative inflation has been 27%. For shareholders, it means an income loss of 15% in 9 years. Moreover, the annual sum of distributions went down from $1.18 per share in 2013 to $1.00 in 2022. MDIV share price, without dividends (Seeking Alpha) This represents a huge loss in inflation-adjusted value. In the same time, the cumulative inflation has been about 29%, based on CPI. The next chart confirms it: the share price has lost 29% since inception. This is a clue pointing to capital decay. The annualized return since inception, reinvesting distributions, is below the distribution rate. competitors, last 12 months (Seeking Alpha) However, it is the worst performer in the last 12 months: competitors since Dec 2017 (Seeking Alpha) Starting date is to match data availability. ALTY has five, but two of them differ from MDIV: it replaces high yield corporate bonds and dividend stocks by emerging market bonds and covered calls. HIPS has four asset categories: REIT, MLP, CEF and BDC. These products are competitors, but they are structured in different ways. iShares Morningstar Multi-Asset Income ETF ( IYLD), reviewed here.Global X Alternative Income ETF ( ALTY), reviewed here,.GraniteShares HIPS US High Income ETF ( HIPS), reviewed here,.The next chart compares total returns of MDIV and three other multi-asset high yield ETFs: The risk-adjusted performance (Sharpe ratio) is inferior by far to both benchmarks. Volatility is similar to the stock benchmark, but the maximum drawdown is deeper. Since inception in 2012, MDIV with dividends reinvested has lagged the S&P 500 ( SPY) by 9.8 percentage points in annualized return, and a 60/40 portfolio by 5.5 percentage points. ( C) with 1.60% and Morgan Stanley ( MS) with 1.60%. The top four issuers are DigitalBridge Group ( DBRG) with an aggregate weight of 2.57%, AGNC Investment Corp. Several holdings in the preferred category may be issued by the same company. It is noteworthy that three of the four REITs in this table are mortgage REITs, and they are the heaviest holdings. WESCO International, Inc., Series A, 10.625% Variable Rate They also result in 25 constituents.Įxcluding the high yield corporate bond ETF weighting 21.54% of asset value, the top 10 holdings are listed below. The rules for MLPs are similar to those for preferreds, with specific parameters. The top 25 are included in the index and weighted by yield. Eligible preferreds are ranked based on yield and volatility. Preferred stocks must pass a similar screen, without the positive earnings conditions and with lower requirements in capitalization and liquidity. The index selects 25 REITs and weights them by yield. REITs must meet the same criteria, with a higher threshold for the payout ratio: 150%. Then, 50 stocks passing all rules are selected and weighted by yield. One year realized volatility less than the Nasdaq Benchmark Index, one-year realized volatility plus 15%.a dividend payout ratio less than or equal to 80%.positive total earnings in the trailing 12 months.a dividend each of the last three years.The high yield corporate bond category is represented by the First Trust Tactical High Yield ETF ( HYLS ).Įquity securities (excluding real estate investment trusts, or REITs) must meet conditions of capitalization and liquidity, and show: The underlying index allocates 20% of its weight to each category. Distributions are paid monthly.Īs described on FirstTrust website, the fund invests in five asset categories: equity securities, REITs, preferred securities, MLPs and high yield corporate bonds. It is a high-yield ETF with a 12-month distribution rate of 6.93%, a net expense ratio of 0.72% and 125 holdings. Strategy and portfolioįirst Trust Multi-Asset Diversified Income Index Fund ETF ( NASDAQ: MDIV) started investing operations on and tracks the Nasdaq US Multi-Asset Diversified Income Index, a rule-based model mixing different categories of securities. Reviews with updated data are posted from time to time. This article series aims at evaluating ETFs (exchange-traded funds) regarding the relative past performance of their strategies and metrics of their current portfolios.
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