Market Pulse: Portfolio holdings for a slowing economy
April 24, 2013
INCLINE VILLAGE, Nev. — The March employment report and other economic statistics were disappointing. Gold plunged 13 percent in two weeks. Copper fell 5 percent last week and is down 13 percent in 2013. The head of Germany's Bundesbank, Jens Weidmann, said it could take ten years to recover from the eurozone debt crisis. What does all this mean?
GDP growth, both here and in China, will be less than thought and interest rates will stay low longer than what most everyone thought. The Fed won't raise rates with this backdrop. Hmmm, low rates for another few years … that's why utilities, junk bonds, and high dividend paying equities are at or near their highs.
With this backdrop, two global dividend ETFs are good buys. The first is Guggenheim S&P Global Dividend Opportunities (LVL), which has a seven percent yield. LVL has an expense ratio of 0.60% and has its largest holdings are in the telecomm, financial, and energy sectors. Its largest holdings are based in U.S., Australia, and France.
The second attractive ETF is Global X SuperDividend (SDIV), which yields nearly eight percent. SDIV utilizes an equal weight approach, allocating about one percent of the portfolio to 100 stocks. SDIV's largest holdings are in the U.S., Australia, and the U.K. Its largest sector holdings are REITs, telecomm, and financial. The fund has an expense ratio of 0.58%.
In addition to these funds, I'm comfortable buying emerging market debt funds as they have pulled back from their recent highs. In the past I've featured Western Asset Emerging Market Debt (ESD). Now Templeton Emerging Market Income (TEI) represents the better value. TEI yields 6.1 percent.
In a weak economy it is tempting to sit in the money market or buy U.S. Treasuries. That won't meet your investing goals, however. Yes, with rock-bottom interest rates it can be a difficult investing climate, but there are still good opportunities for those seeking income from their investments.
David Vomund is an Incline Village-based fee-only money manager. Information is found at http://www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.