Dividends

ETF Talk: New State Street Fund Offers Income

This week’s featured exchange-traded fund (ETF) is a new one from the State Street Group that focuses on income allocation. The fund, SPDR SSgA Income Allocation ETF (INKM), invests in a number of other ETFs and seeks to provide investors with stable income. The fund’s prospects are difficult to gauge because it is less than two months old. However, INKM has started to attract money from investors. If the current trend continues, it could provide sufficient liquidity to merit consideration as a potential recommendation for those who seek a steady stream of income.

INKM has fallen since April 2012 when it first started trading. However, the markets in general have been slumping since that time. The fund opened traded at $30.01 on April 26, slid as low as $28.87 in midday trading on June 5, but has been climbing in recent days to hit $29.56 as I wrote this afternoon’s feature.

The SPDR SSgA Income Allocation ETF (INKM) seeks to provide total return to investors by focusing on income and yield-generating assets. This fund could prove attractive to income-oriented investors, since it currently has a 30% exposure to investment-grade bonds, which limit its volatility, compared to many other funds. This stability is enhanced by the freedom that INKM’s fund managers have to deploy its portfolio in lower-risk securities during periods of high market volatility. If you’re like me, stability is hard to pass up in today’s uncertain market.

As of June 12, INKM’s top five holdings were: SPDR S&P Dividend ETF (SDY), 19.04%; SPDR Barclays Capital Long Term Corporate Bond ETF (LWC), 14.07% ; SPDR Barclays Capital High Yield Bond ETF (JNK), 8.30%; SPDR Barclays Capital Long Term Treasury Bond ETF (BWZ), 7.90%; and SPDR S&P International Dividend ETF (DWX), 7.89%. The fund’s asset class allocations, also on June 12, were: Equity, 45.99%; Investment Grade Bonds 30.1%, High Yield, 8.32%; Hybrids, 8.05%; and Global Real Estate, 7.54%.

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Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/