An ETF Play for Your Retirement Income Portfolio

Retirees who are managing their portfolios should not chase after returns. Instead, most exchange traded fund investors saving for retirement should include strategic allocations and find opportunities in alternative income investments.

For instance, Michael Fabian, a managing partner at FMD Capital Management, suggests taking a look at preferred stocks.

Specifically, the iShares U.S. Preferred Stock ETF (PFF) provides investors with exposure to preferred stocks, which provide a specified dividend paid before common stock holders and take precedence over common stocks in case the company goes under. PFF shows a 5.66% 12-month yield.

“Alongside the view that the equity markets will avoid a major calamity in 2013, we find that many individual issue preferred stocks have worked off their excess premiums to par value, and are now resting at relatively attractive valuations when compared with earnings multiples of high dividend stocks,” Fabian said.

More over, PFF has a lower beta to the S&P 500 Index and offers a higher dividend yield than the average stock on the index.

Source:  Tom Lydon, ETF Trends

iShares U.S. Preferred Stock (PFF) is a component of the D2 Capital Management Multi-Asset Income Portfolio.

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 

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