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High yield ETF's are an effective way to gain exposure to sector or asset class movements that provide dividend income and the opportunity for capital growth. In recent years, exchange traded funds have increased in popularity due to the fact that ETF's are composed of a basket of stocks. This isolates an investor from exposure to any one particular stock. High yield exchange traded funds can be selected according to ones investment preferences. The following article discusses some product options for investing in dividend ETF's. The Wisdom Tree
Company provides a range of high
dividend yield ETF products that cover domestic dividend, international
dividend indexes and sector dividend indexes. The essence of these
products are to weight the indexes according to dividend yield. Under
conventional market weightings, indexes are weighted according to
market capitalization. The Wisdom tree company studied market
weightings and concluded that markets tend to become overweighted in
overvalued stocks and underweighted in undervalued stocks. High yield ETF's
provide flexibility for asset class
exposure. Market participants that have a preference for a particular
sector of the economy can buy an exchange traded fund that has a
concentration of holdings in that sector. They can also choose a fund
comprises large capitalized stock or small capitalized stocks. For
example, an investor that wants exposure to the financial sector could
purchase the Wisdom Tree Financial Sector index which is heavily
weighted in banks and insurance stocks. Other products include the TOP
100 US dividend paying stocks and the TOP 100 International dividend
paying stocks. Investors that want
exposure to high yield ETF's from a
foreign country can invest in high dividend yield ETF products that
cover Japan or Europe. The Pacific ex-Japan Dividend Index covers Hong
Kong, Singapore, Australia and New Zealand with exposure to companies
such as China Mobile, Hang Seng Bank, Telstra Corporation, Westpac
Corporation and BHP Billiton. High yield ETF
products can be used as a short term
trading vehicle or as part of a longer term sector rotation or region
based strategy. These products offer regular dividend streams and the
chance to capture capital growth. They are products worthy of
consideration for every investor and trader. Next article: international ETFs |
