Global X launches two income ETFs
Global X Funds, the New York-based provider of ETFs has launched the Global X TargetIncome 5 ETF (CBOE: TFIV), and the Global X TargetIncome Plus 2 ETF (CBOE: TFLT).
The firm writes that TFIV seeks to achieve a 5 per cent yield, net of fees, while TFLT seeks to achieve the yield on the current 10 Year US Treasury Note, plus 2 per cent, with both funds expected to pay distributions on a monthly basis.
Global X writes: “In a decades long shift from defined benefit (DB) plans, which provide investors with predictable income streams in retirement, to defined contribution (DC) plans, individual investors have assumed much of the risk relating to their retirements. With an outcome-based approach, TFIV and TFLT seek to help investors achieve a specific income levels from their retirement assets.”
TFIV and TFLT track indexes developed by Wilshire Associates (Wilshire) that allocate across 11 ETFs representing different income-paying asset classes. The ETFs seek to attain their targeted income levels while simultaneously optimising their exposures to mitigate risk.
"By combining Wilshire's robust multi-asset analytics and deep institutional allocation expertise, we've structured indexes that aim to target specific yield objectives while mitigating risks," says Jason Schwarz, president of Wilshire Analytics and Wilshire Funds Management. "We're proud to bring these indexes to market and very pleased to work with Global X, which has established itself as a leader in income ETFs," Schwarz adds.
"Despite a recent spate of rate hikes, investors continue to face a low yielding market," says Jay Jacobs, head of research and strategy at Global X. "As the baby boomer generation increasingly transitions into retirement, we believe that TFIV and TFLT can offer potential solutions to investors looking to achieve specific income goals with their portfolios."