In any given year, some assets are popular while others fall out of favor. That’s why it’s wise to own a basket of differentiated assets that can lower volatility and potentially produce enhanced risk-adjusted returns. Investors can play this one-stop shop approach, known as multi-asset investing, through a handful of exchange-traded funds with portfolios that focus on four or five key asset groups. Several of these funds debuted in 2012, and they’ve quickly gained a following.

“These funds are seeing a lot of inflows right now,” says David Mazza, head of ETF investment strategy for the Americas at State Street Global Advisors. State Street’s offering in this niche, the SPDR SSgA Income Allocation ETF (INKM), has taken in more than $100 million this year, according to Mazza.

Each ETF in this group pursues a distinct approach, enabling financial advisors to select the basket of assets best suited for their clients.

SPDR SSgA Income Allocation ETF (INKM)

This fund aims to stand apart by deploying an active rather than passive management approach. Its fund managers can pick from nearly two dozen other income-focused ETFs that are part of the SPDRs program, giving extra weighting to the ETFs that seem best suited to current market conditions.

State Street fund managers use what is known as a “market regime indicator,” which helps determine if the market shows a greater preference for upside or safety (i.e. the “risk on” or “risk off” trade). Mazza says the fund management team also looks at a series of fundamental measures to ensure that the fund gets rebalanced into the best values.

This fund has been a relative under performer, rising just 9 percent since its April 2012 launch. That’s because it has a fairly aggressive 35 percent weighting in low-yielding, high-grade investment bonds. That emphasis also explains why its 30-day SEC yield 3.8 percent is less than its peers. Despite the fund’s active oversight, the 0.70 percent annual expense ratio is in the mid-range of the group average.

Mazza believes the greatest virtue of this fund is the deep level of information it provides: State Street offers a monthly strategy review on the fund’s home page under the heading ‘Active Asset Allocation ETF updates.’ “This is where we want to be as transparent as possible with our positioning,” Mazza says.

Arrow Dow Jones Global Yield ETF (GYLD)

This fund, which launched in May 2012, tracks the Dow Jones Global Composite Yield Index that goes beyond the U.S. borders in search of high-yielding stocks, bonds (corporate and sovereign), REITs and preferreds. It maintains a 20 percent weighting in each niche and rebalances quarterly to harvest profits in the fund’s strongest gainers and to re-deploy funds into recent under performers.

This fairly active approach may help explain a fairly high 0.75 percent expense ratio. The GYLD’s 12 percent-plus market return since inception trails the S&P 500’s 19 percent gain in that period, but comes with lower volatility (thanks to its focus on income-producing investments), and an impressive 5.74 percent 30-day SEC yield.

iShares Morningstar Multi-Asset Income (IYLD)

This fund, which was launched in April 2012, places a greater emphasis on fixed income than its peers: Three of its top four holdings––representing nearly half of the portfolio––are bond funds. Considering that interest rates are already at multi-decade lows and have little room to fall, this bond-centric approach may yield more muted upside.

The IYLD fund has slower asset turnover, which leads to a mid-range 0.60 percent expense ratio. Unlike the GYLD fund noted above, IYLD is more squarely focused on the domestic market with more than 90 percent of its stock and bond holdings based in the U.S.

As is the case with GYLD, IYLD has also delivered 13-month returns in the low teens, trailing the S&P 500. But it offsets that with a 30-day SEC yield of 5.4 percent, which is more than twice the average yield in the S&P 500.

First Trust Multi-Asset Diversified Income Index Fund (MDIV)

This fund is based on an underlying index created by Nasdaq which aims to have a 25 percent weighting in dividend-paying stocks; roughly 20 percent each in master limited partnerships, real estate investment trusts and preferred stocks; and the remaining 15 percent invested in the iShares iBoxx $ High Yield Corporate Bond ETF (HYG). “We really liked this index because it seeks assets that tend to show lower volatility,” says Ryan Issakainen, ETF strategist for First Trust Advisors.

The Nasdaq index is rebalanced quarterly to reduce the emphasis on recent gainers and increase the emphasis on recent losers. Issakainen notes that the fund will avoid any investment that offers a high yield solely because it performed poorly (which might give a temporary boost to the yield).

Since its launch in August 2012, this fund is up about 11 percent, slightly trailing the S&P 500. But it has also delivered a solid 5.5 percent 30-day SEC Yield. The 0.62 percent expense ratio is among the lowest in the peer group.

Guggenheim Multi-Asset Income ETF (CVY)

This ETF launched in 2006 and has produced annualized returns of 5.6 percent since inception. Its longevity means it actually has a track record that investors can gauge to see how this multi-asset class group might perform during different market cycles.

The fund is based on the Zacks Multi-Asset Income Index, which comprises common stocks, ADRs, REITs, MLPs, closed-end funds, Canadian royalty trusts, and traditional preferred stock. Despite its diversity, CVY was pummeled during the market crash of ‘08-’09, in part because closed-end funds were decimated during that period.

But closed end funds rebounded sharply after 2008, and the fund’s 7.3 percent annualized gain over the past five years (including that deep 2008 swoon) has outperformed the S&P 500 by two percentage points, according to Morningstar.

On top of that, the fund comes with an impressive 5.3 percent 30-day SEC yield, and annual payouts have been rising at a 5% to 10% pace in recent years. The fund carries a segment-low 0.60 percent expense ratio.

That slight edge of share price gains over yield is no coincidence. “We think investors should be looking at this ETF from a total return perspective and not merely as an income play,” says William Belden, a head of product development at Guggenheim Investments.

The fund’s index is rebalanced quarterly, and along with income is also focused on such factors as company growth, valuation metrics and stability, Belden says.

The charm of these multi-asset income funds is their diversification. Owning a wide range of stocks, bonds and funds enables them to generate solid dividend streams while reducing the risk associated with a blow-up in any particular stock or asset class. Moreover, the fact that these income producers have also been able to generate credible share price appreciation makes them solid performers in terms of total return.