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.