Monday, 30 June 2014

London's Juicy Bond ETFs

It's all about the juice...
I'm always on the hunt for interesting Exchange Traded Funds (ETFs). Not just any, of course, but specifically high-yield and preferably geographically diversified. What is slightly surprising to me (given the wealth of data available) is that these are not so easy to find - there does not seem to be a comprehensive list that is ranked by yield.

I recently looked at high-yield dividend ETFs. Today I'm specifically looking for fixed-income ETFs quoted on the London Stock Exchange. So here goes with some more real-life Do It Yourself investing...
AAs I have already said, I haven't found a good source of potential ETF targets. Topyields is one of the more useful sites for identifying high-yielders, including some ETFs - but it does not have a page specifically for the London market ETFs (and you should be aware that you may need to double-check some of the numbers that appear).

Even finding the yields from the ETF providers can be difficult, so I tend to rely on the data provided by Bloomberg. Having said that, you obviously need to know what ETF to look for - and therein lies the challenge.

So to help you on your way (assuming you are interested in this corner of the investment world) here is a list of  high-yield fixed-income ETFs I have come across recently that have an attractive yield. I can't claim that it is comprehensive, so do let me know if I've missed any of your favourites. Currency and current yields (from Bloomberg) are shown.

I think that is quite an interesting collection and it might provide the basis for a well-diversified portfolio for the longer term. That's assuming that we know what will happen to worldwide bond yields/prices - which we don't (other than that it is likely to fall in some developed markets). My own strategy is to buy the highest yields (within reason) - but many experienced investors might see this as rather naïve! Still, it seems to have worked for me over the last few years...

But do make your own assessment.

[The DIY Income Investor portfolio currently holds IHYG, SEML, SHYU and EMDD]

[Update 2/7/14 - .... and now includes HYLD]



  1. Hi DIYII,

    I'm interest to know how long you've been investing in bonds. While I've dabbled I've yet to feel I fully understand the market like I do with equities.

    1. Hi UTMT

      Several years - enough to get in at the beginning of the bond boom due to QE and then to sell off now the market is heading for an unwind. However, I see fixed-income as a necessary stabilisation factor in the portfolio - even more so when you can spread the risks with an ETF. But I don't understand why bonds prices haven't fallen further sooner.

  2. Hi DIY,
    I was looking ay buying VHYL (World High dividend ETF), one of your current holdings. Bloomberg shows yield of 5.47% - is this correct based on your actual income you received in 2013/2014 ?

    I always have to triple check ETF dividend yields and often have to look at historical distribution data to get an accurate answer.


    1. Yes Anon - this can be a problem and it sometimes requires a lot of digging to get the actual figures. I haven't specifically checked VHYL but on previous detailed reviews of other ETFs I have found that Bloomberg's trailing 12 month figure is accurate - that's why I use their data!.