Leveraged, High-Income Portfolio Yielding 14%

Posted by D4L | Thursday, April 24, 2014 | | 0 comments »

Investors continue to look for high yield. As recently as today, Mohamed El-Erian makes this observation and discusses some of the rationale in his blog entry on The Exchange. He attributes the quest for yield, almost any type of yield, to low economic volatility combined with low inflation which minimizes the risk of disruptively sharp economic fluctuations. Add the fact that cash is paying almost nothing and the opportunity cost of foregoing yield becomes even more significant. Finally, there's the widely held view that equity valuations may be approaching worrisome levels, so investors are looking harder at other avenues of opportunity.

The ETN is currently yielding about 14% (including April's pending distribution). Combined with the price return of 9.7% this represents an annualized total return of 43% since its December 2013 inception. DVHL offers a broadly diversified high-income portfolio of ETFs, Preferred Stocks, Corporate Bonds, World Sovereign Bonds, MLPs, BDCs, REITs and Dividend Equities. It offers the income investor the opportunity to buy this diverse portfolio at 2x leverage at a moderate price. Certainly there is high risk involved in any such investment, but the broad diversification should go a long way toward moderating that risk.

Source: Seeking Alpha

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