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This week Russ Koesterich, iShares Global Chief Investment Strategist, discusses the reasons behind zero real-yields on US inflation-protected bonds.
Russ suggests an alternative inflation hedge in the form of mega caps. Large and mega cap stocks in the US are trading between 8-11x next year's earnings, and less than 1.5x book value.
We have also included an ETF solution for advisers who may be using Australian equities to implement yield trading strategies. The 12 month gross actual yield for the continuants of iShares S&P/ASX High Dividend ETF was 8.83%*.
Expressing a global mega cap view via ETFs
iShares S&P Global 100. IRESS code: IOO.AXW
Russ continues to favour mega-caps in the equity space. IOO is a potential solution for brokers looking for a core global equity strategy to complement Australian equities with global businesses such as BHP and COH.
Key points about IOO:
- designed to deliver the performance of 100 transnational mega caps
- diversify international equity exposure with 107 securities from 10 countries
- largest holdings - Exxon Mobil, INTL, Microsoft, Chevron and Nestle
- management cost 0.40%
- provides unhedged global mega cap exposure
- currently has over $860 million in assets
- holds physical securities, not derivatives or synthetics
- trading on P/E and PB levels not seen since the depths of the GFC. See chart.
IOO P/E & PB Ratio.
Diversify your equity income via ETFs
iShares S&P/ASX High Dividend. IRESS code: IHD.AXW
IHD may be suitable for advisers seeking high dividend investment exposures to help maximise earnings certainty.
Key points about IHD:
- designed to deliver the performance of the S&P/ASX Dividend Opportunities Index (Index)
- the Index has been designed to serve as a benchmark for Australian income seeking investors
- sector limits of 20% underweights financials to provide high yield and diversification
- largest holdings - Navitas, Monadelphous, Westpac, United Group, IRESS Market Tech and Coca-Cola Amatil
- quarterly distributions
- 12 month gross actual yield for the continuants of IHD was 8.83%*
- management cost 0.30%
- holds physical securities, not derivatives or synthetics
Your opinion matters most to us. Tell us to what you'd like to see covered in iShares Trading Ideas.
If you have any questions please don't hesitate to contact the iShares team on 1300 474 2737.
Regards,
Tim Sparks
National Broking Strategy & ETF Research
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Russ Koesterich,
CFA, iShares Global
Chief Investment
Strategist |
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Your opinion matters most
to us |
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What would you like to see in
"iShares Trading Ideas"
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*Source: Bloomberg, year to 19 September 2011.
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