Here are 2 ASX exchange traded funds (ETFs) that might be worth a look if you need something better than bedding to put your money.
Vanguard International Credit Securities Index ETF (ASX: VCF)
This ETF from Vanguard holds a portfolio of high-quality investment-grade bonds from around the world. There are no government bonds held, but bonds from government-guaranteed or -owned entities are included, as well as corporate bonds rated BBB- or higher. The lack of government bonds helps add some yield without too much extra risk and makes this ETF a good way to get some exposure to yield-bearing debt instruments, in my opinion. VCF has a running yield of 2.98% and has returned 6.25% over the past year, which isn’t a bad result. VCF has a management cost of 0.3% per annum.
iShares S&P/ASX Dividend Opportunities ETF (ASX: IHD)
This ETF is run by BlackRock (the largest asset manager in the world) and invests in a portfolio of 50 high-yielding Australian equities. Why own one dividend-payer when you can own 50 in one share? The beauty of an index fund like IHD is that you will only ever find high-yielding companies in your holdings. If a company ceased to pay a dividend, it will be dropped from the ETF and replaced with another who will. IHD’s current top holdings include South32 Ltd (ASX: S32), Alumina Ltd (ASX: AWC) Commonwealth Bank of Australia (ASX: CBA) and Wesfarmers Ltd (ASX: WES). IHD has a nice trailing yield of 7.23%, pays distributions quarterly, and also has a management fee of 0.3% per annum.
With either of these two ETFs, you have a good choice for income (in my opinion). VCF would be a good way to get exposure to some of remaining the bonds that are paying a decent yield, but IHD has a very nice income paid quarterly – so not exactly Sophie’s choice with these ETFs!
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.