Equity Closed-End ETFs invest in common and preferred stocks of domestic and international companies, and may emphasize current income, capital appreciation, or some combination of income and capital appreciation. These funds may build portfolios that consist of stocks issued by a broad range of companies, diversified across industries, geographies and economic sectors, or they can focus on specific investment styles, such as large-cap, small-cap, growth or value.
Some of these funds may leverage their assets through the issuance of preferred stock or hedge their portfolio through the use of options and futures.
US equity income Closed-End ETFs seek to provide current income by investing in dividend paying securities, which typically include investment-grade preferred stocks, of domestic companies. In addition, some funds may invest a portion of their assets in debt securities and private placements, as well as securities of foreign corporations. These funds may build portfolios that consist of stocks issued by a broad range of companies, diversified across industries, geographies and economic sectors, or they can focus on specific industries such as the utilities industry.
US equity growth Closed-End ETFs typically seek to provide capital appreciation by investing primarily in common stocks of domestic companies. In addition, some funds may invest a portion of their assets in debt securities and private placements, as well as securities of foreign corporations. These funds may build portfolios that consist of stocks issued by a broad range of companies, diversified across industries, regions and economic sectors, or they can focus on specific investment styles, such as large-cap, small-cap, growth or value.
US sector Closed-End ETFs typically seek to primarily provide capital appreciation by investing in equity securities of domestic companies in specific industries such as telecommunications, banking, media, natural resources or health care. In addition, some funds may invest a portion of their assets in physical assets, debt securities and private placements, as well as securities of foreign corporations.
Taxable preferred securities funds typically seek to provide high current income by investing a majority of their assets in fixed rate and adjustable taxable preferred securities. As taxable preferred securities do not quality for a dividends-received reduction, they generally offer attractive market yields relative to other income investments. These funds may build portfolios that consist of taxable preferred securities issued by a broad range of companies, diversified across industries, geographies and economic sectors, or they can focus on specific industries, geographies or economic sectors.
Real estate funds generally invest in the common stock, preferred, stock and convertible securities of publicly traded Real Estate Investment Trusts (REITs), and to a lesser extent Real Estate Operating Companies (REOCs). REITs pool investors’ funds for investment primarily in income producing real estate or in real estate related loans (i.e. mortgages). Some REITs invest in a variety of property types: shopping centers, apartments, self-storage, warehouses, office buildings and hotels, among others. Others specialize in one region or even a single metropolitan area.
Because these funds concentrate their assets in the real estate industry, investments may be closely linked to the performance of the real estate markets. However, they are attractive because they typically pay out a large portion of their income as dividends, which can translate into a relatively high yield.
Global equity Closed-End ETFs generally invest in equities of companies primarily located in developed countries outside the US, and may emphasize current income, capital appreciation, or some combination of income and capital appreciation. These funds may build portfolios that consist of stocks issued by a broad range of companies, diversified across industries, countries, regions and economic sectors, or they can focus on specific investment styles, such as large-cap, small-cap, growth or value.
Emerging markets closed-end equity funds typically invest in common and preferred stock of companies primarily located in developing countries outside the US, and may emphasize current income, capital appreciation, or some combination of income and capital appreciation. In addition, these funds may invest in debt securities convertible into common stock and common stock purchase warrants. Although emerging market investments can be volatile and illiquid, Closed-End ETFs are not forced to sell securities from their portfolios to meet redemptions, and may offer investors access to investments where liquidity is a constraint.
Non-US equity Closed-End ETFs typically invest in equities of companies primarily located outside of the US, and may emphasize current income, capital appreciation, or some combination of income and capital appreciation. These funds may build portfolios that consist of stocks issued by a broad range of companies, diversified across industries, countries, regions and economic sectors, or they can focus on specific investment styles, such as large-cap, small-cap, growth or value. International funds focus primarily on investments in developed nations, while emerging market funds focus primarily on investments in developing nations.
