According to the Senior Citizens League, loss of buying power is the #1 concern facing retirees in the US, with 92% listing it among their greatest fears in a recent survey. When retirees are living on a fixed income tied to a retirement portfolio, the erosion of buying power through inflation or a market downturn that erodes principal funds can be devastating.
Retirees who want to live out their golden years without undue worries about finances will ideally benefit from a portfolio that combines the following elements:
- Solid income
- Inflation mitigation
- Capital appreciation
Nailing this investment trifecta ideal on a consistent and foolproof basis is something that has eluded many financial planners, although many have attained at least 2 out of the 3 often enough to build successful practices. Exchange Traded Funds (ETFs) are an asset class that track specific market indices and can help to reach that goal on a mix-and-match basis to suit a wide range of investor objectives and risk tolerances.
Founded in 1985, New York headquartered WisdomTree Investments has parlayed its ETF product and asset management skills into an 84 ETF strong catalog and $125.4 billion in total global assets under management. While many portfolios will typically track the S&P 500 Index and the Nasdaq 100 for growth, with the S&P 500 High Dividend Index or the 10-year US Treasury bond for yields, there are two (2) WisdomTree selections that are outside the norm that can contribute nicely to a retirement portfolio and to supply one of the missing legs of the trifecta:
- WisdomTree Emerging Markets High Dividend Fund (NYSE: DEM)
- WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (CBOE: GDMN)
WisdomTree Emerging Markets High Dividend Fund
Saudi Arabian Oil Company (better known as ARAMCO) stock is the fifth largest holding in the DEM portfolio.
While US GDP growth is expected to grow between 1.7% to 2.7%, according to JP Morgan, other economists anticipate that Emerging Market GDP growth is likely to exceed 4%. The WisdomTree Emerging Markets High Dividend Fund (NYSE: DEM) was created to capitalize on the emerging market opportunities that often are only covered in their respective nations and receive little to any international news coverage. Tracking WisdomTree’s Emerging Markets High Dividend Index, DEM focuses on the highest dividend yielding stocks among the various emerging market exchanges. Many of the names in its portfolio are familiar, but more oriented in energy, commodities, construction, and finance, as opposed to healthcare, for example.
|
Category |
As of time of this writing: |
|
Yield |
5.14% |
|
Net Assets |
$2.92 Billion |
|
Beta |
0.86 |
|
Expense Ratio |
0.63% |
|
Inception date |
7-13-2007 |
|
Average Daily Volume |
249,508 shares |
|
1-year Return |
6.88% |
|
3-year Return |
8.41% |
|
5-year Return |
10.79% |
|
10-year Return |
5.04% |
|
Total Holdings |
488 |
Sectorwise, DEM is weighted most heavily towards the following industries:
- Financial Services – 28.30%
- Energy – 12.07%
- Technology – 11.06%
- Basic Materials – 10.51%
- Industrials – 8.67%
The top 5 largest holdings in the DEM portfolio are:
- China Construction Bank Corp. Class H – 4.84% (China)
- Vale SA – 3.29% (Brazil)
- MediaTek, Inc. – 2.89% (Taiwan)
- Industrial and Commerce Bank of China Ltd. Class H – 2.39% (China)
- Saudi Arabian Oil Corp. – 2.28% (Saudi Arabia)
WisdomTree Efficient Gold Plus Gold Miners Strategy Fund
WisdomTree’s GDMN ETF invests directly in gold futures contracts or in stocks of companies that derive at least 50% of their revenues through gold mining activities or ownership.
When it comes to a hedge against inflation, gold has been the go-to hedge by cultures around the world for centuries. Inflation erodes the buying power of currency, which is the scourge of retirees across the nation. A number of economists have attributed recent weakness in the US dollar to several factors:
- The ascension of the BRICS (Brazil, Russia, India, China, South Africa) economic coalition, which has fostered significant international non-dollar trade between member nations;
- Uncertainty over US tariffs and unresolved trade agreements between the US and nations with yet to be negotiated new trade deals;
- Concerns over the future of NATO and potential oil supply interruptions due to war in the Middle East.
The WisdomTree Efficient Gold Plus Gold Miners Strategy Fund (CBOE: GDMN) is an ETF contemporary market approach to capitalizing on gold exposure for a portfolio. It does this by:
- Investing directly in a portfolio of US-listed gold futures contracts;
- Global stocks that derive at least half of their revenues through gold mining operations.
- US Treasury securities to hedge the gold futures contracts.
|
Category |
As of time of this writing: |
|
Yield |
5.52% |
|
Net Assets |
$36.59 million |
|
Beta |
1.17 |
|
Expense Ratio |
0.45% |
|
Inception date |
12-14-2021 |
|
Average Daily Volume |
30,669 shares |
|
1-year Return |
82.26% |
|
3-year Return |
29.88% |
|
US equity portfolio ratio |
14.84% |
|
Non-US portfolio ratio |
77.92% |
|
Total Holdings |
58 |
The top 10 largest weighted holdings in GDMN are:
- Agnico Eagle Mines, Ltd. – 8.26%
- Newmont Corp – 7.38%
- Barrick Mining Corp. – 6.46%
- Anglogold Ashanti PLC – 6.38%
- Wheaton Precious Metals Corp. – 4.67%
- Kinross Gold Corp. – 4.67%
- Gold Fields Ltd. ADR – 4.51%
- Franco-Nevada Corp. – 4.44%
- Northern Star Resources, Ltd. – 4.20%
- Alamos Gold Inc. Class A – 3.16%
While neither DEM nor GDMN should be taken to serve as the cornerstone of a portfolio, both of these ETFs offer exposure to sectors that can supply the missing components of growth, inflation mitigation, and income when a conventional S&P 500 oriented growth allocation or something comparable falters in the US markets.
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