The BetaShares Global Income Leaders ETF (ASX: INCM) could be an option to consider if you’re seeking dividend income but you’re not comfortable investing in individual shares.
What Are ETFs?
ETFs are investment funds that are listed on a securities exchange. They can be ‘managed funds’ or ‘index funds’, or in other words, active or passive.
Typically, ETFs give an investor exposure to many different shares or assets with a single purchase, offering one of the quickest and easiest methods of achieving diversification. The Best ETFs website has a list of Australian ETFs.
Global Income Leaders INCM ETF
The BetaShares Global Income Leaders ETF invests in a portfolio of 100 companies spread across developed countries with the aim of providing quarterly dividend income.
The INCM ETF aims to track the performance of the Nasdaq Global Income Leaders NTR Index, which has returned 11.59% per year over the last five years. The ETF itself was started in October 2018 and has returned 8.63% since inception after fees.
Financials make up 43% of the portfolio, while utilities and consumer staples are allocated 11% and 10.5% respectively. Most of the holdings are based in the US (60.1%) with Canada and Japan coming in second and third.
Some familiar companies in the ETF include Ford Motor Company (NYSE: F), AT&T Inc (NYSE: T) and Qualcomm Inc (NASDAQ: QCOM).
INCM ETF Fees And Risks
Management fees for INCM are 0.45% per year which is high compared to international shares ETFs from the likes of Vanguard.
The ETF also has close to half of its holdings in financials, which is not ideal from a diversification point of view. It’s also interesting that 60% of the holdings are in the US when markets like Australia and the UK have higher average dividend yields.
INCM’s performance since inception has been encouraging, although it has only been operating for less than a year. While the ETF may provide regular income, it’s hard to say what the annual yield is likely to be until the ETF has been operating for a full year.
It may tick the box for income, but I think there are better options for diversification. I’d rather invest in our number one ETF pick which can be found in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.