This 21% Yielding ETF Gives You A Way To Get Diversification And Collect Income From Gold
"Gold Exposure With High Income"
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Current Price: $20.55
Over the past several months, investors have had plenty to digest. Rising oil and gas prices following the conflict with Iran reignited inflation concerns, Treasury yields moved higher, and expectations for interest rate cuts continued getting pushed further into the future.
Despite all of that, the broader market has remained surprisingly resilient, climbing more than 8% year-to-date.
Gold (GLD), however, hasn’t been nearly as fortunate.
After reaching record highs earlier this year, the precious metal has pulled back sharply, posting its worst quarter in over a decade. While many investors have become cautious, I believe the recent weakness has actually improved the long-term opportunity for income investors looking to add precious metals exposure.
One fund that continues to stand out is the FT Vest Gold Strategy Target Income ETF (IGLD). The ETF combines exposure to gold with an eye-catching distribution yield of roughly 21%, making it an attractive option for investors seeking both income and diversification.
While the recent correction has pressured both the fund’s NAV and monthly distributions, I believe the long-term investment thesis remains intact.
Looking Back 👀
I first covered IGLD earlier this year when gold was approaching record highs. At the time, I believed the fund offered retirees and income-focused investors an attractive way to gain exposure to precious metals while generating significantly more income than simply holding gold outright.
The ETF subsequently outperformed several of its peers before the recent correction in gold.
Although I remained constructive on gold’s long-term outlook, I also warned that after such a powerful rally, investors should expect increased volatility and the possibility of a meaningful pullback.
That correction has now arrived.
Since my last coverage, gold has retreated considerably, dragging IGLD lower as well. While short-term performance has certainly been disappointing, I don’t believe the decline represents a permanent change in the long-term outlook for either gold or the fund itself.
Instead, I view much of the weakness as the result of shifting interest-rate expectations, profit-taking after an extraordinary rally, and investors temporarily rotating toward higher-yielding Treasury securities.
