Global X Debuts New YieldCo ETF

Global X Funds has never been one to shy away from unconventional income strategies and their existing forays into this space have been largely successful. 

For example, the Global X SuperDividend ETF (SDIV) has accumulated over $1 billion in total assets by searching out some of the highest yielding REITs, MLPs, and financial stocks in the world. 

To build upon their suite of income products through an alternative asset class, they recently released the Global X YieldCo Index ETF (YLCO).  This new ETF will trade on the NASDAQ exchange and feature a 0.65 percent expense ratio. 

According to the fund fact sheet, “A yieldco is a dividend growth-oriented public company, created by a parent company, which bundles renewable and/or conventional long-term contracted operating assets in order to generate systematic cash flows.”

At launch, YLCO will contain well-known stocks such as First Solar Inc (FSLR) and SunEdison Inc (SUNE).  The portfolio will also be diversified on a global scale as well.  The United States makes up 56 percent of the stock allocation, with the majority of the remaining companies domiciled in the United Kingdom and Canada. 

"YieldCos are an emerging asset class that meets many of the key investment characteristics investors are looking for, such as high current income, low volatility and the opportunity for dividend growth," said Jay Jacobs, Research Analyst at Global X Funds. "We are excited to bring this asset class to investors who have traditionally looked to MLPs and REITs for alternative income exposure."

One of the advantages of these YieldCos is that a large percentage of their profits are returned to shareholders in the form of dividends.  The Global YieldCo Index currently has a yield just over 3.00 percent.  In addition, income from YLCO will be distributed on a quarterlybasis.

This new alternative income ETF will offer investors an innovative tool to tap into proven cash flow in renewable energy and should certainly be on your radar.