4 BlackRock ETFs For Steady Retirement Income

iShares U.S. Preferred Stock ETF (NYSEARCA:PFF)

Preferred stocks are a type of hybrid income vehicle that straddle the line between equity and fixed-income characteristics. This alternative style allows them to pay relatively high yields and also remain in a senior position on the capital structure.

PFF is the largest fund in this sector, with over $16 billion dedicated to a benchmark of 300 preferred issues. Most the underlying exposure is distributed in the financial and real estate sectors, with smaller allocations in telecom, energy, and utilities.

This exchange-traded fund currently sports a 30-day SEC yield of 5.34% and income is paid monthly to shareholders. The annual expense ratio for PFF is listed at 0.47%.

It should be noted that a fund of this nature should be used as a tactical holding in the context of a diversified income portfolio. It may be appropriate as an income-enhancing specialty fund or to provide a dynamic return profile for those seeking out high yield sectors.

Investors should note that preferred stocks will be susceptible to both interest rate and equity volatility as principal risks.

iShares Conservative Allocation ETF (NYSEARCA:AOK)

In my experience, retirees tend to shift their risk tolerance down a few notches as they begin to realize there is less time to make up for any egregious mistakes. One way to do that is to consider a low-cost, multi-asset fund with a conservative mandate.

AOK is designed as a 70/30 allocation of bonds and stocks that includes both domestic and foreign exposure. This “fund of funds” style ETF is make up of other iShares portfolios with a total net expense ratio of 0.25%. Income is paid monthly to shareholders in AOK and the current 30-day SEC yield is listed at 2.53%.

Conservative investing isn’t sexy, but this ETF allows you to participate in an extremely diversified portfolio at a very minimal expense. This creates a sensible game plan and one-stop-shop for a portion of your investment accounts.

One note of caution is that the overweight nature of the bonds in this portfolio does skew the risk needle towards the direction of interest rates. Nevertheless, the historical price fluctuations have been far more muted than a stock-only holding.

Note: This article is written by David Fabian and was originally published on the FMD Capital Management blog. FMD Capital Management is a fee-only investment advisor which provides daily updates on ETFs, portfolio strategies, and market insights. Contact them for a free portfolio review.