For investors looking for current income, the Federal Reserve's policies have not been a huge help. The central bank's endless parade of QE has kept bond rates depressed while a similar situation could soon impact mortgages and REIT-focused investments now that the bank has taken a closer look at MBS purchases.

This trend has undoubtedly pushed investors back into equities, helping to boost stock prices pretty much across the board. While this has been a decent strategy so far, some cracks are beginning to appear in a global recovery, suggesting that we could be in for a rough patch to close out the year.



After all, Europe is at or already in a recession while many emerging markets, including China, are in the process of slowing down. The U.S. isn't that much better, but the domestic market is arguably the best of the worst in this environment meaning that a tilt towards American stocks could be the way to go in this climate (also read Buy American with these Three Commodity ETFs).



However, a purely large cap focus doesn't seem like that great of a strategy as most large and mega cap securities do a significant amount of business outside of the U.S., implying that exposure to large caps isn't likely to be too focused on American economic health. In fact, some estimates peg the amount of S&P 500 revenues that come from international sources at around 50%, so to say that these large caps are zeroed in on the American market seems a little out of date to say the least.



That is why, in our opinion, true domestic exposure can best be achieved via small cap securities. These pint sized stocks aren't big enough to be international behemoths, so they are pretty much entirely focused on the U.S. for their revenues, potentially making them great choices in a global slowdown.



Yet, while many small cap securities can be quite volatile, those that pay out hefty yields on a regular basis tend to be safer. Plus, their outsized yields can certainly help during this low rate environment, suggesting that they could be great picks for those looking for current income as well (see Three Overlooked High Yield ETFs).



With this backdrop, we have highlighted below three small cap ETFs that have impressive yields. Any of the following three could be interesting choices for investors searching for yield, but with a more domestic focus during this shaky time for the global economy:



PowerShares S&P Small Cap Utilities ETF (PSCU)



For a sector approach to the small cap problem, investors can always look to the high dividend payers in the utility industry. This segment which is often known for its high yields in the large cap space, can also offer up high payouts in the small cap market by following the S&P Small cap 600 Capped Utilities & Telecom Services Index.



This benchmark results in a fund that has just 22 holdings in total, although assets are relatively well spread out with no one security accounting for more than 10% of assets. From a sector look, telecoms account for under 20%-- with utilities making up the rest - while over 90% of the fund is categorized as value stocks (see the Comprehensive Guide to Utility ETF Investing).



Currently, the fund is a low cost choice in the space, charging investors just 29 basis points a year in fees, although bid ask spreads look to be rather wide. Still, the product is a high payer, giving investors a 3.0% yield in 30 Day SEC terms.



WisdomTree Trust Small Cap Dividend ETF (DES)



For a true dividend focus in the small cap market, it is hard to go wrong with WisdomTree's DES. The product tracks the WisdomTree SmallCap Dividend Index which consists of the bottom 25% of the market capitalization of the WisdomTree Dividend Index, after the 300 largest firms have been removed.



Once this is done, the component stocks are weighted by the amount of cash dividends that each component is expected to pay in the next year. With this focus, the fund holds over 600 components, putting an extremely heavy weight on financials as these account for over half of the portfolio.



Still, the top holding only accounts for 2.1% of assets, suggesting a very well spread out product from an individual security perspective. It should also be noted that the fund is a relatively liquid product as well as one that has a low cost, coming in at just 38 basis points a year (read Small Cap Value ETF Investing 101).



Furthermore, the fund has an impressive yield of over 4% in 30 Day SEC terms, so investors will have to weigh this solid payout against the heavy financial concentration if they are considering an ETF in the small cap market that has a dividend focus.



Wilshire Micro-Cap ETF (WMCR)



For a look at the smallest of the small, investors could consider the Wilshire Micro-Cap ETF (WMCR). This product tracks the Wilshire Micro Cap Index which consists of nearly 1,500 firms that are also in the bottom half of market capitalization in the broad Wilshire 5000 index.



Of this benchmark, the fund holds roughly 870 securities and does a great job of spreading out assets, as no one firm accounts for more than 0.5% of the fund. However, the product is somewhat concentrated from a sector perspective, as financials (29.3%), health care (18.9%), and technology (16.2%) combine to make up a pretty sizable chunk of assets (also read For Japan ETFs, Think Small Caps).



Still, the product charges a decent 0.50% per year in fees, although volume is quite low suggesting wide bid ask spreads. However, the annual yield is rather robust, currently coming in at 3.4%, implying that it could be a yield destination for some investors in the micro cap market.



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Tickers in this Article: DES, WMCR, PSCU

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