As stock and bond markets keep falling, Joseph Alexopoulos has been searching for yield.

The co-founder and chief investment officer of Aequitas Wealth Management in Los Angeles says he's convinced there are still some attractive values around for investors willing to take a longer-term focus.

Putting such a strategy to work in the short term can prove challenging, admits Alexopoulos. But he points out that in times like these, not all news is bad. "We're actually finding nice dividend streams in some areas of the stock market and attractive yields in specific segments of fixed income," he said.

Alexopoulos uses exchange-traded funds for 90% of his high net worth and institutional client portfolios. The former financial advisor at Fidelity Investments and Citigroup's private bank takes a buy-and-hold, globally diversified approach to portfolio management.

His three-year-old firm slants about 60% of its holdings toward value-oriented ETFs. "Our portfolios were suffering during much of the year after the collapse of the whole Financial Services sector," said Alexopoulos.  

But he still favors the long-term prospects of many value-oriented ETFs for his investors. Alexopoulos considers WisdomTree International SmallCap Dividend Fund (NYSE: DLS) an especially appealing choice right now. "It has been pummeled recently by the U.S. dollar's advance and a general deterioration in overseas markets," he said.

In the past three months, DLS has tumbled nearly 40%. It was down more than 48% heading into Thursday.  

Inherent Buffer 

But with a yield of 6.36%, investors in DLS are getting a built-in cushion to help get them through the market's short-term gyrations, says Alexopoulos.

"It's remarkable to find such high yields in a small-cap international stock fund," he said. "If you've got some cash to put to work today and a high tolerance level—small international stocks can be very volatile. Then DLS is definitely something we think looking at over the long run."

Aequitas Wealth also is using Vanguard Value ETF (NYSE: VTV). The large-cap U.S. fund is currently yielding 4.04%, says Alexopoulos. "VTV took a bigger hit than the broader market earlier this year," he said. "But you're getting about a 60% higher yield with VTV than most S&P 500 funds. And large-cap value has been mounting a comeback lately."

Heading into Thursday, VTV had returned -40.45% so far in 2008, according to Morningstar. That was almost identical to this year's returns for the SPDRs Trust (AMEX: SPY). But while it has lost 33%-plus in the past three months, VTV has slid some 31%, marking a complete reversal from earlier in the year.

"We don't manage money around short-term technical analysis," said Alexopoulos. "To me, that's voodoo portfolio management. How do you look at a chart and walk away with some sort of understanding of what to invest in over the longer term?"

Remaining disciplined with a proper long-term asset allocation plan that fits realistic risk-adjusted goals, he adds, is more important now than ever.

That's why despite dour forecasts for Europe in coming months, Alexopoulos is sticking with the Vanguard European Stock ETF (NYSE: VGK) in client portfolios. It has a yield of 5.63% at the moment.

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