Over the period since we launched Global ETF Profits in March 2010, the Income & Hedges Portfolio has been our top-performing portfolio. In addition to our security selection, this portfolio benefited from investors’ flight from risk, as economic uncertainty continued to roil the global marketplace. Since inception, the Income & Hedges Portfolio has returned better than 22 percent, while our Growth Portfolio has gained about 19 percent.

We will continue our coverage of two of the Income & Hedges Portfolio holdings in my Personal Finance Fund Portfolio.

ALPS Alerian MLP ETF (NYSE: AMLP) holds a capitalization-weighted portfolio of 25 primarily midstream master limited partnerships (MLP), including names such as Enterprise Products Partners (NYSE: EPD), Kinder Morgan Energy Partners (NYSE: KMP) and Magellan Midstream Partners (NYSE: MMP).

While obviously energy-focused, the operations of most midstream MLPs are fairly diversified and largely insulated from commodity prices. Rather than being paid according to the value of the commodities they move, pipeline operators are paid by volume.

Given that midstream operators’ profitability is driven more by aggregate demand than commodity prices, I remain extremely positive on the sector for many of the same reasons I discussed in the feature article.

ALPS Alerian MLP ETF currently yields 6 percent, one of the highest yields in the ETF space. The reason for such an impressive payout is the structure of MLPs; they’re not subject to corporate-level income tax, so most of their income is passed along to investors. But this isn’t a case of questionable companies making higher distributions just to attract investors; these are strong companies that take advantage of a unique structure to maximize unit-holder returns. And many have been able to tap into relatively inexpensive financing to fund acquisitions and organically grow their businesses. As a result, payout growth in the sector has averaged between 5 percent and 6 percent over the past several quarters.

While ALPS Alerian MLP ETF doesn’t confer any tax advantages itself–due to its structure it pays corporate-level income tax and investors are subject to tax on income and capital gains–it benefits from the higher payouts MLPs are able to offer because of their favorable treatment.

Although MLPs face some short-term headwinds, the sector’s long-term growth story remains intact. We already have a better than 9 percent gain in this position, and investors still have time to pick up shares and enjoy the attractive yield of this ETF. Look for continuing coverage of this ETF in my Personal Finance Fund Portfolio.

Continue buying ALPS Alerian MLP ETF under 20.

We will also continue covering Market Vectors Intermediate Municipal Index (NYSE: ITM) in my Personal Finance Fund Portfolio.

Most muni bond indexes have been largely rangebound this year, as investors remain cautious about the state of municipal finances. Many municipalities are still engaged in broad cost-cutting programs, including reducing citizen services and trimming payrolls. While there likely will be a higher-than-average municipal default rate over the next few years–there have already been 26 so far in 2012–the risk posed by muni bonds is still extremely low relative to other fixed-income investments. Really, the only safer investment is US Treasury bonds, and those offer little opportunity for upside.

Later this year, muni bonds will also get a boost from a tighter supply of issues. Last year, municipalities redeemed about $350 billion in outstanding bonds, while issuing just $295 billion in new bonds. That trend is likely to continue this year. Redemptions and new issues had roughly equal volumes during the first quarter. But in the second quarter, it is estimated that about $140 billion in bonds will be redeemed versus just $120 billion in new issuance. That gap is expected to widen to about $30 billion per quarter during the second half of the year.

As demand outpaces supply, we should see muni bonds move higher later this year. In addition to being a play on the muni bond market’s favorable underlying demand, this ETF also offers an attractive 3.1 percent yield.

Buy Market Vectors Intermediate Municipal ETF under 25.

As with our Growth Portfolio, there is only one Income & Hedges Portfolio holding I would recommend selling now.

When I added iPath US Treasury Steepener ETN (NYSE: STPP) to our portfolio back in December, I was expecting the global economy to continue gradually improving. As such, I thought yields on US Treasury debt would rise, and the yield curve would steepen.

Unfortunately, I was much too early in reaching that conclusion.

So far this year, Europe is still struggling to address it sovereign-debt crisis, and elections held on the Continent this past weekend are likely to exacerbate the eurozone’s woes.

In France, socialist Francois Hollande ousted Nicolas Sarkozy from the president’s office, while in Greece the New Democracy party and the Coalition of the Radical Left won the largest number of seats in parliament. The winners of both sets of national elections were running on clear anti-austerity platforms, which raises doubt about whether Europe will be able to follow its current path toward resolving its debt crisis.

The European election outcomes coupled with concerns about weakening emerging market growth have pushed US stock indexes down and once again triggered a flight to safety. As a result, the US Treasury yield curve remains flat, and iPath US Treasury Steepener ETN is currently down by about 7 percent.

Given the uncertainties facing the global economy, sell iPath US Treasury Steepener ETN.