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MarketWatch linked an interesting article from Barron's today. Usually a Barron's piece will be blocked to non-subscriber's, but this one let me read thru. It pointed out some very nice high-yielding Mutual Funds, with yields in the 8% range.
I hope the link is still open....I found some of these Funds to be of interest.
Chasing yield can be so dangerous..especially now.
Look at GLQ , up 40% in 90 days ..these are going to plunge just as fast eventually, and you won’t know when most likely.
Personally I don’t think this is a good time to swing for the fences . I think it is more a time to start to conserve those gains ..not by fleeing to cash but by betting on more outcomes with a portfolio than just prosperity.
It may be time to increase the quality of the holdings ...there is just to much conflicting data to bet solely on just prosperity continuing
Last edited by mathjak107; 02-11-2021 at 03:12 AM..
Well, I didn't like some on their list that rely on Option Writing or Global Electric Utilities. But for a portion of my Fixed Income Allocation, I might go for the one based on US Infrastructure Stocks that's paying a 10.8% yield. Still researching these.
Nothing is good or great if you have free markets. The Fed is no longer buying bond ETFs. They are buying bonds in the open market to allow banks to front run their purchases and mark up the bonds. Buying the ETFs mainly benefits Blackrock which is already managing their assets.
The problem is the last year high yield returned about the same return as a total bond fund despite the fed and the higher interest they pay .
That makes them not a great risk vs reward choice anymore ...they are so closely aligned to the moves in stocks too.
I held hyg the competition to JNK since March and did ok but I sold it last month
Difference now is the FED has interest rates extremely low where as they did not a year ago until 1 month later when covid started the whole panic in March.
And the FED has stated they plan to keep the FED fund rate at 0-0.25% until at least 2023 and maybe even 2024 and beyond as long as inflation stays low.
Plus the income from bond funds is taxed at W2 income rate where as with qualified dividends, it is taxed more like capital gains if held long enough.
It seems like almost all dividends are qualified as long as they are U.S companies except for REITs.
Yes the stocks could no hard if broad market does but broad market pays little to no dividend and is so overvalued right now and makes no sense. And is just mostly capital appreciation which is often a greater fool on the other end buying hot companies that are unsupported by their fundamentals.
I'd much rather go in high dividend yeild stocks than broader market.
Broader market is dramatically overvalued and high yield dividend stocks are far less overvalued if at all and many even still undervalued or their dividend yield would not be so high.
Irrelevant what the fed does with rates ..investors have been bidding high yield bonds lower in value offsetting the higher rates they may pay .
Despite the fed , despite lower rates , despite the higher yields , all you got for your money the last year is the same return a total bond fund gave you with a much higher quality portfolio
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