Keith Fitz-Gerald- Money Morning - Only the News You Can Profit From.
Keith'S LATEST HEADLINES
Article 2 Friday, August 31, 2012Three Top-Notch Choices for Yield-Starved Investors
My dad held up his hands and shrugged his shoulders. "But what can I do in a yield-starved environment?" he asked.
"Plenty, actually," I told him.
In fact, there are a wide-range of choices available for income-hungry investors who are struggling to overcome the Fed's disastrous zero-interest rate policies.
Obviously, though, the suitability varies widely depending on individual liquidity, credit and yield requirements.
Here are some of the more interesting options I've been exploring lately:
Near-Term Tax Free Fund (NEARX): From U.S. Global Investors, this fund is billed as an alternative for investors who want safety but are willing to take on a bit more risk.
I like the fact that the fund is a very consistent performer with more than 10 years of positive numbers in the record books. I also appreciate that the fund has been around since December 1990, particularly since I view it as a possible substitute for traditional money market funds or even CDs.
Morningstar gives NEARX 4-Star ratings overall in the 3-, 5-, and 10-year categories, while Lipper bestows 5 stars for preservation, expense and tax efficiency.
The fund's goal is pretty straightforward. It invests in municipal bonds with short-term maturities issued by state and local governments nationwide.
Examples include holdings from the City of Chicago, the Commonwealth of Puerto Rico, and the City of San Antonio Texas Water System Revenue.
The strategy is pretty simple. With at least 80% of its net assets invested in investment-grade munis, it's exempt from federal income tax — including my personal "favorite" middle-class eviscerator, the alternative minimum tax.
Maturities are kept to five years or less to avoid the volatility associated with longer-dated issues and the threat of rising interest rates. The average maturity is 3.40 years, while the average duration is slightly lower at 3.06.
30-Day SEC Yield: 1.03%
Expense Ratio: .45%
Note: Don't be unnecessarily put off by the 1.03% yield. Remember this is a tax-exempt fund.
On a tax equivalent basis, the yield jumps to 1.77% for an individual in the 35% tax bracket. That's actually higher than the yield on 10-year Treasuries as of press time.
iShares Morningstar Multi-Asset Income Index Fund (IYLD): From iShares, this fund is a more aggressive choice for income-hungry investors. It tracks the underlying Morningstar Multi-asset High Income Index, which is itself comprised of equity, fixed income and alternative income exchange-traded funds (ETFs).To continue reading, please click here...
Banking 7 Friday, August 24, 2012Five Ways to Consistently Bank Gains and Manage Winning Trades
Keith Fitz-Gerald 5 Monday, August 20, 2012What Skirt Lengths Tell You About The Stock Market
Stocks 4 Friday, August 17, 2012Q&A with Keith: Why Bill Gross is Wrong About Stocks
Government 72 Wednesday, August 15, 2012What the Last Roman Emperor Would Tell President Obama Today
Stocks 10 Tuesday, August 7, 2012Sorry…Facebook (Nasdaq: FB) is Still Only Worth $7.50 a Share
Global Investing 6 Friday, August 3, 2012What 700 Million People in the Dark Says About Investing in India
Keith Fitz-Gerald 3 Tuesday, July 31, 2012How to Protect Your Portfolio Against One of Wall Street's Greatest, Best Kept Secrets
Keith Fitz-Gerald 6 Friday, July 27, 2012Four Ways To Not Lose Money In A Bubble Economy
Stocks 4 Friday, July 13, 2012Five "Extra" Moves to Make Right Now to Protect Your Financial Future