Tag Archives: income
4 Best-Rated Diversified Bond Mutual Funds To Invest In
Diversified bond funds provide investors with a convenient and affordable option to hold a portfolio of bonds from different economic sectors. Costs incurred to create a portfolio of individual bonds would be significantly higher than investing in this class of funds. The associated risk also declines since volatility in a specific sector has only a partial effect on the funds’ fortunes. The opportunity to reinvest the income generated and a relatively higher level of liquidity also make them a secure and attractive investment. Below we share with you 4 top-ranked diversified bond mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and we expect the funds to outperform their peers in the future. MassMutual Premier Short-Duration Bond Fund (MUTF: MSTDX ) seeks high level of total return. MSTDX maintains a diversified portfolio by investing predominantly in fixed income securities. MSTDX invests a major portion of its assets in investment grade securities. MSTDX is expected to maintain a dollar-weighted average maturity of three years or less. MSTDX may invest not more than 10% of its assets in securities below investment grade. The MassMutual Premier Short-Duration Bond Fund has returned almost 1% over the past one year. MSTDX has an expense ratio of 0.52% compared to a category average of 0.81%. DoubleLine Core Fixed Income Fund N (MUTF: DLFNX ) invests the majority of its assets in securities that are expected to provide fixed income. Around one-third of DLFNX’s assets get invested in securities, including junk bonds, bank loans and credit default swaps. The DoubleLine Core Fixed Income Fund N has returned 1.4% over the past one year. Jeffrey E. Gundlach is one of the fund managers and has managed DLFNX since 2010. Voya Intermediate Bond Fund A (MUTF: IIBAX ) seeks to provide maximum total return. IIBAX invests a major portion of its assets in investment-grade bonds, including corporate, government and mortgage bonds. The Voya Intermediate Bond Fund A returned 1.1% over the past one year. IIBAX has an expense ratio of 0.66% compared to a category average of 0.82%. RidgeWorth Seix Total Return Bond Fund A (MUTF: CBPSX ) invests a majority of its assets in fixed-income derivatives, including debt securities issued by the government and its affiliates, corporate bonds and asset-backed securities. CBPSX invests in debt securities throughout the globe, including those from emerging economies. CBPSX may invest a maximum of 20% of its assets in high-yield securities that are rated below investment grade. The RidgeWorth Seix Total Return Bond Fund A returned 0.9% in the last one-year period. As of October 2015, CBPSX held 278 issues, with 10.11% of its total assets invested in US Treasury Note 2%. Original Post
Why Income Investors Should Not Ignore Preferred Stock ETFs
Preferred stocks have been quite popular among income-seeking investors due to their juicy yields but many now wonder how these securities will perform in a rising rate scenario. We believe that there is still a case for investing in these securities. What are Preferred Stocks? Preferred stocks are hybrid securities that have characteristics of both debt and equity. They have a higher claim on assets and earnings than common stock. Preferred stocks are either perpetual (without any maturity date) or have long-term maturity (30 to 50 years). Like bonds, preferred stocks are usually rated by rating agencies. Most preferred dividends have the same tax advantage that the common stock dividends currently have. However, while companies have the obligation to pay interest on the bonds that they issue, dividends on preferred stock can be suspended or deferred by the vote of the board. Why Should You Invest in Preferred Stocks? Juicy yields around 5-6% are the main attraction for investors. Further, preferred stocks have low correlations with common stocks and hence add diversification to a stock-centric portfolio. Further, these securities have much lower volatility than stocks and provide stability to portfolios. Risks Like bonds, preferred securities are sensitive to changes in the interest rates. In the event of rising interest rate, the value of these securities will fall. But I believe that in the current scenario, when interest rates are expected to stay “lower for longer,” the impact will be minimal. Preferred securities also face credit risk as the issuer may not be able to meet the claims of investors. However, both the ETFs that we have discussed below have minimal exposure to energy sector, where chances of default are higher. Many preferred securities have call provision, i.e. the issuer has the right to redeem its preferred stock or convert it to common stock, but call is usually exercised by issuers when interest rates are falling. ETFs to Consider iShares S&P U.S. Preferred Stock Index (NYSEARCA: PFF ) is the most popular and liquid preferred stock ETF in the space. It has a lot of exposure to banks and other financials, which are expected to do well in rising rate scenario. PowerShares Variable Rate Preferred Portfolio Fund (NYSEARCA: VRP ) holds variable- and floating-rate preferred stocks which reduces interest rate risk. Thus, VRP could be a nice option for income-seeking investors in the rising rate scenario. To learn more, please watch the short video below: Original Post