|
|
|
|
| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
|
|
| Bonds Online |
|
|
| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
|
S&P National Bond Index
|
3.00% |
|
|
S&P California Bond Index
|
2.96% |
|
|
S&P New York Bond Index
|
3.13% |
|
|
S&P National 0-5 Year Municipal Bond Index
|
0.70% |
|
|
| S&P/BGCantor US Treasury Bond |
400.09 |
|
| More |
|
| Income Equities: |
|---|
| Preferred Stocks |
|---|
|
S&P U.S. Preferred Stock Index
|
848.03 |
|
|
S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
|
|
S&P U.S. Preferred Stock Index (TR)
|
1,701.05 |
|
|
S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
|
|
| REITs |
|---|
|
S&P REIT Index
|
174.07 |
|
|
S&P REIT Index (TR)
|
425.30 |
|
|
| MLPs |
|---|
|
S&P MLP Index
|
2,469.58 |
|
|
S&P MLP Index (TR)
|
5,428.50 |
|
|
See Data
|
|
|
|
 |
|
|
|
|
|
|
Bond ETFs Offer Yield, Stability If Bear Roars |
BY JOANNE VON ALROTH
INVESTOR'S BUSINESS DAILY
Posted 3/6/2007
Investors don't complain when the bull runs strong. But when the stock market turns and charges the matador, as it did last week, many run for the safety of fixed income.
Most familiar are individual bonds and bond funds. But a third option offers even more stability: fixed-income exchange traded funds.
Bond ETFs are portfolios of bonds that track the performance of a bond or index, such as 20-year Treasuries. They are bought and sold like stocks. Investors reap interest via monthly dividends, and any capital gains are paid out through an annual dividend.
Bond ETFs don't mature, but they reflect the particular bond index's maturity and can be shorted, traded on margin and hedged with options.
Volatility
"We're starting to see more volatility in the market," said portfolio manager Jerry Slusiewicz. "If you have a limited or no fixed-income exposure, this might be the way to go."
It costs less to buy a bond ETF than to buy varying bonds of different maturities known as laddering. There's historical transparency in pricing and you avoid fees on each individual bond trade and the spreads that are built into stocks.
Also, you spread your risk if you invest in an ETF that tracks the 100 bonds on the corporate bond index such as iShares Lehman Aggregate Bond Fund (AGG) rather than putting all your money behind one or two corporate bonds.
The buzz about whether the Federal Reserve will lower interest rates actually could make some bond funds more attractive.
Lower Rates
If you believe that the slower economy will linger for a while and the Fed will lower rates, for example, iShares Lehman 20+ Year Treasury Bond Fund (TLT) might be to your taste. Currently offering a 4.6% yield with an IBD Relative Strength Rating of 52, it doesn't have the kind of push an equity stock would. But it offers a safe haven while offering steady payout.
On the flip side, there's iShares Treasury Inflation-Protected Fund, (TIP) or TIPS, which currently pays 4.5% and has an RS of 44. "If you're in the camp that believes inflation will come back, that's a good way to go," Slusiewicz said.
If interest rates were to rise, however, a shorter-duration bond ETF would give lower interest-rate risk. One such ETF is iShares Lehman 1-3 Year Treasury Bond Fund, (SHY) which currently pays 4.1% and has an RS of 44.
Bond ETFs aren't for everyone. As evidenced by the relatively flat base on almost all, they're not for aggressive investors, Slusiewicz says. But if you want safety, a bond ETF could be your ticket.
"They're a very tax-efficient, safe way for investors to have access to markets on an extremely cost-effective basis," he said. "They're a great place to hide out."
|
|
|
|
|
|
| Partner Market Place |
|
|
|
| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
|
|
| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
Keep up with monthly, in-depth coverage of fixed income market strategies, commentary, and insights as seen by our sources. Sign up for the free BondsOnline Advisor now!
Unsubscribe here [+] |
|
|
|
|
|
|
|
|
