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| 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. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Junk Bonds: Ticket to a Higher Yield |
FOX BUSINESS - April 5, 2011 - By Constance Gustke
Looking for solid returns that weather interest rate fluctuations?
For investors with a greater appetite for risk, high-yield corporate bond funds are one possibility. The yield is the draw, hovering around 7% versus 1.7% for a five-year certificate of deposit in early April 2011, according to Bloomberg Businessweek and Bankrate's Interest Rate Roundup. Also known as junk bonds because they have lower ratings than investment-grade bonds, their higher interest rates come with more risk of defaulting.
Conversely, the high rate also protects your investment when interest rates rise and bond prices fall, as the economy chugs along. Why? As corporate balance sheets strengthen, stocks do well and so do high-yield corporate bonds.
High-yield corporate bond funds have low volatility and good long-term returns. The reason: Historically, junk bonds offer higher yields than comparable Treasuries.
"Essentially, they're hybrid securities," says Shane Shepherd, head of fixed-income research at Research Affiliates in Newport Beach, Calif. "If 2011 is a reasonably good year for the economy, high-yield bond funds will do well."
Take the Higher-Rate Cushion
Conversely, other fixed-income investments are usually clobbered by rising interest rates because they don't have the higher-rate cushion.
The biggest risk is credit-related. Junk bonds usually have poor credit ratings of "BB" or lower versus higher-rated, investment-grade bonds, according to investment researcher Morningstar Inc. So, they're more likely to default than investment-grade bonds.
Corporate bond default rates now are typically only 2% to 3% annually, says Andrew Gogerty, senior mutual fund analyst at Morningstar. "During the crisis, they were 10%," he says.
Still, their return is better. From 1987 to 2006, high-yield corporate bonds had only one negative year for total return, compared to three for investment-grade bonds, according to an analysis by the financial magazine, Investment News. The higher-yield cushions return when interest rates spike. Conversely, investment-grade bonds currently sport yields of only 3.5%.
Read more: http://www.foxbusiness.com/personal-finance/2011/04/05/junk-bonds-ticket-higher-yield/#ixzz1IkoA0000
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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