| 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)
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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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Creating the Perfect Portfolio: Fixed Income |
Seeking Alpha - August 1, 2011 - By Larry Meyers
I began this series of creaing the perfect porfolio with an overview of asset allocation, followed by large cap growth stocks, large cap value, mid cap growth, mid cap value, and small cap stocks. You can find them all here. Today I’ll be filling out the portfolio with fixed income, commodities, and international securities.
As it happens, I don’t have a lot of time to investigate individual bonds. There are a few corporations that have strong balance sheets that still have lingering high-yield bonds from tougher days, but for bonds, I stick entirely to ETFs and mutual funds.
High-yield bonds are themselves volatile and risky, so I only allocate 2% of the portfolio to them, and chose the SPDR Barclays Capital High Yield ETF (JNK). The ETF yields a sizable 8.25%, has a minimal expense ratio of 0.31%, and has an 3-year average annual return of just over 10%. The top holdings include bonds issued by CIT Group (CIT), AIG, and HCA. Companies like CIT are what you'd expect to find in a junk bond fund. CIT, of course, went through some very dicey times during the financial crisis. The good news is that they've recovered.
I’m not fond of municipal bonds these days, given all the budgetary troubles of the states. I’ve allocated 2% to iShares S&P National Municipal Bond ETF (MUB). I’m allocating 2% to the Fidelity US Bond Index (FUBFX), which yields 2.94%. Besides US Treasuries, the fund also holds a large position in Fannie Mae (FNMA.OB) bonds, presumably because the fund believes the US will back those bonds.
I also want 2% international bond exposure – despite the troubles in the international debt markets – so I’m choosing the SPDR Barclays International Treasury Bond ETF (BWX). The ETF has some volatility, offering the potential for modest capital gains. It’s up 5.89% YTD.
I’m not wild on domestic bonds as a whole these days, which is why I’m putting 6% into preferred stocks. These securities offer more safety than bonds do, have a modest potential for capital gains, but they depend on the overall health of the company that issues them. The best part for fixed income fans, however, is they yield anywhere from 5% to 9%. The SPDR Wells Fargo Preferred Stock ETF (PSK) is my choice here. It offers a great yield of 6.68% and is also up 5.60% YTD. Top holdings include preferred stock issued by Barclays PLC (BCS), HSBC Holdings (HBC), Wells Fargo (WFC), and AT&T (T). Financials often have extensive preferred stock classes available. What I love about these holdings is that companies like Wells Fargo, which has well over a trillion dollars in assets, is a solid bank despite the financial crisis. AT&T is obviously not going out of business anytime soon. With preferred stock, we aren't concerned with growth (AT&T's is anemic), but with a solid balance sheet (AT&T's generates around $15 billion in free cash flow annually).
Rounding out fixed income, I’m putting 3% into utilities, 5% into real estate, and 5% into commodities and natural resources. iShares S&P Global Utilities ETF (JXI), yields 4% and gives me international exposure. I have knowledge of several individual REITs, but am playing it safe by choosing Vanguard REIT ETF (VNQ), which yields 3.28% and has returned 10% YTD. Its top holdings include Vornado Realty Trust (VNO), to the tune of 15% of the ETF's holdings. Vornado managed to stay flat on cash flow during the crisis, and put out $250 million in FCF last year.
For the complete article.
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| Stuff to look at |
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S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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