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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)
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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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Investments that can add some spice to your portfolio |
HeraldTribune.com - August 17, 2009 - by Robert Stepleman
Most investors have at least a rudimentary understanding of the roles that common stocks and fixed interest-rate bonds have in a portfolio. But there are other less well understood investments that also can play important roles in a portfolio.
These roles can vary from being an integral part of a core stock and bond portfolio to the more limited role of essentially being insurance against foreseeable but unlikely economic occurrences and the even more dangerous unforeseeable ones.
ne underused asset that should be considered for a core holding is "master limited partnerships," or "MLPs." They typically own energy assets like natural-gas and oil pipelines and storage operations.
MLPs trade just like stocks but they have important differences. The most important thing to investors is that they pay a significant portion of their profits as distributions that are partly tax-deferred. These reduce the MLP's cost basis and thus taxes do not have to be paid until the investment is sold.
Unfortunately, MLPs report distributions each year on a K-1 instead of a 1099, and these tend to come later than 1099s and are more complex.
MLPs should not be held in tax-deferred individual retirement accounts because some of the distribution may come from something called "unrelated business income" and will be taxable even though it is held in the IRA.
Finally, since these are partnerships, investors unlike those owning stock in corporations are not shielded from additional liability beyond their investment. Thus, there is a very small probability they could be held accountable for an MLP's actions.
MLPs tend to pay "dividends" about 3 percent higher than the interest-rate on a 10-year Treasury bond. Currently, they are even higher.
Among the many available that are worth further investigation are Suburban Propane Partners (SPH), Linn Energy (LINE), Plains All America Pipeline (PAA), Boardwalk Pipeline Partners (BWP), Energy Transfer Equity (ETE) and Williams Pipeline (WMZ).
An asset that can play a role in an investor's portfolio midway between core and insurance is variable-rate preferred stocks. These are preferred stocks. That means that unlike common stocks they have only limited voting rights. But they are higher in the capital structure than common stocks. That means investors may still receive dividends even if the common stock's dividend is suspended.
The key reason these play an insurance role is that their dividend varies with some index outside the control of the issuer. These indexes rise with increases in general interest rates and thus offer protection against increased inflation.
These preferred stocks tend to pay slightly lower dividends than similar quality fixed-rate preferred stocks. However, the cost for the "insurance" is currently a bargain.
Several among the many available that are worth further investigation are Metlife Preferred A (MET-PA), Bank of America Preferred E (BAC-PE) and Goldman Sachs Preferred A (GS-PA). The first two pay dividends of at least one dollar.
An asset that has become more popular lately is gold. There are about 15 exchange-traded funds, or "ETFs" that allow investors access to gold. The most popular being the ETF called SPDR Gold Shares (GLD). Recall that ETFs are like index funds that trade on a stock exchange.
In my view, gold should be classified as pure insurance and not a core investment.
Broad-based commodity investments also can play an inflation insurance role in a portfolio. They too should not be considered as core investments.
There are many ETFs they can fulfill the role. For example, one of the largest is PowerShares DB Commodity Index Tracking (DBC). A 5 percent portfolio allocation would not be unreasonable.
Investors should generally avoid ETFs that invest in a single commodity like natural gas.
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