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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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| More |
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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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Top Three High Yield Junk Bond ETFs - Top Yielding ETFs |
SMR - Dec. 13, 2011
With an economy that is potentially on the brink of falling apart, junk bond ETF investing probably isn’t on the forefront of most investors’ minds. Yet, products in this slice of the market have held up surprisingly well in the turmoil thanks to ultra-low default rates, yields that thoroughly outperform ‘safer’ government bond payouts, and capital gains that beat out equities. In fact, according to recent reports, high-yield corporate bonds have outperformed the S&P 500 by 5,300 basis points when looking from October 2007 to the end of November 2011. “Keep in mind that from a total return standpoint, this sector has absolutely crushed the equity market in the past four years,” said David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates. in his Breakfast with Dave report.
Thanks to these trends, the high yield space has begun to see more interest despite the floundering economic environment. This could be especially true if default levels remain at rock bottom rates; the trailing 12-month default rate was just 1.94% in September and is expected to rise to only 3.1% in the next nine months. While this is obviously a large increase, investors should note that this is still below the long-term average default rate of 4.6% according to Standard & Poors, suggesting that we are still in an environment that has few credit events (see Top Three High Yield Real Estate ETFs).
Another favorable aspect of the junk bond world is the ultra-high yields on these securities. These payouts, which can often be above 6%, are far higher than comparable Treasury bonds as well as many international government counterparts. Since default rates have been so low and the duration of these securities tends to be lower than other corners of the fixed income market, this hefty yield premium could be worth chasing for most investors in this environment (read Three Outperforming Active ETFs).
Given these favorable metrics in all three of the key aspects of junk bond investing—yield, capital appreciation, and default rates—it may now be the time to consider a bigger allocation to the sector. This could be especially true for investors seeking to boost yields or just diversify the bond component of a portfolio. Below, we highlight three excellent choices that investors have when considering an allocation to this potentially lucrative space:
iShares iBoxx $ High Yield Corporate Bond Fund (HYG)
This fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the iBoxx $ Liquid High Yield Index, a corporate bond market index compiled by the International Index Company Limited. By following this benchmark, the product has close to 470 holdings with heavy exposure to the short and intermediate portions of the curve. In fact, the weighted average maturity of the product is just 5.6 years (read ETFs vs. Mutual Funds).
For the complete article.
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| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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