Bank Loan Funds

[yakers]

My MIL has a fund she is closing out and wants something safe with a reasonable return. She had this in a Symetra annuity which is being closed at no cost, was returning about 4%. The Capital One CD rate is 4.75%, her financial ‘advisor’ at Washington Mutual is recommending a Hanford Floating Rate Trust(HFLIX) which is paying 6.1% right now and this fund needs to be held for 1 yr or there is a 1% penalty.
This seems pretty reasonable, she should not need the funds for a year or more and this is a good rate and it looks fairly safe although not FDIC anything.. Are these bank loan funds a reasonable thing for her to hold? This is about 20% of her financial assets, not counting her home which she is in the process of selling.

[Darryl]

HSBC online savings account is paying 5.05%. No fees and no wire fees to transfer in or out (transaction time is 3 days).
I use one to hide money from myself (any trick I can think of to make me believe I am broke) and to move money between different bank & CU accounts without paying their wire fee.

[megacorp-firee]

Quote:

Originally Posted by Darryl HSBC online savings account is paying 5.05%. No fees and no wire fees to transfer in or out (transaction time is 3 days). I use one to hide money from myself (any trick I can think of to make me believe I am broke) and to move money between different bank & CU accounts without paying their wire fee.

Darryl, let me offer my services ... I'll make sure you won't will have difficulty, finding you dough

[calmloki]

I've plugged $$ into FNBOdirect - a savings account paying 6% on up to 1 million $, rate good till Sept 28. Short term money with pretty quick access and no penalty for early withdrawal. FDIC insured up to $100,000. I like not being locked in at a rate for a long time, though a longer guaranteed rate on their part would be nicer....

[clifp]

Be careful with the Hartford fund, it is basicallly an intermediate term junk bond fund which invests in below investment grade variable interest rate loans to corporations, average credit quality is B-BB.

[Olav23]

http://www.latc.com/2006/09/20/business/business3.html

[brewer12345]

Quote:

Originally Posted by clifp Be careful with the Hartford fund, it is basicallly an intermediate term junk bond fund which invests in below investment grade variable interest rate loans to corporations, average credit quality is B-BB.

I agree. Bank loans get a good rap because they generally did well during the junk marfket collapse in 2002-2003, but in the intervening years many stupid bank loans have been made to junky borrowers.

I would investigate agencies, especially the Federal Home Loan Bank's bonds. They are backed by the feddle gummint (and not public/quasi-independent like Fannie) and generally offer a spread over comparable treasuries. They are also exempt from state and local income taxes.

[Darryl]

Quote:

Darryl, let me offer my services ... I'll make sure you won't will have difficulty, finding you dough

Mega-Corp, very kind of you and I am tempted to accept but I am thinking I may have too many accounts and should drop a few.

[Arif]

Quote:

I've plugged $$ into FNBOdirect - a savings account paying 6% on up to 1 million $, rate good till Sept 28. Short term money with pretty quick access and no penalty for early withdrawal. FDIC insured up to $100,000. I like not being locked in at a rate for a long time, though a longer guaranteed rate on their part would be nicer....

ditto. I think the rate drops to 5.XX% after the 6% teaser. Still not to shabby.