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]

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]

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]

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]

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.