Searching for yield.

[nun]

Sounds like you know what you are doing. I thought you were talking about just now getting into this fund so was stating the case for what one should be thinking about to reallocate right now.

I was actually responding to the "searching" part of the thread title. Sorry for the misunderstanding but maybe it helped someone reading this.

Yes, in the title of the thread I was referring to the general search for yield as highlighted by articles that have been pushing various high yield options recently. I would never own such high yielding investments because of the risk, leverage and stuff under the hood that I don't understand.

 

[marko]

I've been very happy with my bond funds. One is a mix of bonds and a few equities the other is a high yield (yes, I know...junk bonds).

Each has paid consistent 4% and 7.5% dividends respectively for the past 20 years. With the shake out on so many companies, the default in high yield funds has dropped somewhat as well.

YMMV

 

[nun]

I've been very happy with my bond funds. One is a mix of bonds and a few equities the other is a high yield (yes, I know...junk bonds).

Each has paid consistent 4% and 7.5% dividends respectively for the past 20 years. With the shake out on so many companies, the default in high yield funds has dropped somewhat as well.

YMMV

My ER strategy is geared towards reducing my need for income rather than seeking out big dividends. So I am happy with my total bond index and intermediate corporate mix for fixed income. However, there are lots of people who see 10% plus dividends and dive right in. I'm interested in the pitfalls of that.

 

[FIREd]

However, there are lots of people who see 10% plus dividends and dive right in. I'm interested in the pitfalls of that.

Two words: value trap.

Personally, I am happy with my assets yielding ~3% (target WR), so I haven't had to reach too far for yield yet.

 

[Lsbcal]

The Vanguard Value Index Fund yields 2.93% currently. And Total Stock Market is at 2.1%.

Yield + growth, in a low interest rate environment.

 

[MichaelB]

The Vanguard Value Index Fund yields 2.93% currently. And Total Stock Market is at 2.1%.

Yield + growth, in a low interest rate environment.

Yep. And for those with the fortitude, the international ETF EFA is yielding 3.4% and most European ETFs are also above 3%.

This is the second thread on yield - this may be a contrarian sign for high yield products. Still, Ben Bernanke has committed to keeping rates low for a while longer, so there's no need to rush to the exits.

A well run global corporation should be able to create lots of opportunities when it can borrow as much as it wants at such low rates.

 

[FinanceDude]

That 2.6% is just what the fund is yielding at this moment. Of course, it does not mean the total return will be 2.6%. I hope we agree that risk/return is pretty much baked in when it comes to the bond market. As a whole the bond market is very efficient. If you are getting 5% SEC yield you are taking on a lot more risk.

Yes and no. There are some funds doing 3.5-4.5% distribution rate that are not loaded up 70% on high yield..........

 

[pb4uski]

My point is that it's part of my 50% bond allocation, I bought it a couple of years ago as I wanted to have more corporate bonds that total bond index alone would have given me. That's as exotic as I get.

+1 I did the same as Total Bond has too much gov't and insufficient corporates for my taste so Intermediate Investment Grade is ~75% of my bond allocation. I do have a 16% slug of High Yield Corporate and that is as exotic as I get on the bond side.

 

[Brat]

(THOPX) Looks like a kind of expensive option for a bond fund at 80BP annual fees.

I agree but I can't find a good short or intermediate corporate bond fund with comparable performance that is cheaper. I am open to suggestions.

 

[Brat]

Has anyone commented on Fidelity Floating Rate High Income Fund (FFRHX)?

 

[nun]

Has anyone commented on Fidelity Floating Rate High Income Fund (FFRHX)?

I'd say it's expensive and it's return comes out of riskier debt that I'd like to buy.

 

[Animorph]

Has anyone commented on Fidelity Floating Rate High Income Fund (FFRHX)?

I looked at that near the beginning of the year. It dropped a lot in 2009/9, so it didn't look too appealing to me. However, I was looking for something closer to cash than not.

 

[rsingh6675]

Please try to specify your funds

I've been very happy with my bond funds. One is a mix of bonds and a few equities the other is a high yield (yes, I know...junk bonds).

Each has paid consistent 4% and 7.5% dividends respectively for the past 20 years. With the shake out on so many companies, the default in high yield funds has dropped somewhat as well.

YMMV

There is no point in talking & preaching generalities. One must give specific example---- Some of the CEF's & Mutual funds with good yields that I have, are----
DSU
MHI
PMM
DHF
GABUX
VWIAX
PASDX etc, etc
These are the examples of dividend paying funds. I don't know if these are good for long term or not. But I don't like to talk without specifics.

 

[wolf]

There is no point in talking & preaching generalities. One must give specific example---- Some of the CEF's & Mutual funds with good yields that I have, are----
DSU
MHI
PMM
DHF
GABUX
VWIAX
PASDX etc, etc
These are the examples of dividend paying funds. I don't know if these are good for long term or not. But I don't like to talk without specifics.

Thanks, I like your direct answer. Generalities and preaching do not accomplish anything.

 

[brewer12345]

Has anyone commented on Fidelity Floating Rate High Income Fund (FFRHX)?

It is a junky loan fund. Little interest rate risk, plenty of credit risk, but safer than junk bonds. I like the asset class but it is getting pricy.

 

[marko]

There is no point in talking & preaching generalities. One must give specific example---- Some of the CEF's & Mutual funds with good yields that I have, are----
DSU
MHI
PMM
DHF
GABUX
VWIAX
PASDX etc, etc
These are the examples of dividend paying funds. I don't know if these are good for long term or not. But I don't like to talk without specifics.

Preaching! Generalities! Specifics!

"...one must give specific example...."

Gee.

 

[Brat]

The more I mull this over the better Wellesley looks. I could keep just 3 years MRDs in a short term bond fund or CDs and then fill my long term bucket with a dividend ETF or S&P index fund and be done with it.

For those not in the know we are 74 & 71.