PHK - Your opinion please

[retire2020]

I've about 50K cash in my account earning almost nothing. My friend keeps telling me to buy PHK as it has almost 12% yield and made up of different bonds so lesser risk than stocks. My idea is to use this cash incase of emergency only or when market dips and I need cash. I'm willing to take 5-10% dip with this and he thinks when equity goes down bonds usually go up or go down much lesser than stocks. Any advise or suggestion?

 

[braumeister]

A quick glance at M* tells me I would definitely stay away.
But I assume you've taken those factors into consideration.

For an emergency fund, I'd have second thoughts if I were you.

 

[rbmrtn]

It is a high yield fund that will act more like a stock than bonds. It is also trading at a high premium to NAV. It dropped 70% during 2008.... not a good emergency fund

 

[retire2020]

It's too good to be true. My friend's argument is that it kept paying 12C/share every month even through worst market of 2008-2009 despite the price drop of 70%. He has obviously done well holding for past seven years but I do not think it's right for me to jump in at current share price.

 

[Dash man]

Emergency funds should be in an insured savings account or CD. I wouldn't recommend it being considered as an investment. It's there so you don't have to sell investments when the market is down and you have an emergency.

 

[Tortoise]

Unlike treasuries and muni bonds, PHK will likely move with the stock market. It has a high expense ratio of 1.05%. I would not buy. I would certainly advise against using as an emergency fund holding. When the next emergency hits, the money may not be there.