I’m getting 7-8% on collateralized, relatively short term loans. Can you beat that?

[njhowie]

njhowie,

Everything you are talking about is reflected in the information found on the morningstar web pages. Instead of making guesses, you can compare the two funds directly and then determine which one you want to purchase.

I will be ignoring this thread for now on as it appears you just want to argue.

I apologize if I offended you, I was certainly not looking to argue, but present the facts of the significant risk profile differences between the two funds, which unfortunately you have been minimizing...all of which I did retrieve off of the Morningstar web pages - no guesses whatsoever.

We'll agree to disagree on this one.

 

[COcheesehead]

VanEck Vectors CEF Municipal Income ETF Report (XMPT) | Asset Allocation Summary

Vanguard High-Yield Tax-Exempt Fund Report (VWAHX) | Asset Allocation Summary


Lets compare XMPT and VWAHX.

Both have a BBB credit quality. XMPT has an effective duration of 8.37 years and VWAHX is 6.84.

XMPT has a 5 year total return on NAV of 7.26% and VWAHX is 5.53%.

Seems like a pretty reasonable trade off to me. An extra 1.53 years duration risk for 1.73% more total return.

There is no need to throw around scary hyperbole. Just look on morningstar or whatever and do a comparison.

They have the same credit quality. So it comes down to whether you want a little more duration risk for a little more total return. If you do, great. If you don't, great.

Me, I would take the extra 1.73% total return. It doesn't seem like much but it is when people are looking at 4% withdrawal rates. I am also willing to gamble that we will not see run away inflation, and an extra 1.53 years duration risk is ok with me.

It’s not scary hyperbole if it’s true.
The fees are high, it uses leverage, it’s duration is long so it is open to interest risk. The only thing I will correct is my statement about it being junk. It is only near junk.

It’s near term return of one year, so in a rising rate environment, is -1.71%, when others in its class like NHMAX for an example have positive returns of 6.22%.

 

[slouch]

Anyways, interested in any recommendations on ways to get yield. I have plenty of stock market exposure and am looking for ways to diversify.

If you're into speculative yields, you could look into BDC's like $GSBD, or mREITs with leverage like $MORL.

 

[underwrite]

If you're into speculative yields, you could look into BDC's like $GSBD, or mREITs with leverage like $MORL.

Good point. I haven't looked at BDCs in awhile. I should take another look. Thanks.

 

[underwrite]

Was hand carrying payments in to a small loan company for the $30k house we were buying - I'd bought it from a neighbor's son after my neighbor passed away. The son sold the loan at a discount! I would have stretched for a discounted amount. Told the man running the loan company I wanted to get on the other side of the loan process. After the loan was paid off we did some small loans; owner of that loan company sold and we went with the new company, making loans they presented to us. The loan companies were getting all kind of fees and 4 points. Hmm. We got our numbers up and visited a group making loans in downtown Portland - put a big chunk with them and they evaporated in about a year, taking our money with them. Hmm.

We continued to make loans through the loan company, but kept seeing the same faces over the years - somewhere in there we just started loaning direct to the borrowers we were familiar with. Feel our risk is reduced because we know the practices of our borrowers. We don't charge as much as we maybe could, so our borrowers come back to us.

Crazy story! Thanks for sharing. Sounds like a cool business you have.

 

[sengsational]

XMPT looks like a A ticket ride.

"A" tickets were horse and buggy, carousel, etc. "E" tickets were roller coasters and the like. I think you mean "E"?

 

[njhowie]

Over the past 3 weeks, leading up to the Fed rate hike this week, we have the following performance:

XMPT: -2.3%
VWAHX: -0.98%
NHMAX: -0.93%

I stand by my prior statements.

 

[COcheesehead]

"A" tickets were horse and buggy, carousel, etc. "E" tickets were roller coasters and the like. I think you mean "E"?

Yes(blush)

Sorry haven’t been to Disney in a long time.

 

[UnrealizedPotential]

You might take a look at REM. Or in the mortgage Reit sector AGNC. It pays monthly. But I don't know if owning a Mortgage Reit is good right now. But I do know AGNC is solid and isn't going anywhere. The current yield is a little over 11%. A lot of risk for that though. It could get ugly if rates keep rising and rise faster than they have the last few years.


You have to weigh the good with the bad.

 

[ArthurF]

Which high yield fund? Any thoughts on the low cost high yield ETF's?

 

[kyzymurgist]

Which high yield fund? Any thoughts on the low cost high yield ETF's?

I like Yeidstreet for their wide variety of alternative investments with low or zero correlation to the stock market. Two of my favorites at 10% or higher yield, are their periodic litigation finance and dry cargo vessel offerings.

For secured hard money lending, there are several funds that offer 8% and above returns with much better diversification than possible with the crowd lending platforms. I like Broadmark Capital.

And if you want lower minimums but value diversification of regions and platform risk, Alphaflow is an interesting option.

You must be an accredited investor to take advantage of all these investments but I expect many of us qualify.

Diversification is the only free lunch in investing. And with the expected future modest return based on CAPE10, I think it's prudent to have some alternative assets in the portfolio.

Even Lending Club with modest 6% yield on prime loans may be worth considering in the current environment.

But for the best ROI, it's still tough to beat rental property. The market is certainly less attractive than 5 years ago but 20% is possible if you buy right and use leverage. And don't forget all the tax benefits. However it's a business - not a passive investment.

Mike

 

[RenoJay]

I do a lot of hard money lending directly to borrowers, but have avoided Peerstreet and related sites because: 1. with buy and flip, a lot can go wrong, 2. Last I checked the “25% equity” was based on the “expected value” of the home. In my world, if someone bought the run down house for $50k, then it’s worth $50k. Period. 3. Most important, I don’t want others making underwriting decisions for me. I’ve learned this lesson the hardest a couple times. Everything starts great but once the market gets shaky, Peerstreet will start approving loans that today would seem shaky. I’d rather keep control, meet my borrowers face to face and tour the house myself. All that said, to your original question, 7-8% is a healthy fixed income yield and if you stretch for more you’ll be taking on more risk.

 

[njhowie]

Over the past 3 weeks, leading up to the Fed rate hike this week, we have the following performance:

XMPT: -2.3%
VWAHX: -0.98%
NHMAX: -0.93%

I stand by my prior statements.

Since 9/23:

XMPT: -3.16%
VWAHX: +0.36%
NHMAX: -1.22%

XMPT is clearly the underperformer, and for the reasons I previously stated. There is little reason for paying higher fees, for higher risk and getting this kind of underperformance.

 

[Retireby45ish]

I like Yeidstreet for their wide variety of alternative investments with low or zero correlation to the stock market. Two of my favorites at 10% or higher yield, are their periodic litigation finance and dry cargo vessel offerings.

For secured hard money lending, there are several funds that offer 8% and above returns with much better diversification than possible with the crowd lending platforms. I like Broadmark Capital.

And if you want lower minimums but value diversification of regions and platform risk, Alphaflow is an interesting option.

You must be an accredited investor to take advantage of all these investments but I expect many of us qualify.

Diversification is the only free lunch in investing. And with the expected future modest return based on CAPE10, I think it's prudent to have some alternative assets in the portfolio.

Even Lending Club with modest 6% yield on prime loans may be worth considering in the current environment.

But for the best ROI, it's still tough to beat rental property. The market is certainly less attractive than 5 years ago but 20% is possible if you buy right and use leverage. And don't forget all the tax benefits. However it's a business - not a passive investment.

Mike

First time poster here. Been lurking for a while. I noticed this post and was wondering what others thought of a company like Broadmark Capital. Seems like a good business plan. Other than a housing market collapse, I don’t see any major threats to their business. With returns in the 10% range they seem like a good alternative investment.
I’m just looking for non-market correlated assets for maybe 7-10% of my portfolio.

Curious what others think and asking as part of my due diligence before I take the plunge.

What a great community of people on this forum. As a 40yr old on my way to FIRE these resources have been instrumental in my planning.