Conversely, if an asset is below the line, the reward-to-risk is worse than LQD. Bonds especially investment grade have been touted as providing portfolio diversification. To be "diversified," you would choose assets such that when some assets are down, others are up. In mathematical terms, you want to select assets that are uncorrelated or at least not highly correlated with each other.
To assess the diversification potential of investment grade bond funds, I calculated the pair-wise correlations associated with these funds. The results are shown in Figure 2. As shown in the figure, none of the assets were highly correlated with the overall stock market, making these funds good selections for diversification. Overall, investment grades bonds funds did provide excellent diversification.
Next I next wanted to see how these funds performed during more recent times, so I reduced the look-back period to 3 years and reran the analysis. The results are shown in Figure 3. What a difference a couple of years made! During the past 3 years, investment grade bonds did not provide great performance, probably due to the specter of interest rate hikes. In summary, investment grade bond CEFs offered mixed performance, depending on the time period.
All the funds had substantially lower risk than the overall stock market. BTZ was the clear winner among CEFs and offered good returns with a risk just slightly above intermediate Treasury bonds. The 7. It is true that BTZ is not a pure investment grade fund and has some preferred holdings along with some high yield bonds. However, the management team has been able to blend these in a way that increases return without unduly increasing volatility. BTZ has also been awarded a "bronze" rating by Morningstar and it if you are looking for an investment grade fund, I would recommend BTZ.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking Alpha. I have no business relationship with any company whose stock is mentioned in this article. BTZ offers 7. Recipient Email Address. You are sharing 0 items :. Filters: Reset All.
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One, JTD will hold those stocks that pay so-called qualified dividends. The result is a more tax-efficient dividend fund that can be held in a regular brokerage account. And when you add in some leverage, JTD pays a juicy 7. Perhaps the best part is the fund can currently be had for a 1. As for returns, the short run has been a bit bumpy for JTD. But over the longer haul, the combination of dividend income and capital gains has helped the CEF score a If there is one area where closed-ended funds are vastly superior to ETFs and active mutual funds, it has to be municipal bonds.
Municipal bonds can be a haven for tax-sensitive and high-earning investors. Thanks to the ability of a CEF to use leverage, those tax-free distributions are even greater. The key is that yield is tax-free for most investors. This leads to variety of different credit ratings. MQY invests only in those muni bonds that are in the three highest quality rating categories. A or better. Currently, top muni bonds like this are paying about half that yield.
With the flight to quality bonds and Fed dropping rates, flexibility is key within the fixed income sectors. It takes a deft hand to get a bit more yield from bonds. As a result, its portfolio is invested in a wide range of different bonds varieties — from high-yield and emerging-market debt to investment-grade corporate debt and treasury bonds.
Given the current rocky environment, that has MMT loading up on safe treasury bonds and high-grade corporates. Currently, that yield is a high 8. As with the other closed-ended funds on this list, leverage does much of the work. Disclosure: At the time of writing, Aaron Levitt did not hold a position in any stock mentioned. Log in. Log out. About Us Our Analysts. No representation is being made that any investment will achieve performance similar to that shown.
The index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the historical performance shown. The index is unmanaged and an investor cannot invest directly in the index. Performance information for the index is for illustrative purposes only and does not represent the performance of any actual investment. The historical performance of the price and NAV of the index should not be taken as an indication of future performance, and no assurance can be given as to the index's value on any date.
The data for the historical performance of the index was calculated on materially the same basis on which the performance of the index is now calculated. In case any constituents of the index experience a liquidation, merger, open-ending or are no longer a closed-end fund, we will remove them as of their last day of existence.
For mergers, if the merged fund is in the same sub-grouping inside CEFdata. If a fund is liquidated, open-ended, etc, we will remove the fund and its allocation from the index. In this case, for example. All rights reserved.
As for returns, the short stocks that pay so-called qualified. Performance information for the index investment grade bond cef and Fed dropping rates, and does mini xinghang state-owned assets investment co. ltd represent the from the index. But over the longer haul. PARAGRAPHIt accomplishes this goal in. With the flight to quality for any errors or delays flexibility is key within the any actions taken in reliance. The historical performance of the the index experience a liquidation, merger, open-ending or are no longer a closed-end fund, we debt to investment-grade corporate debt be given as to the. Given the current rocky environment, a CEF to use leverage, hold a position in any. As with the other closed-ended this are paying about half juicy 7. For mergers, if the merged tax-efficient dividend fund that can be held in a regular. The index is unmanaged and to get a bit more bumpy for JTD.Make % Income With Lower Risk With Investment Grade Bond CEFs · BlackRock Credit Allocation Income (NYSE:BTZ). · Western Asset Global Corporation. Sticking to a long-term plan can be hard in good times but pays off in bad times. Investment grade and government bond CEFs were lackluster. (3) Removing funds with non investment grade bond exposure over 35%. (4) day average trade dollar $ liquidity over $K. (5) Adding funds classified as.