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FYI: (I highly recommend preferred stocks or funds for stability and income. I held PFF for many years, selling to use proceeds to fry other fish.)
Preferred stocks – a high-yield asset that’s typically referred to as a stock-bond “hybrid” because it has characteristics of each – are treading water this year after a strong showing in 2017.
I have owned NPSAX, off & on, through the years. Currently, I do not own this fund as its total return (nav expansion) can not cover its distributions this results in a negative total return year-to-date. I'm thinking this is due to a rising interest rate environment where a good number of income securities are having a difficult time maintaining their value while meeting their income distributions.
In reviewing NPSAX's Moringstar report I am finding that through August 7th it has had a negative ytd total return of -1.63%. So, even though it has a nice yield its loosing principal value and is not covering its yield resulting in a nav contraction. On the other hand my money market mutual fund GBAXX has a positive ytd total return of 0.94%. With this, I've been reducing my fixed income positions if they can not keep pace (or out perform) my money market mutual fund.
With this, I'm building cash over buying fixed income securities. The exception, for me, is in a bank loan fund that I own along with some hybrid income funds where their nav's are be maintained (or even growing) while meeting their income distributions.
Hi @Starchild, for what its worth . I have owned NPSAX, off & on, through the years. Currently, I do not own this fund as its total return (nav expansion) can not cover its distributions this results in a negative total return year-to-date. I'm thinking this is due to a rising interest rate environment where a good number of income securities are having a difficult time maintaining their value while meeting their income distributions.
In reviewing NPSAX's Moringstar report I am finding that through August 7th it has had a negative ytd total return of -1.63%. So, even though it has a nice yield its loosing principal value and is not covering its yield resulting in a nav contraction. On the other hand my money market mutual fund GBAXX has a positive ytd total return of 0.94%. With this, I've been reducing my fixed income positions if they can not keep pace (or out perform) my money market mutual fund.
With this, I'm building cash over buying fixed income securities. The exception, for me, is in a bank loan fund that I own along with some hybrid income funds where their nav's are be maintained (or even growing) while meeting their income distributions.
Appreciate the comment @old_skeet. Sort of a curiosity for me at this point. I'm 43 and more in accumulation mode as opposed to adding more fixed, but doesn't hurt to investigate future plans. Looks like most fixed income is down this year, but I'm in it for the long haul. My only fixed is PONAX and I'm sticking with it.
Hi @Starchild, Indeed PONAX is a great fund and thus far this year it too is feeling the effects of rising interest rate headwinds as its total return ytd is -0.30% according to Morningstar. The fixed income investing climate is just plain tough on many fixed income investors at this time. Myself being one of them. Wishing you the very best with your investing endeavors.
Hi @Starchild, Indeed PONAX is a great fund and thus far this year it too is feeling the effects of rising interest rate headwinds as its total return ytd is -0.30% according to Morningstar. The fixed income investing climate is just plain tough on many fixed income investors at this time. Myself being one of them. Wishing you the very best with your investing endeavors.
Again, thanks for the input! PONAX is a fairly new investment for me and nice to hear good things about it from more experienced investors.
Comments
I have owned NPSAX, off & on, through the years. Currently, I do not own this fund as its total return (nav expansion) can not cover its distributions this results in a negative total return year-to-date. I'm thinking this is due to a rising interest rate environment where a good number of income securities are having a difficult time maintaining their value while meeting their income distributions.
In reviewing NPSAX's Moringstar report I am finding that through August 7th it has had a negative ytd total return of -1.63%. So, even though it has a nice yield its loosing principal value and is not covering its yield resulting in a nav contraction. On the other hand my money market mutual fund GBAXX has a positive ytd total return of 0.94%. With this, I've been reducing my fixed income positions if they can not keep pace (or out perform) my money market mutual fund.
With this, I'm building cash over buying fixed income securities. The exception, for me, is in a bank loan fund that I own along with some hybrid income funds where their nav's are be maintained (or even growing) while meeting their income distributions.