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Ways to Earn Up to 9% on Your Money Now

johnNjohnN
edited May 2020 in Other Investing

https://www.kiplinger.com/slideshow/investing/T052-S005-earn-up-to-9-on-your-money-now/index.html


/in addition to taking a vast human toll, the coronavirus pandemic has mercilessly infected virtually every corner of the investment world. As markets plunged and seized up, the Federal Reserve dropped its short-term interest rate to zero and began injecting trillions of dollars into the financial system to shore up credit markets and keep money flowing to beleaguered companies, households and local governments. Yields on 10- and 30-year Treasuries plummeted to record lows, and yields briefly turned negative on some short-term T-bills/


Couple good ideas presented
Enjoy

Comments

  • davidrmorandavidrmoran
    do a search for 9% in this article
  • chuck
    phyzx 9.4% when the article was written 7.02% yield as of close fri.
  • MarkMark
    Well the article title does say "up to" 9% so there's that. What if you want more? I know some, own them, but wouldn't advise them to most at this time. If I was any good at the trading game I probably would have and should have sold them but I won't until a potential loss of principal (at my cost) becomes apparent. They say nothing lasts forever.
  • Old_JoeOld_Joe
    Viewed from the disadvantage point of 80, I can assure you that's true. :(
  • davidrmorandavidrmoran
    chuck said:

    phyzx 9.4% when the article was written 7.02% yield as of close fri.

    That one outperforms FAGIX for all time periods I could see (back to 10y). Is the yield history pretty steady?

  • catch22catch22
    edited May 2020
    Hi @davidrmoran

    Kinda tough placing a standard HY fund against FAGIX for a compare. Over the period of FAGIX existence, the fund usually has an equity exposure of 15-20%. An unusual HY fund.

    PHYZX appears to be doing some other magic in the cash position with "longs" in something. I don't see anything out of the ordinary to suggest that the fund likely has had more than an average yield when compared to others in this category.

    COMPARE begin Jan. 1999
  • msf
    catch22 said:

    Kinda tough placing a standard HY fund against FAGIX for a compare. Over the period of FAGIX existence, the fund usually has an equity exposure of 15-20%. A unique HY fund.

    Unusual but not unique. WHGHX "has a neutral allocation of 80% of its total assets in debt securities and 20% of its total assets in equity securities."

    Two funds that on the surface look similar, but despite their equity sleeves and junk bonds, very different profiles. They sit at nearly opposite ends of the risk spectrum for HY funds.

    WHGHX tends to invest in higher quality junk (BB vs. category B). Perhaps as a result, WHGHX has below average volatility and below average performance, except this year, even with its equity. FAGIX in contrast, is very volatile and has had a dreadful YTD.
  • FD1000
    These articles hardly ever get the info you need/want. The most interesting are funds in the 3-6% yield where you find good risk/reward + yield.
    Over the years I find myself using many times HY Munis + Multisector/NonTrad funds, especially securitized/MBS. Many of these got hit hard in 2008 and 2020 but they will be back.

    FAGIX is an interesting fund I have watched over the years but not used. Did you know that FAGIX performed better than the SP500 for one year since the bottom on 3/6/2009?

    In 2020, SPY is better since the bottom of 3/23.
  • catch22catch22
    Hi @msf
    You're correct. I changed unique to unusual.
  • carew388carew388
    In high yield I've been satisfied with VWEHX TGHNX and MWHYX .
  • CrashCrash
    edited May 2020
    carew388 said:

    In high yield I've been satisfied with VWEHX TGHNX and MWHYX .

    There's no perfect recipe for anything in this world, including investing. I don't own any bond funds calling themselves "high yield" any longer. I looked at those three. It seems to me that for "HY" products, those dividends are rather sub-par. ...Right now, my PTIAX offers the best of my three funds' distributions, and it is closer to breaking-even in 2020 than my PRSNX or RPSIX. Yields on these funds range from 3.69 to 3.88 to 4.68.

    Which particular angles on all of this can someone point out to me?
  • FD1000
    edited May 2020
    If I invest in HY it's only for trade. HY is a hybrid product that usually doesn't justify itself. Compare VWEHX(good HY) to VBIAX (60/40 indexes) (chart) and you will see VBIAX beat VWEHX for 1-3-5-10-15 years.

    Most investors should not collect funds but use 3-7 funds and why HY doesn't have a place in my portfolio.
    The only false justification is higher yield which I never like. The first thing you should look at investment is risk/reward and only then look for higher yield, that true with stocks and bonds.
  • msf
    If I invest in HY it's only for trade. HY is a hybrid product that usually doesn't justify itself.
    We each have our own set of preferences.

    Vanguard Research put out a 16 page report last June:
    Junk or jewel? Assessing the role of high-yield bonds in a diversified portfolio
    https://personal.vanguard.com/pdf/ISGJORJ.pdf

    Its summary bullet points:
    • High-yield bonds, which represent the debt financing of companies rated below investment grade by the primary rating agencies ... carry greater issuer risk than traditional fixed income products...
    • On average, high-yield bonds have outperformed higher-quality fixed income securities. ...
    • High-yield bonds behave like a “hybrid” instrument, reflecting characteristics of both
      the equity and fixed income markets. ... We conclude that high-yield bonds are expected to improve the risk and return characteristics of a traditional balanced portfolio if funded by the portfolio’s existing equity allocation. [Emphasis in original.]
    The paper notes that HY bonds are pure debt securities, though many investors choose to see them instead as hybrids: "Although high-yield bonds are debt instruments, their return characteristics could classify them as a hybrid asset class in the eyes of many investors."

    The only false justification is higher yield which I never like.
    Vanguard apparently concurs, observing that the higher yield is not fully realized:
    The implication of this higher level of risk is that collectively, investors in high yield have not realized the reported yield in full over time. From 1987 through 2018, the average total return lagged the average yield, likely because of the loss rate associated with high-yield bond defaults...

    Another feature that can help to explain why returns have on average trailed yields is callability. ... According to Bloomberg Barclays, as of December 31, 2018, 98% of bonds in the Bloomberg Barclays U.S. Corporate High Yield Index had a call feature.
    That latter feature (callability) is shared by MBSs.

    Compare VWEHX(good HY) to VBIAX (60/40 indexes)
    Vanguard looked specifically at how HY improves a 60/40 portfolio:
    Investors who include high yield in a 60/40 portfolio should get a higher level of return for the same level of risk, and a lower level of risk for the same level of return, as they would with a 60/40 portfolio that does not include high yield
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