I hold both a preferred share index fund (the Canadian version of PFF) and a selection of 5-year rate reset preferred shares from Canadian pipelines, utilities and a couple banks. It’s hard to find yields that match the 5-year rate resets without taking on a lot of duration. Bit of a free lunch, IMO.
I would view the 5-year default risk of a pipeline (at least the ones I own) as near zero, and yield of near 6% on some of these bad boys is pretty tasty for the term.
I can’t offer much, but I’m thinking about adding a high yield ETF. WE use HYG at work for our tactical ETF strategies, despite a 0.5% expense ratio. In an improving economy I don’t see too much risk with adequate diversification.
There are a lot of unconstrained absolute return products coming online, ETF and mutual fund. I haven’t looked too closely into any of them, but some are designed to be relatively duration neutral and put out decent fixed income type returns.
Be aware of the interest rate risk. You could always go LC or Prosper and get high yields with monthly amortizations and short maturities (3 yrs generally) – both of which soften the blow from rising rates. But it’s unsecured consumer debt, so don’t know what your risk appetite is.
I already told you, look into LC. Also, some MLPs have fairly high yields but got to understand the risks involved. I recently went long VNR, my yield (if distribution doesn’t get cut, which is a risk this year) based on my cost basis is something like 9%.
no on junk. yes on mlps. they got really nice industry reports out there wells, kayne anderson, etc. most important things to focus is their div growth, thats where the majority of gains are.
True enough. I didn’t bother looking at the yield. They’re just the best MLP manager around so I threw their name out there. Who needs yield when you’re making 30% a year?
Plus they’re local guys so I’m supporting the home team.