The idea would be something that would earn a nice yield over time and continually put money in my pocket. Rough idea would be something like 70% fixed income (mostly bank loan etfs and some US government bonds and corporate bonds etfs) and 30% equity (large cap stocks that have some nice dividend yields like JNJ, P&G, Unilever, KMB, ABT). I’m sure at least a few of you have something like this. Any input? Any mistakes I should avoid? Thanks!
you are a little late to the game unless deflation comes on strong… the 10yr is at 2.60… Gundlach’s doubleline fund (DBLTX) is the best way to go now. He’s in mortgages yielding 15% or so. Significantly less interest rate risk than treasuries earning zip
Just do a dogs of the dow portfolio and roll your yields every year if you’re gonna be passive. I think it’s a pretty safe 6% yield play.
ASSet_MANagement Wrote: ------------------------------------------------------- > Just do a dogs of the dow portfolio and roll your > yields every year if you’re gonna be passive. I > think it’s a pretty safe 6% yield play. I own a lot of large cap stocks in other accounts so I want to be in mostly credit. But thanks for the idea.
my portfolio is made up of ~40% Muni CEF’s. I am not in the top bracket and don’t have a state income tax, but still calculated it to be beneficial for my family. Multiple funds have current yields in the 6-7% range- this is for insured, but levered funds. Of course there is market risk if you are worried about the MV of the CEF itself- especially considering the leverage (the rates these funds pay is approaching 0 right now), but if you are expecting to hold and collect the income you should be fine. If the account is not tax sheltered I’d stay away from a lot of the FI funds considering where the Muni yields are. There are also multiple equity income funds that technically pay lower rates but I often fount turnover to negate that, and I’m personally didn’t have the funds to create my own diversified portfolio. Just a thought of course, your situation is surely unique to mine 
What do you make of NLY? Div yield is >15% yet the company appears to be very high quality. Anyone know this company in detail? As for the substantive point of an income portfolio - I think you want to be hedged against inflation in the future somehow. Bond performance has been outstanding over the past 25 years as interest rates have collapsed. Strong probability of mean reversion over the next 10 years so you don’t want to get burned.
Carson Wrote: ------------------------------------------------------- > What do you make of NLY? Div yield is >15% yet the > company appears to be very high quality. > > Anyone know this company in detail? > > As for the substantive point of an income > portfolio - I think you want to be hedged against > inflation in the future somehow. Bond performance > has been outstanding over the past 25 years as > interest rates have collapsed. Strong probability > of mean reversion over the next 10 years so you > don’t want to get burned. Its a levered portfolio of MBS. Similar to Redwood Trust
What are the risks? Share price volatility is low (even though Q4 2008) and the div yield is phenomenal. Seems too good to be true. What’s the catch?
Carson Wrote: ------------------------------------------------------- > What do you make of NLY? Div yield is >15% yet the > company appears to be very high quality. > > Anyone know this company in detail? > > As for the substantive point of an income > portfolio - I think you want to be hedged against > inflation in the future somehow. Bond performance > has been outstanding over the past 25 years as > interest rates have collapsed. Strong probability > of mean reversion over the next 10 years so you > don’t want to get burned. Re your last paragraph: I definitely agree. That’s why I’d hold more bank loan CEFs than bond etfs.
There is certainly risk. I think the vol will be commensurate with interest rate vol and the factors that effect the MBS market, such as prepay expectations. The portfolio is levered up it looks like about 6:1 so something that dings the portfolio for 5% could ding the shareholder for 30%. I would read their commentary and conference calls to see if you agree with their strategy.
There is certainly risk. I think the vol will be commensurate with interest rate vol and the factors that effect the MBS market, such as prepay expectations. The portfolio is levered up it looks like about 6:1 so something that dings the portfolio for 5% could ding the shareholder for 30%. I would read their commentary and conference calls to see if you agree with their strategy.
I think I will take a look at it in more detail. Who’d have thought a firm investing in MBS with leverage would survive Q4 08 unscathed? Its share price took a very modest hit relative to financials generally. And now it offers a 15%+ yield. Interesting.
^ they are mostly agency mbs, so there was a ton of money to be made at the end of 08 and during 09. They are really bright people and write great commentary. DBLTX is still a better option, IMO
Just listen to Gary Schilling and long 30 yr T Bonds.
MLPAX!