Written by David Fabian, April 18th, 2017
Treasury bonds continue to be a stalwart position among income investors and those who opt for credit quality over yield or other characteristics of fixed-income. Treasuries benefit from the highest credit rating possible and are backed by the full faith of the U.S. Government. They are also the most directly susceptible to interest rate fluctuations and would perform poorly during a secular period of rising rates.
One attractive way to own Treasury bonds is through a diversified exchange-traded fund (ETF). This vehicle creates the flexibility to directly hone in on a certain maturity or index methodology in an extremely low-cost and liquid package.
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Written by David Fabian, April 07th, 2017
Many investors are making the right choice to build their core portfolios around low-cost, liquid, and diversified ETFs geared towards dividend paying stocks and bonds. These funds provide transparent exposure to a broad range of asset classes without the drag of high expenses.
While this core exposure is important, there may also be a desire to further diversify your holdings towards alternative investment styles with a penchant for higher yields. This is the foremost objective behind ETFs that invest in a basket of closed-end funds (CEFs). Read more
Written by David Fabian, March 21st, 2017
Small cap stocks are traditionally known as centers of growth in the global capital markets. These companies often demonstrate greater risk due to their diminished market footprint. However, they also offer compelling performance and diversification dynamics for investors with a higher risk tolerance.
Most exchange-traded funds that track this segment are focused on broad swaths of the small cap category. They typically own hundreds, if not thousands, of individual stocks with market capitalization’s of less than $2-$3 billion.
Written by David Fabian, March 13th, 2017
Preferred stocks offer the distinction of being unique hybrid instruments with qualities of both stocks and bonds. In that manner, they offer healthy dividend yields alongside a favored position in the capital structure of many companies that issue these securities.
The reason company’s issue preferred shares are to raise capital from investors that are seeking an attractive yield without adding traditional debt (bonds) that carry strict maturity dates and covenants. Preferred stocks can also be “callable” from the issuer, who has the right to redeem them at a certain price or time at their discretion. Read more
Written by David Fabian, March 07th, 2017
Rising interest rates are making many bond fund investors nervous about the prospects for weakening future returns and unstable risk dynamics. This fear is putting some fuel behind ETF strategies that short Treasuries or sectors such as bank loans that have historically performed well in a rising rate environment.
The PowerShares Bank Loan Portfolio (BKLN), which invests in a basket of floating rate notes and senior loans, has accumulated more than $2.4 billion since the U.S. election. That confidence has so far been rewarded with a steadily rising price trend versus the volatility that has pervaded most aggregate bond benchmarks.
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