Vanguard Long-Term Bond ETF (BLV)
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- All Comments on BLV
- General Discussion on BLV
- Bond Expert: Friday Outlook [view article]
- A 360 View of Returns (July 2008) [view article]
- Three Bond Classes: Year-to-Date Returns [view article]
- Why I'm Against Fixed Income ETFs [view article]
- Bond Expert: Monday Wrap [view article]
- Long and Junk Bond ETFs: Stepchildren of Fixed Income Investing [view article]
- Broad US Bond ETFs [view article]
- Questioning The Value of Bond ETFs [view article]
- Muni Bond ETF Yields Holding Steady [view article]
- Nuveen Global Gov't CEF: Opposites Are Attractive [view article]
- Vanguard Offers Four New Bond ETFs [view article]
loading ...Recent BLV Articles
- Bond Expert: Friday Wrap
- Bond Expert: Friday Outlook
- Bonds Rally, But for How Long?
- Three Bond Classes: Year-to-Date Returns
- Bond Expert: Monday Wrap
- A 360 View of Returns (July 2008)
- Replicating Portfolios with ETFs
- Muni Bond ETF Yields Holding Steady
- Time to Increase Credit Risk Exposure
- Long and Junk Bond ETFs: Stepchildren of Fixed Income Investing
- Full List of Articles »
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Bond Expert: Friday Outlook [view article]
The trend in yield is saying that fear at the end of every day is the dominant emotion. No one trusts the weekend convocations? Who is on the roster awaiting the gentle processes of the regulator? Wachovia follows WaMu I guess. In the end this can not be good for housing market, or have we stopped worrying about MBS/CDS now that the Congress is fixing things? ReplyBond Expert: Friday Outlook [view article]
Some Wachovia bonds are trading around midday at 60 and even 50 cents on the dollar, for notes with 5-6 months to run. Dealer yields 155-306%. Note that Wachovia is still rated investment grade by the agencies. But after WaMu and inaction in Washington... ReplyA 360 View of Returns (July 2008) [view article]
job well done and very easy to follow ReplyThree Bond Classes: Year-to-Date Returns [view article]
Brett: A good observation but the question is why? Why do high grade municipal bonds on the intermediate and long term part of the curve out yield Treasurys?Why has the intermediate portion of both the Treasury and muni curve out performed the long end? The muni/treasury relationship has created what I feel are rare opportunities in muni bonds. If you want to put on an abritrage trade then you can buy PZA (a muni ETF) and buy TBT ( a short treasury ETF) and wait for the spread to collapse.
Reply
Three Bond Classes: Year-to-Date Returns [view article]
It is a nice graph which says that fear is running the markets these days, but you have not seen anything yet. Treasuries will become even more valuable when equities dive and fear grips the traders. I will sell then and of course, I am short too. I wonder if PM will come in out of the cold? ReplyWhy I'm Against Fixed Income ETFs [view article]
All Index funds are risky, especially income funds. Use Managed Closed End Funds instead. Here's some recent research with real ife investment portfolios:Good News For Income Investors
Looking for good news in today's markets is like searching for the proverbial needle in a haystack. Needless to say, practically all investment grade equities and nearly all closed end funds that specialize in providing regular recurring monthly income have been reduced in market value by this prolonged correction. The quake has spread in all directions from its financial epicenter, and the mounting doom and gloom has taken its toll on even the most rational investment decision makers. Try to keep in mind that the purpose of income investing is the income that your portfolio produces not an increase in the securities' market values---
So here's the good news (and for anyone with a 40% or higher income asset allocation, or an income portfolio being used for living expenses), it really is very good news. Base income levels, from the beginning of the stock market correction in June '07 until mid-July '08, have barely changed at all. In fact, they have probably risen in properly asset allocated portfolios. I have examined the regular recurring monthly income distributed by 56 taxable income CEFs and 61 tax-free income CEFs, and the conclusions are pretty remarkable.
In spite of the fact that the vast majority of my favorite monthly income producers are lower in market value than I would like, the amount of income they are distributing to shareholders has not moved lower meaningfully--- even though the Federal Reserve has reduced interest rates by approximately 60% during the past twelve months. Here are the numbers: (1) 48% of the taxable-income CEFs are distributing precisely the same amount per share as they did a year ago. Fourteen issues have increased their payouts and fifteen have reduced them.
The net result is a decrease of just fourteen cents (2.5% of the total monthly payout). The average current yield on the portfolio, as of mid July '07, is 9.86% without considering any capital gains distributions. Additionally, the group is selling at market prices that reflect an average discount of nearly 11% from NAV. Is that special or what? The bonds, preferred stocks, government securities are priced 11% below their current market values.
(2) The numbers are similar with regard to the 61 tax-free income CEFs: 46% have not altered their payout over the past twelve months; eighteen have reduced their payout slightly, and 15 have increased the monthly dole. The net difference for the group over the past year is less than one cent, or a percentage change of two-tenths of one percent. Remarkable. This group is selling at an average discount from NAV of 9.1% and has a current tax-free yield of 5.51%.
(3) Of 117 individual issues, about half have produced stable income. The others have accounted for a total payout reduction of less than 15 cents--- a measly 1.7%. Why is this amount of little consequence? Two reasons really.
First of all, a properly asset-allocated income portfolio does not disburse all of the base income it receives, so there is income available to reinvest in more shares of income producing securities. This process assures a growing cash flow to calm your fear of rising prices. The other reason is a bit more hypothetical. The Fed has lowered rates significantly, a process that normally produces higher prices for income securities. Eventually, those lower interest rates (even if global pressures convince politicians to take back some of the reductions) should produce higher prices (i.e., profit taking opportunities) in these securities.
Admittedly, even if your asset allocation has been fine tuned for years, lower portfolio market values in this area make stock market valuation shrinkage feel even worse. But the value of stable cash flow becomes painfully clear for investors who misguidedly depend on capital gains for their spending money. Properly asset allocated portfolios contain enough base income generators to pay the bills. The purpose of capital gains is to produce proportionately more base income generators.
The purpose of this email is simply to bring some needed sunlight into an investment environment that is far gloomier than I think it needs to be. If you want the details, you'll have to request them personally.
Steve Selengut
www.sancoservices.com
www.kiawahgolfinvestme.../
Professional Portfolio Management since 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"
Reply
Bond Expert: Monday Wrap [view article]
John, thanks for the article, I'm trying to learn more about bonds in general. Do you also cover High Income and Tax Free's? I'm curious if the one is too risky now, and, or if it is too soon to get into the second? ReplyBond Expert: Monday Wrap [view article]
you dress up simple fear in very swanky motives:" hoping for a rate cut in the future?" Do they really invest on a hope such as that. I read your opinions and I appreciate the attempt to personify the bond buyers as real, living, breathing beings. They are not. In another life they would be bottom eaters or body snatchers like Pimco' undertakers who sort thru the dead (mortgages) to see what might be salvaged. Another's need to borrow becomes an opportunity for the scroungers. thanks for trying. ReplyLong and Junk Bond ETFs: Stepchildren of Fixed Income Investing [view article]
Good News For Income InvestorsLooking for good news in today's markets is like searching for the proverbial needle in a haystack. Needless to say, practically all investment grade equities and nearly all closed end funds that specialize in providing regular recurring monthly income have been reduced in market value by this prolonged correction. The quake has spread in all directions from its financial epicenter, and the mounting doom and gloom has taken its toll on even the most rational investment decision makers. Try to keep in mind that the purpose of income investing is the income that your portfolio produces not an increase in the securities' market values---
So here's the good news (and for anyone with a 40% or higher income asset allocation, or an income portfolio being used for living expenses), it really is very good news. Base income levels, from the beginning of the stock market correction in June '07 until mid-July '08, have barely changed at all. In fact, they have probably risen in properly asset allocated portfolios. I have examined the regular recurring monthly income distributed by 56 taxable income CEFs and 61 tax-free income CEFs, and the conclusions are pretty remarkable.
In spite of the fact that the vast majority of my favorite monthly income producers are lower in market value than I would like, the amount of income they are distributing to shareholders has not moved lower meaningfully--- even though the Federal Reserve has reduced interest rates by approximately 60% during the past twelve months. Here are the numbers: (1) 48% of the taxable-income CEFs are distributing precisely the same amount per share as they did a year ago. Fourteen issues have increased their payouts and fifteen have reduced them.
The net result is a decrease of just fourteen cents (2.5% of the total monthly payout). The average current yield on the portfolio, as of mid July '07, is 9.86% without considering any capital gains distributions. Additionally, the group is selling at market prices that reflect an average discount of nearly 11% from NAV. Is that special or what? The bonds, preferred stocks, government securities are priced 11% below their current market values.
(2) The numbers are similar with regard to the 61 tax-free income CEFs: 46% have not altered their payout over the past twelve months; eighteen have reduced their payout slightly, and 15 have increased the monthly dole. The net difference for the group over the past year is less than one cent, or a percentage change of two-tenths of one percent. Remarkable. This group is selling at an average discount from NAV of 9.1% and has a current tax-free yield of 5.51%.
(3) Of 117 individual issues, about half have produced stable income. The others have accounted for a total payout reduction of less than 15 cents--- a measly 1.7%. Why is this amount of little consequence? Two reasons really.
First of all, a properly asset-allocated income portfolio does not disburse all of the base income it receives, so there is income available to reinvest in more shares of income producing securities. This process assures a growing cash flow to calm your fear of rising prices. The other reason is a bit more hypothetical. The Fed has lowered rates significantly, a process that normally produces higher prices for income securities. Eventually, those lower interest rates (even if global pressures convince politicians to take back some of the reductions) should produce higher prices (i.e., profit taking opportunities) in these securities.
Admittedly, even if your asset allocation has been fine tuned for years, lower portfolio market values in this area make stock market valuation shrinkage feel even worse. But the value of stable cash flow becomes painfully clear for investors who misguidedly depend on capital gains for their spending money. Properly asset allocated portfolios contain enough base income generators to pay the bills. The purpose of capital gains is to produce proportionately more base income generators.
The purpose of this email is simply to bring some needed sunlight into an investment environment that is far gloomier than I think it needs to be. If you want the details, you'll have to request them personally.
Steve Selengut
www.sancoservices.com
www.kiawahgolfinvestme.../
Professional Portfolio Management since 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"
Reply
A 360 View of Returns (July 2008) [view article]
Finally, a universal overview that gives the reader direction for areas to research for future investment. Great job! ReplyA 360 View of Returns (July 2008) [view article]
Thank you, very helpful. Replying
A 360 View of Returns (July 2008) [view article]
very good job Richard, it gives a sectoral - global view, I learned a lot with the summary! Challenging times ReplyQuestioning The Value of Bond ETFs [view article]
Nathan,you sound like a real winner, so I guess Ill listen to you and not John, should I buy morningstar or a bond fund?
Reply
Editors
General Discussion on BLV
Is this a buy or a sell? ReplyThe Wind
Muni Bond ETF Yields Holding Steady [view article]
I have a bunch of the CEFs and am very happy with them. They've been looking pretty sad lately but are starting to turn around now. All the CEFs I have are still giving regular dividends, none have given capital yet (since I've had them) so I figure I'm still winning. I love them! Reply