iShares Lehman Government/Credit Bond Fund (GBF)
-
Quote & Analysis
-
Forum
Trading Center
Loading...
Symbols:
GBF Forum Topics
- All Comments on GBF
- General Discussion on GBF
- Why I'm Against Fixed Income ETFs [view article]
- Broad US Bond ETFs [view article]
- Bond Expert: Monday Outlook [view article]
- Auction-Rate Securities, RIP? [view article]
- Auction-Rate Bonds Fail to Find Buyers [view article]
- Did FASB Scupper the Auction-Rate Market? [view article]
- The Advantages of Bond ETFs [view article]
- Short On Liquidity: Bond ETFs By Average Daily Volume [view article]
- Barclays Finally Releases New Fixed-Income ETFs [view article]
loading ...Recent GBF Articles
- Bond Expert: Monday Outlook
- Auction-Rate Securities, RIP?
- Did FASB Scupper the Auction-Rate Market?
- Auction-Rate Bonds Fail to Find Buyers
- Fixed Income ETFs Almost All Overbought
- ETFs Yielding More Than 3%
- Investing in Multi-Sector Bond Funds
- Fixed Income ETFs Largely Oversold
- Broad US Bond ETFs
- Why I'm Against Fixed Income ETFs
- Full List of Articles »
Trading Center
Hedge Fund Jobs
Job Seekers: Search jobs by category, get job alerts by email or live feed, apply online See full list of jobs »
Employers: See all recruitment options, get applications online or by email Post a job »
Why 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 Outlook [view article]
On the contrary, I think trading volume will be very heavier. I agree there will be volitility, and a tension between the bottom-seekers and those wanting to get out of their positions on price improvements.However, in the bigger picture, what has happened?...FNM and FRE have been bailed out, all our other problems remain.
So at 4pm, I expect the market to have come back to only a modest gain. Reply
Editors
General Discussion on GBF
Is this a buy or a sell? Replyes
Auction-Rate Securities, RIP? [view article]
Agree with stockbrokerfraud.com. This has been truly appalling behavior that does huge damage to investor confidence not only in these notes, not only in munis, but in all aspects of financial markets. It's obvious that retail investors assume the same decency in others that they have in their normal, everyday dealings with others. Now they have learned this is not reciprocated by the financial industry, which will damage confidence in the entire private investment system. Replyraud.com
Auction-Rate Securities, RIP? [view article]
Investors who were promised safety and liquidity will still suffer losses in the secondary markets, if ever established. Now firms are offering margin Reg T-4 lending on these instruments and have recently found religion in disclosing the risks associated with these securities, which they claim they were unaware at the time of recommendation. It is amazing how this problem has not be covered in the corporate media to any meaningful extent. ReplyAuction-Rate Bonds Fail to Find Buyers [view article]
so who is buying the high interest ars's. ReplyBitchdog
Did FASB Scupper the Auction-Rate Market? [view article]
Can you explain why your tone suggests that FASB should not implement sensible changes to accounting rules intended to make corporate balance sheets more accurate and transparent ?You should have just quit when you identified the true cause of the failures......the idea that the increased accuracy in the cash account description somehow forced corporations out of this market is ridiculous.
jbd. Reply
Auction-Rate Bonds Fail to Find Buyers [view article]
"Bren", I hope also, but this is like a tidal wave now that is unstoppable. Every act has a reaction, and no one can see clearly what the ramifications are. Had the FED not drove up rates for 17 consecutive quarters, and just left them alone, people could perhaps have made their payments, and property values would have stabilized. The FED wanted to stop the "inflation", and the result is now serious deflation in property, and inflation in everything else. Is there a worse scenario economically? ReplyAuction-Rate Bonds Fail to Find Buyers [view article]
I hope and believe that what is happening now is just a way for an overpriced housing market to correct itself ReplyAuction-Rate Bonds Fail to Find Buyers [view article]
someone has just made a filthy amount of money on this. not me, but someone. sure wish it was me ReplyAuction-Rate Bonds Fail to Find Buyers [view article]
It is about time the domino collapsed and reality sets in. The US has been living a dream for too long and the dream is now a nightmare.I am looking at the tape this AM and it seems the only safe haven is in precious metal, commodities and energy. Reply
rver
Auction-Rate Bonds Fail to Find Buyers [view article]
And I remember Paul Wessel saying bank capital reserves at $2900 billion were adequate to extinguish the sub-prime mortgage problem. Also Ben Stein noted that sub-prime was only 5% of the mortgate market and no problem in a $14 trillion economy. So much for the experts, I hope they muzzle them in the future. ReplyBroad US Bond ETFs [view article]
Does anyone know the difference between the iShares Lehman Aggregate Bond Fund (AGG) and the iShares Lehman Government/Credit Bond Fund (GBF) and the SPDR Lehman Aggregate Bond ETF (LAG)? ReplyJackson
Broad US Bond ETFs [view article]
Have we missed out any ETFs here? Or any Seeking Alpha articles that are important to understanding them? If so, please leave a comment and let us know! ReplyWhy I'm Against Fixed Income ETFs [view article]
DJ & DS: Quick note here. Just had a baby girl late Thursday and got back home now. By chance, checked out SA site. But to make things simple, please put comments/questions on my blog at thebetabrief.com so I can have all inquiries at one place. Sorry for quick get away but there's literally a scream beside me. Thanks. Reply