(GVI)

All Comments on GVI

  • commenter
    sanserve
    Aug 19 08:52 AM
    My Website
    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
  • commenter
    SeekingAlpha
    Editors
    Apr 06 05:21 AM
    My Website
    General Discussion on GVI
    Is this a buy or a sell? Reply
  • commenter
    CSMITH543
    Dec 30 08:10 PM
    Seeking the Sweet Spot: Intermediate-Term ETFs [view article]
    Thanks Ray. Great article. Reply
  • commenter
    CSMITH543
    Dec 30 08:08 PM
    Seeking the Sweet Spot: Intermediate-Term ETFs [view article]
    Thanks Ray. Great article! Reply
  • commenter
    Ralph F
    May 31 02:51 AM
    Broad 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)? Reply
  • commenter
    David
    Jackson
    May 01 03:44 AM
    My Website
    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! Reply
  • commenter
    Richard Kang
    Apr 28 09:33 AM
    My Website
    Why 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
  • commenter
    dma
    Apr 26 07:30 AM
    Why I'm Against Fixed Income ETFs [view article]
    Richard

    For individual investors, there seems to be no effective way to access either the "absolute return" or "private equity" categories you rightly point out as being a huge part of the success of the large endowment investors. That leaves us with cash, stocks, bonds, and real assets (mostly REITs, possibly some commodity plays). Within that restricted universe, bonds could easily end being 10-20% of the portfolio simply for diversification.     Reply
  • commenter
    David
    Jackson
    Apr 26 05:53 AM
    My Website
    Why I'm Against Fixed Income ETFs [view article]
    Excellent article, Richard.

    But what about the iShares Lehman Short Treasury Bond Fund (SHV)? Isn't it just a very convenient and cheap way to buy short term Treasury notes that would actually make sense for a lot of people?     Reply
  • commenter
    JohnB
    Mar 13 12:21 PM
    The Advantages of Bond ETFs [view article]
    Don't forget Vanguard's upcoming Bond ETFs, etf.seekingalpha.com/a... Reply
  • commenter
    Dan Hector
    Mar 12 01:37 PM
    The Advantages of Bond ETFs [view article]
    Thanx for the article and the link the Von Alroth article. Do you know if any one has published a comparison of the costs of owning a Bond ETF vs the direct purchase of a bond portfolio?

    It seems to me that to justify the MER on the ETF - which is annual - the MER must be lower than the difference in bond yield spread the ETF manager should be able to achieve compared to a retail investor (ignoring commissions on the ETF and assuming only treasuries in the portfolio so we can assume away default risk). This comparison would also vary depending on the average duration (a measure of transactions) of the bond portfolio.

    It would be interesting to see this kind of comparison.     Reply
  • commenter
    mahesh reddy
    Mar 12 11:49 AM
    The Advantages of Bond ETFs [view article]
    thanks!.........for the info......Mahesh Reddy Reply
  • commenter
    reginald
    browne
    Feb 14 10:03 AM
    Short On Liquidity: Bond ETFs By Average Daily Volume [view article]
    liquidity isn't dicated by trading volume, one should determine the liquidity of the underlying asset that comprise the ETF. Reply
  • commenter
    David
    Jackson
    Jan 13 04:21 PM
    My Website
    Barclays Finally Releases New Fixed-Income ETFs [view article]
    Very interesting; thank you. I wonder whether there's room for muni bond ETFs given how many muni bond CEFs there are, and how State-specific that market is. Reply
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