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Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 4:05 pm
by I Shrugged
I'm the trustee of a charitable remainder trust, and I have a specific need for a high yield bond or ETF or BDC that yields at least 7%. Believe me, I know the problem with that number. Without getting into all the whys and wherefores, I'll say that the trust does have other investments. The settlor of the trust has outlived his life expectancy by quite a bit (go him!), and in the FED's suppressed rate world, it has made it tough to keep the distributions going without eating into principal. Bonds mature or get called, and the reinvestment opportunities are not yielding anything close to what we need. What see: reinvestment risk, lol.
I understand the risks at that yield. But does anyone have any pet ideas I can look at? Currently we hold some Ares Capital (ARCC), which is a highly regarded business development company (BDC) yielding 8.5%. They are a financier of mid-market companies. I could buy more but I want to diversify if possible. We also have Pimco High Income Fund which is "yields" 12%, although it's consuming itself. Hell, the whole portfolio is a house of cards if we get another credit meltdown. But I'm trying to squeak through this and need another investment since our Govt Motors 6.9% bond got called.
Ideas?
Re: Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 4:07 pm
by Libertarian666
I Shrugged wrote:
I'm the trustee of a charitable remainder trust, and I have a specific need for a high yield bond or ETF or BDC that yields at least 7%. Believe me, I know the problem with that number. Without getting into all the whys and wherefores, I'll say that the trust does have other investments. The settlor of the trust has outlived his life expectancy by quite a bit (go him!), and in the FED's suppressed rate world, it has made it tough to keep the distributions going without eating into principal. Bonds mature or get called, and the reinvestment opportunities are not yielding anything close to what we need. What see: reinvestment risk, lol.
I understand the risks at that yield. But does anyone have any pet ideas I can look at? Currently we hold some Ares Capital (ARCC), which is a highly regarded business development company (BDC) yielding 8.5%. They are a financier of mid-market companies. I could buy more but I want to diversify if possible. We also have Pimco High Income Fund which is "yields" 12%, although it's consuming itself. Hell, the whole portfolio is a house of cards if we get another credit meltdown. But I'm trying to squeak through this and need another investment since our Govt Motors 6.9% bond got called.
Ideas?
What happens if you can't find such a unicorn?
Re: Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 4:15 pm
by Pointedstick
TDAmeritrade shows me some terrifying A-rated munis yielding 7% and more:
Re: Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 4:23 pm
by Libertarian666
None of those have "yield to worst" of 7% or more.
Re: Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 6:13 pm
by Ad Orientem
Check out Yahoo's bond screener.
http://screener.finance.yahoo.com/bonds.html
I set the search for 7% with no other limits and sorted by yield with these results...
http://reports.finance.yahoo.com/z1?b=1 ... =-1.000000
Re: Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 6:20 pm
by I Shrugged
Thanks AO, that's interesting.
I have found some conservative BDCs (that's an oxymoron) yielding 7.6 or so.
Re: Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 6:33 pm
by Libertarian666
How about these "sure things"?
http://www.bloomberg.com/quote/BGRE:IND
(The question, of course, is what you would be sure of.)
Re: Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 6:43 pm
by Ad Orientem
Honestly... I type this with trembling fingers, if you want high yield, Greek sovereign bonds MIGHT be worth a hard look. But you need to understand a few things...
* Greece is bankrupt. There is no way they can pay off what they owe.
* But they are part of the EU and the rest of the EU seems determined, for now, to maintain the fiction of Greek solvency.
* The question then is how long can this last?
* Greek bonds are denominated in Euros so you are also dealing with currency risks.
I would look at any move into Greek debt as purely short term and highly speculative (meaning risky as hell).
Re: Need high yield bond or ETF or BDC
Posted: Tue Aug 27, 2013 7:14 pm
by I Shrugged