Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Three Income Funds That Will Persevere

By

Income investing, at least the most successful income investing, is a long-term prospect, so it pays to find solid investments that will outperform their peers year in and year out.

PrintPRINT

My dad held up his hands and shrugged his shoulders. "But what can I do in a yield-starved environment?" he asked.

"Plenty, actually," I told him.

In fact, there are a wide-range of choices available for income-hungry investors who are struggling to overcome the Fed's disastrous zero-interest rate policies. Obviously, though, the suitability varies widely depending on individual liquidity, credit, and yield requirements.

Here are some of the more interesting options I've been exploring lately:

Near-Term Tax Free Fund (NEARX)
From US Global Investors, this fund is billed as an alternative for investors who want safety but are willing to take on a bit more risk.

I like the fact that the fund is a very consistent performer, with more than ten years of positive numbers in the record books. I also appreciate that the fund has been around since December 1990, particularly since I view it as a possible substitute for traditional money market funds or even CDs.

Morningstar gives NEARX four-star ratings overall in the three-, five-, and ten-year categories, while Lipper bestows five stars for preservation, expense and tax efficiency.

The fund's goal is pretty straightforward. It invests in municipal bonds with short-term maturities issued by state and local governments nationwide. Examples include holdings from the City of Chicago, the Commonwealth of Puerto Rico, and the City of San Antonio Texas Water System Revenue.

The strategy is pretty simple. With at least 80% of its net assets invested in investment-grade munis, it's exempt from federal income tax-including my personal "favorite" middle-class eviscerator, the alternative minimum tax.

Maturities are kept to five years or less to avoid the volatility associated with longer-dated issues and the threat of rising interest rates. The average maturity is 3.4 years, while the average duration is slightly lower at 3.06.

30-Day SEC Yield: 1.03%
Expense Ratio: .45%

Note: Don't be unnecessarily put off by the 1.03% yield. Remember, this is a tax-exempt fund. On a tax-equivalent basis, the yield jumps to 1.77% for an individual in the 35% tax bracket. That's actually higher than the yield on ten-year Treasuries as of press time.

< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE