Many fixed-income funds have fallen sharply ever since the Fed Chairman Bernanke talked about "tapering." The iShares 20+ U.S. Treasury ETF (TLT) has lost 17% since May. Yet retirees still need income form their investments and many investors don't want to be too exposed to the stock market. What should they do? That's the subject of my recent interview with TheStreet.com.
click here for TheStreet.com article
In my interview I was asked for my favorite ETFs for income and long-term investing. I believe income investors must include dividend-paying equities, but I limited my choices to fixed-income ETFs. Here are the two I chose:
PowerShares Senior Loan Portfolio (BKLN). This is one of the most popular ETFs in 2013, gathering $3.6 billion in assets. BKLN yields 4.6 percent and provides some protection against rising rates because it invests in floating-rate bonds. Because most of the bonds are not investment grade, the risk to this fund is a slowing economy.
iShares US Dollar Emerging Market Bond ETF (EMB). Rising interest rates led to selling in most fixed-income funds and for many this selling is deserved. But not in all. I believe the selling in emerging market bond funds is overdone. EMB is the largest emerging market bond fund with $4.1 billion in assets and it primarily hold U.S. dollar denominated government debt, much of it investment grade. It yields 5.3 percent.
--David Vomund is an Incline Village-based fee-only money manager. Information is found at www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.
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