Income Opportunities In CEFs And Emerging Markets

Quant vs Traditional InvestorsBy Andyhill8 (Andy Hill) [Public domain], via Wikimedia Commons

Closed-end funds and emerging-market debt offer opportunities for income investors. We also look at Vanguard’s most recent announcement about its bond ETF and what to expect from the FOMC this month.

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Closed-End Funds an Important Consideration for Income-Oriented Investors (WealthManagement.com, August 29)

Closed-end funds (CEFs) are typically actively managed and offer income-producing advantages and diversified income. “Closed-end funds are one of the most efficient investments for building, growing and sustaining the ongoing income investor’s need in retirement.” Because of stable asset bases, CEFs are also advantageous in specialized and alternative asset classes “such as less liquid or smaller capitalization securities and markets, real estate and private placements.”

What Is the Best Way to Invest for Income? (Morningstar, August 25)

“Demand for income remains strong thanks to an increasing number of retirees, record low interest rates, lengthening life expectancies and the dwindling use of annuities.” Emerging-market debt continues to offer income investors opportunities, however, “the sustainability of its recent rally must be carefully considered.”

Vanguard Continues to Boss the Bond Game (Barron’s, August 22)

With Vanguard continuing to “dominate the bond game,” the asset management company announced it will launch a new exchange-traded fund in the December-end quarter of this year. According to Vanguard, this approach “will allow for better liquidity and lower expenses immediately.” This announcement came after a statement earlier in the month by Vanguard pointing to other changes occurring in its bond department.

How Will the End of QE Affect the Bond Markets? (AGG) (ETF Daily News, August 23)

The Federal Open Market Committee (FOMC) “is expected to announce the formal start of tapering at its Sept. 20 meeting, with Treasury and possible agency or mortgage-backed security reductions expected to happen in October.” The author of this article proposes several strategies to deal with the expected tapering cycle including a “duration barbell” strategy, non-core spread products and floating-rate products.

Global Dividends Hit Three Year High – Where to Invest for Income (Money Observer, August 22)

According to a survey, the UK was the sole region to see a year-on-year headline decline in dividend payments while global payouts hit a quarterly record. “The UK was the worst-performing region on a headline basis, seeing dividend payments slide by 3.5 percent; both emerging markets and North America saw double-digit growth.” For income investors, mining is an ‘under-appreciated’ sector that offers opportunities as well as “life assurance, which provides the combination of a good starting yield and good dividend growth.”

Article by Anna Sachar, Advisor Perspectives

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