JNK Beats WIP At the Top of The Fixed Income Table

05/10/2011 0 comments

 

In order to reach your financial objectives, you must diversify. There are a range of investment alternatives that vary greatly in the degree and type of risk and potential return. The key to developing a sound portfolio is to strike the right balance between potential reward and risk, based on your financial objectives, financial situation and investment style. 


Fixed Income refers to assets that provide their owners with a fixed stream of income. Fixed income assets can be broken down into five sub-classes:

  • Government-issued securities
  • Corporate-issued securities
  • Inflation-protected securities (IPS)
  • Mortgage-backed securities (MBS)
  • Asset-backed securities (ABS)

An enormous amount of innovation continues within the world of fixed income. For the retail investor, IPS, MBS, and ABS are all relatively new additions. The U.S. leads the world in the range and depth of fixed-income offerings--particularly with MBS and ABS. Other countries are developing their MBS and ABS markets. 

Although the fixed income stream ETFs provide the best hedge against equity volatility, the returns are not high as equity and other assets. WIP, JNK & BWX are the best performers in terms of returns but the last week showed a decline.

There is a mixed trend within the fixed asset type ETFs but overall more sub-classes are up than down. We are expecting a shift in ETF’s towards international fixed income as the dollar weakens and interest rates are raised overseas

WIP fund total Net assets value is 1.362 billion with a one year return of 16.95% and a three year return is of 4.01%. The gross expense ratio is 0.50%. The total sector allocation is broken down into the following composition: Treasury 99.83% & Cash 0.16%.

JNK fund total Net assets value is 7.3 billion with a one year return of 12.82% and a three year return is of 8.21%. The gross expense ratio is 0.40% for the sector allocations please see the graph below:

 

 

 

Although the one year returns of WIP i.e. 16.95% are greater than JNK i.e. 12.82%, we prefer the longevity from JNK i.e. 8.21% within the 3 years double the time of WIP return and it is performing well in the short term too.

We track asset class movement and you can see here the fixed income table which is updated weekly.

Assets Class

Symbols

05/06
Trend
Score

04/29
Trend
Score

Direction

International Inflation Protected

WIP

6.74%

9.22%

v

High Yield

JNK

5.54%

5.68%

v

International Treasury

BWX

5.1%

6.82%

v

Long Term Credit

LQD

3.48%

2.87%

^

Emerging Mkt Bonds

PCY

3.48%

2.21%

^

20+ Year Treasury

TLT

3.38%

1.63%

^

Inflation Protected

TIP

3.09%

3.27%

v

10-20Year Treasury

TLH

2.88%

1.73%

^

Intermediate Term Credit

CIU

2.43%

2.06%

^

Intermediate Treasury

IEF

2.39%

1.65%

^

US Total Bond

BND

2.1%

1.77%

^

MBS Bond

MBB

1.92%

1.83%

^

California Muni

CMF

1.74%

1.99%

v

National Muni

MUB

1.57%

1.24%

^

Short Term Credit

CSJ

1.0%

1.09%

v

New York Muni

NYF

0.64%

0.51%

^

Short Term Treasury

SHY

0.55%

0.53%

^

Treasury Bills

SHV

0.08%

0.07%

^

 Trend score is the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).
You can get a no cost widget for any of these tables which will automatically update weekly.

 

If you are planning to shift part of your portfolio into fixed-income investments to help manage risk, you may also want to consider "laddering" these securities. This means you spread the total dollar amount of your investment among fixed-income securities with different maturities.


Symbols:  AGG, BND, SHV, SHY, IEF, TLH, TLT, TIP, WIP, HYG, JNK, PHB, CSJ, CIU, LQD, BWX, CMF, NYF, MUB, MBB, PCY, EMB 

 

 

Disclosure:

MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

 



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