High Yield Bond Funds
Closed end funds have been thriving since 2009. Facing the threat of the QE taper, the high yield closed end funds have dropped in value. The question is whether it is the right time to invest in these high-yield closed end funds yet. Personally, I think it is a great time to invest in some of these high-yield closed end funds. Based on several matrices, high yield closed end funds are attractive than mutual funds or exchange traded funds ETFs or even stocks.
Bond closed end funds are traded like bond exchange traded funds (ETFs) or regular stock. They are divided into several categories such as municipal bond fund and taxable bond fund. Municipal bond closed end fund provides tax free income from federal tax rate and possible state & local tax.
The taxable bond fund also provides interest income for investor however this income is subjected to federal income tax rate. The taxable bond fund divided into several classes such as multisector bond, government bond, mortgage bond, corporate bond, senior loan or bank loan, etc.
These top high yield bond closed end funds are selected based on its potential for income growth and capital appreciation. These bond funds are among the best performer fund for the past 5 years in its category. You will find the fund review below. These funds are great for investment during this year, 2013 as well.
Top 3 high yield closed end funds for 2014 are:
- DWS Municipal Income Fund (KTF)
- Western Asset Mortgage Defined Opportunity Fund (DMO)
- PIMCO Dynamic Income (PDI)
DWS Municipal Income Fund (KTF)
If you are interested in municipal bond, you should consider DWS Municipal Income Fund as your first choice for your 2014 investment. This top bond closed end fund uses its assets to invest in investment grade municipal debts. It has a high yield of 6.94%. The yield is distributed monthly. The taxable equivalent yield is 10.67% for the highest bracket federal tax rate.Top Closed End Funds
With $670 million of total assets, its expense ratio is only 1.15%. The fund manager is Philip G Condon since 1999. This DWS Municipal Income fund has an average UNII per share of $0.4252. This bond fund has returned 4.79% over the past 3 year and 10.88% over the past 5 year. Morningstar has ranked this top high yield closed end funds with 5 stars rating.The top 3 holdings in its portfolio are Austin Tr Var Sts Ctfs 5% 5.00 01 Jul 2032, Puerto Rico Sales Tax Fing Cor Rev 6.5% 6.50 01 Aug 2044, and Kern California High School Dist 5% 5.00 01 Aug 2030. The annual portfolio turnover rate is 40%. The AMT portion in its portfolio is only 4.32%.
Western Asset Mortgage Defined Opportunity Fund (DMO)
Another top high yield bond closed end fund for 2014 is Western Asset Mortgage Defined Opportunity Fund. The current share price is $21.64. Ranked with 5 stars rating, its objective is to provide current income and capital growth. The dividend yield is 8.34%. There are 324 bonds in its holding.This best mortgage bond fund has returned 6.40% over the past year, and 14.43% over the past 3 year. The top 3 sectors are commercial mortgage backed bonds (88%), corporate bonds (7%), and asset backed securities (4%).
PIMCO Dynamic Income Fund (PDI)
Managed by Joshua Anderson, Daniel J Ivascyn, and Alfred Murata, this PIMCO Dynamic Income fund is one of PIMCO closed end funds which is traded on discount to its net asset value (NAV).The market price is trading 7.36% discount to its NAV. It invests mainly in a global portfolio of debt obligations and other income-producing securities.This best high yield bond closed end fund has returned 15.61% over the past 1 year, and 20.02% since its inception. The top 5 sectors are brokerage, Non-Captive Cons. Finance, Restaurants, Chemicals and Technology. The dividend yield is 7.61%. You can buy this PIMCO fund from your favorite brokerages.
No comments:
Post a Comment