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SPDR Barclays Capital High Yield Bond Message Board

  • RUNNER1200 RUNNER1200 Mar 27, 2011 4:48 AM Flag

    JNK No Longer Worth the Risk

    I didn't mind owning JNK when it was supporting 10+%, but now it doesn't make sense given the risk and the fact that T is giving me 6%. Anyone else have a better outlook?

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    • Looks like many of the REITS are starting to break-out. I also like CIM and MO.

    • I'm into REIT, too, for the high divvy.

      I bought in January & February after the ex-divvy. By the time ex-divvy came in late 3/31/11, the price appreication covered the divvy, and I sold.

      Now, in late March and the last 2 weeks, I dollar-cost averaged down, taking an educated guess these 2 REIT price will rise back up. If not, I'll hold for the 11%+ divvy.

    • I bought some agnc (an mreit) a few months ago and it did well. Now the mreit's are having problems. Sold my agnc and went into jnk. Hated to give up that fat 19% div but who knows what will happen to mreit's. Something is happening to them. Even the cadillac of the industry,agnc,is dropping in price. Had to get out to avoid further losses. But kept my other mreit's.

    • Risk compared to what? I think 7.5% in corporate bonds is lower risk than 0% in bankrupt US treasuries.

      • 1 Reply to keepingitrealinny
      • JNK is an awesome bond fund. It's 7+ Billion with short duration. The upcoming interest rate increase will hurt it for a day or two, but the 'accidentally high yield' buyers will bring it right back up where it belongs.

        Of course, diversify. I love PCEF if you're looking for income funds. It pays about 8.5% and is a 'fund of funds' of about 75 CEFs. That's extremely diversified and will balance out your concerns.

        Oh, and of course I have PHK. That's been a home run for me.

    • First time bought a junk bond in my life, a few hundred shares at 40.4 a month ago, after reading an encouraging article at Seeking Alpha (forget the title) that JNK has a convixity of 0.02%. Now reading this message board, I am not sure if I did the right thing. Do you think investing in PIMCO closed end funds such as PCn, PHK, PCM, are safer for the long run? We need supplemental income , retiring this year. Are closed end funds hard to sell to get our money back when we need it?
      Can,t go to treasury/bonds, yield too low and might lose principle when yields move up and prices go down. Any one care to comment? Thanks.

      • 2 Replies to varia_nada
      • JNK hasnt been around long enough to really give a solid answer on its safety.
        All I would say is to spread your money around in lots of places for safety.
        If you want to go with Pimco products look at their income generated each year for like the past 10 years (if possible). that will give you a decent idea of what type of income highs and lows to expect in differente economic envrionments.

      • Diversity, don't put all your eggs in one basket.

        PHK, PTY, PGF, PFF, JNK.

        All will probably go south with higher interest rates, PTY gone up more and now going down more because Gross guru status.

        Put some in REIT with divvy >10%, too with AGNC and NLY - the cream of the crop.

        Just my 2 cents.

    • I'm rather happy with this div.
      Its only $0.002 lower then last month and still higher then two months ago. For the time being it appears to have stopped its downward progression.

      With an 8.8% I dont see too many other places with a reasonable level of safety.

    • At this point in time there have been very few defaults so I don't see the added risk factor.

      When interest rates rise or inflation starts to rise HY will hold up much better than other bonds or suffer less from any steep market declines.

      AT&T is a good choice but like any other company they could have a pullback and/or cut the dividend.

      • 1 Reply to newport4q
      • You make a good point on the actual default risk. I think we as investors just assume that its a junk fund so therefore its risky.
        The top 10 holdings account for a 15.34% weight. Even if we get a default or two its not going to cripple the fund. The largest one being 3% and thats Citi. We already know that the government wont let them default.

    • as a single company, T is more risky than JNK.

 
JNK
41.33-0.01(-0.02%)3:26 PMEDT

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