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The Procter & Gamble Company Message Board

cartorman 1 post  |  Last Activity: Jun 20, 2016 7:29 PM Member since: Dec 12, 2008
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    by frotbo May 1, 2016 8:39 PM
    cartorman cartorman Jun 20, 2016 7:29 PM Flag

    Frotbo: After looking at a number of alternatives, I decided to abandon the "Funds Route" and buy individual bonds through my discount broker. There are a number of considerations, e.g. G.O. vs Revenue type bonds, and ensuring you get mostly investment grade bonds, etc., but I have now gotten to a place where I can sleep at night. There were too many fingers in the cost and yield to have one of the larger outfits build a portfolio for me, with me footing the bill. I don't own private equity bonds so they don't affect my AMT. Because I plan to hold then to maturity, I also don't have to worry about interest rate moves affecting the NAV with a run on the fund or issues like PR affecting the value of the bonds themselves. You will pay a premium (should be kept around 6%) for the bonds, but if you're keeping them for a relative time, the payback time is not long. Also don't expect the yield to mirror RMUNX. That fund has a large number of "non-investment grade" bonds that carry a greater degree of risk providing that yield. If you stick with Funds, stay away from those carrying PR bonds. Once Congress finalizes their proposal, those bonds are going to realize a "permanent" haircut. Good luck.

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