10.15.18
Income Investors Finally Have a Chance to Cash In
by: Carla Fried
After a decade when conservative money market funds and similar short-term investments yielded close to zero, it is now possible to earn about 2 percent with the products. Lately, the investments have fared better than popular core bond funds that track the Bloomberg Barclays U.S. Aggregate Bond Index. “The boost in yield you get from owning intermediate- and longer-term bonds is very, very low, and you are taking a lot more risk,” said Michael Fredericks, head of income investing for the BlackRock Multi-Asset Strategies group. That it's now possible to earn something on shorter-term investments “changes the calculus a lot in the way you think about things." But Kathy Jones, chief fixed-income strategist at the Schwab Center for Financial Research, said she is concerned that investors are becoming too defensive. “When I go out and talk to clients, all of a sudden everybody is sitting in T Bills or cash equivalents. ... Implicitly, that is trying to time the market,” and such behavior can hurt investor returns.
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