Fixed income investors who listened to Wall Street earlier this year and bought bonds have been left holding the bag. Rates have yet to peak, and yields have continued to move higher, lowering the value of any bonds the investors already held.
So, what should income investors do now?
With so much uncertainty still surrounding the path of the global economy and interest rates, conservative investors may just opt for parking funds in short-term Treasury bills that currently yield more than 5.25%.
Pimco Income Strategy Fund
An easy way to diversify the fixed income portion of your portfolio is through a closed-end fund like the PIMCO Income Strategy Fund (PFL). Run by one of the best-known names in the fixed income space, the CEF offers exposure to varying credit types, credit qualities, and regions of the world.
Here is a brief description of the fund overview pulled from Pimco’s website.
Employing a multi-sector approach, the fund seeks high current income consistent with the preservation of capital by investing in a diversified portfolio of floating and/or fixed-rate debt instruments. The fund has the flexibility to allocate assets in varying proportions among floating- and fixed-rate debt instruments, as well as among investment grade and non-investment-grade securities.
In addition, the fund will not invest more than 20% of its total assets in securities that are, at the time of purchase, rated CCC/Caa or below by each ratings agency rating the security. The fund’s duration will normally be in the short to intermediate range (zero to eight years).
Finally, yield is just one component of the…
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