Hi eM, Re: Stability and High Yield..............
It's a mixed bag at best. If one's 100% invested in the high yield funds near the top, then it becomes a very painful experience when the NAV and share price start downward. However, if one can continue to average down in share price, NAV and average up in yield, then it's not so earth shattering. Assuming the dividends stay steady, the lower the price, the higher the effective yield.
In my case, in my taxable account I pull the yield for living expenses. In my IRA its there to generate cash since I've not been pulling a salary for 22 years and haven't been able to contribute to an IRA. So, since the funds won't be sold unless there's a yield crisis, I don't mind being able to average down.
The JGG is government oriented in income and subject to yields world wide on sovereign debt; CHY is corporate debt and therefore subject to the winds of the economy. NRI is based in real estate and REITS so has both the FED and the economy as its influences. Still for the three, the overall yield is good.
I think the yields on these can only drift a certain distance from prevailing govt bonds of shorter duration. After that people, even when somewhat fearful of capital loss become attracted by the higher yield. The spread is pretty large right now and the generaly stock market nor the real estate market don't appeal to the average investor right now. So, support should start to build for the high yield funds.
All three funds are currently selling at discounts to their NAV. As stability returns, we should see the Price/Share start to switch back to even or slightly above the NAV.
Best regards, Tom
Port Washington, WI 53074
