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Appel's high income fund favorites


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by Marvin Appel, editor Systems & Forecasts

We are putting more of the cash in our high income model portfolio to work; we're buying Wisdom Tree Emerging Markets Equity Income (DEM) and Nuveen High Yield Municipal Bond Fund (NHMAX).

The Wisdom Tree Equity Emerging Markets Equity Income ETF is less volatile than the iShares Emerging Market Index ETF, and has held up better during market declines.  DEM got its start near the last market peak, in July 2007.  

Since then, it has gained 6.4%/year with a 52% drawdown, similar to the drawdown of U.S. blue chip stocks. EEM has been fl at over the same period, and suffered a 66% drawdown.  


In my view, high yield bonds offer the potentially best balance between risk and reward in 2012 (and most other times too).

This fund yields 6.4%, federal-tax free. Its holdings are mostly long-term bonds maturing in more than 20 years.  

About half the portfolio has no credit rating. Holdings are spread around the country. Most are bonds backed by specific projects rather than general obligations. The fund had a 13% drawdown at the start of 2011 from which it has fully recovered.

Learn more about this financial newsletter at Marvin Appel, editor Systems & Forecasts.



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