Fixed Income Managers?

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Jan 4, 2007 10:19 pm

I have several good prospects...over 500k in either money markets or

cds...Im trying to pitch them actively managed fixed income portfolios..sep

managed accounts no funds..Im looking for ny state specific muni managed

accts..Ive been looking in Nuveen and ING but their 06 #'s are tough when

someone is getting 5 percent plus in a CD...anyone else have any ideas or

similar situations???

Jan 4, 2007 11:14 pm

ORNAX, take a look....

Jan 5, 2007 12:04 am

"... their 06 #'s are tough when someone is getting 5 percent plus in a CD..."


NY? Call it a combined 35%... Did they do worse than 3.25%?


Taxable Equivalent Yield.


BTW... if the answer is yes... the client is better off in the cds.


Mr. A

Jan 5, 2007 12:11 am

Right now, fixed income is a TOUGH sell.  Even if they are getting a better yield, you must net out the advisory fee versus being in a CD.


I have several accounts with Soverign Advisors, and I am only charging 40 bps, of which SA gets 20, then it gets ran through my grid...


Might as well keep them in CD's and stay close to them until yields get better IMHO.

Jan 5, 2007 12:50 am

YOU should manage the fixed income portfolio. The fees make it a difficult sell.

Jan 5, 2007 6:31 am

I agree with all the previous posters - Fixed Income is a tough area right now.  Yields are so low.


If you're looking for alternatives, you may wish to learn about the Canadian Oil royalty trusts.  These are similar to US REITS, but instead of investing in real estate, they invest in producing oil fields.  Like a REIT, they are exposed to market risk.  They are currently yielding around 11-15%.


These trusts just took a very major hit.  The new Canadian prime minister ran on the platform that he would not tax income from the trusts, and the first thing he did when elected was to get the wheels rolling for taxation of the trusts.  I don't think that takes effect for several years, but the market reacted immediately.


I'll emphasize again - these are definitely exposed to market risk.  That being said, their yield is awesome, their cash flow is established (no wild catting here), and it looks like the future taxation has now been priced-in.  Also, they pay monthly dividends.


Quick note on CDs.  Keep in mind that they are tied to Fed Funds.  If those drop, you can find yourself short without an attractive alternative.

Jan 5, 2007 12:41 pm
usafa93:

I agree with all the previous posters - Fixed Income is a tough area right now.  Yields are so low.


If you're looking for alternatives, you may wish to learn about the
Canadian Oil royalty trusts.  These are similar to US REITS, but
instead of investing in real estate, they invest in producing oil
fields.  Like a REIT, they are exposed to market risk.  They
are currently yielding around 11-15%.


These trusts just took a very major hit.  The new Canadian
prime minister ran on the platform that he would not tax income from
the trusts, and the first thing he did when elected was to get the
wheels rolling for taxation of the trusts.  I don't think that
takes effect for several years, but the market reacted immediately.


I'll emphasize again - these are definitely exposed to market
risk.  That being said, their yield is awesome, their cash flow is
established (no wild catting here), and it looks like the future
taxation has now been priced-in.  Also, they pay monthly dividends.


Quick note on CDs.  Keep in mind that they are tied to Fed
Funds.  If those drop, you can find yourself short without an
attractive alternative.





Ben graham said the point of fixed income investing was safety of
princicpal. You certainly don't have that in Canadian Income trusts. I'll bet clients were jazzed to see their trusts tank 25% in one day. The
cash flow may or may not be established, because it is often very
senstive to market prices for oil and gas. Rising oil/gas prices
papered over alot of flaws in that sector.



The whole point of fixed income investing is safety of principal.



The deal with fixed income is this. Keeping costs low is critical. If
you are in a wrap fund, owing a bunch of shares of AGG is hunky dorey.
Otherwise add some value by selecting individual bonds and preferred
stocks. Or modify your fee structure such that you charge less for the
fixed income portion. Etc.



Always make sure you are adding value, and you will find that fixed income is simple.

Jan 7, 2007 10:28 am

I agree with everyone here in.


You have to manage the portfolio.. but if the $$ are big enough then get them to go ORNAX if they have long enough time to recover the expense of an A share ..but nice numbers even as a C share though. 


And with managed accounts with fixed income you are guranteed to nickle and dime the yeild .. for sure! IMHO

Jan 8, 2007 11:13 pm

Careful on ORNAX.....lots of airport, tobacco bonds, tons of NR and junk in there also.  If spreads loosen at all between junk and quality, the client is in trouble.


If you feel rates will not go up, try some leveraged close ended muni funds trading at par or discount.  Probably the best bet right now.


Another good bet this year is hybrid bond funds.....with a little convertible, high yield, quality corporate, government agency, maybe even a touch of international bond flavor......I think bond debenture (LBNDX) should give you coupon this year, Federated Strategic Income (STIAX) is a good bet.


Convertible strategies should come back this year, try Calamos for some yield and hedged risk.

Jan 9, 2007 11:07 am

When all else fails, in Dan Fuss we trust.....

Jan 9, 2007 2:32 pm
blarmston:

When all else fails, in Dan Fuss we trust.....


Ahmen...