When the Federal Reserve announced recently that it plans to keep key interest rates at nearly zero until 2014, it hardly came as a surprise. With the economic recovery still in a very fragile state and inflationary pressures remaining tame, record low interest rates are expected to hang around for quite a while. While stock markets largely cheered the latest announcement, you could almost hear the exasperation of those who rely on generating meaningful current returns from their portfolios. The extension of the low rate environment means extending the challenges for yield hungry investors, such as those who rely on their portfolio to generate cash flows to cover living expenses [see also Six Juicy High Yield Bond ETFs For 2012].
Against this backdrop, more and more advisors have engaged actively in searching out securities that offer meaningful current returns for their clients. Not surprisingly, that objective generally leads to the assumption of greater risk, whether though lower creditworthiness or longer durations. There are, of course, investors at the opposite end of the spectrum, whose primary objectives focus not on maximizing current yield but on minimizing risk and simply maintaining the value of their investment. And for those looking to do a bit more than stuffing their cash under the mattress, there are some interesting ETF options out there [for more ETF ideas, sign up for the free ETFdb newsletter]: [click to continue…]
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