More investors are stocking up on non-traditional bonds, bond strategies
As renewed interest in bonds continues, there is also growing interest in non-traditional bonds and strategies.
The resulting search for yield led to greater popularity of alternative approaches in investing in bonds. Yet they may be less popular among financial advisors due to lack of awareness, lack of promotion and the amount of research needed to employ them successfully, he said.In addition to non-traditional strategies, Schmitzer is working with emerging market local currency bonds.
Eric Mancini, CFP, director of investment research and wealth advisor with the Traphagen Financial Group, also uses emerging market bonds in the form of investment-grade corporate bonds. These are often from places such as China, India and Thailand and may yield 4.5 percent to 5 percent."A combination of these specialized bonds doesn't increase risk," Mancini said.
For his part Peter McAleer, founder of McAleer Wealth Management Group, has found a niche in using municipal bonds issued by states based on the 1998 Tobacco Master Settlement Agreement between the four largest U.S. tobacco manufacturers and 46 states. The states receive cash flows every year and earmark this money to back municipal bonds with a guaranteed 3 percent return or higher, depending on inflation.
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