October 7, 2012

JUST REMOVE THE FRAUD FROM SUB-PRIME LOAN DERIVATIVES AND THEY'RE SIMILARLY VALUABLE:

High-yield bonds worth the risk, fund manager says : Jim Keenan, who manages the $9.3-billion BlackRock High Yield Bond Fund, says such bonds provide equity-like returns with lower risk. (Stuart Pfeifer, 10/05/12, Los Angeles Times)

[W]here's an income-hungry investor to turn? One option is high-yield bonds, which are paying about 6% but carry risk that issuing companies may default, eroding the bonds' value.

Jim Keenan, who manages the $9.3-billion BlackRock High Yield Bond Fund, said bonds issued by companies with less-than-perfect credit ratings are a good investment because they provide equity-like returns with lower risk. His fund has a yield of about 5.9%.

"Today, if you're cautious and want to protect your wealth you're going to get a real negative result if you sit in cash," Keenan said. "The value of the dollar is 2% to 3% less every year. Sitting in cash is to some degree a destruction of the value of your currency."

High-yield bonds, typically referred to as junk bonds, are from companies with troubled credit ratings. In order to attract investors, these companies offer higher interest rates to bond holders.

Keenan, 36, supervises a team at BlackRock's New York office that searches for bargains in these beaten-down brands. The fund returned 17% for the first three quarters of 2012, if dividends were reinvested in the security.

Posted by at October 7, 2012 1:53 PM
  

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