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A mixture between stocks and bonds. like 60% VT + 40% BNDW. For corporate bonds, you may buy JAAA/PAAA/CLOA, but honestly BNDW is fine as it includes corporate bonds
Depends on your definition of safe, but look at CLOA (or JAAA) or BCLO. I use BCLO for some of my parked cash and it doesn’t give me any heartburn whatsoever but others would run away screaming from the idea.
IMO it's very low-risk. CLOA is very new, so doesn't complete Morningstar data yet, but it's basically a clone of the JAAA fund. Both only invest in AAA rated companies (the most creditworthy). Morningstar rates it as a 7 on a scale of 1 - 100 in terms of risk (1 is the lowest score you can get -- VOO is rated 75 on the risk scale). The price range for CLOA over the past year has been a low 50.61 and a high of 52.12, so you can see the price doesn't fluctuate much.
If you are willing to entertain some risk, you could look at CLOA (roughly 6% per year) or JAAA (similar).
I’m at 26% domestic stocks; 5% gold; 69% CLOA and PULS. And thought I was underweight equities!
Uber, Walmart, Costco, CLOA, GDX.
No cash but moved 30% to CLOA and BKLN.
>Also reasonable but I think your risk estimate is overly high. Of all the junk bonds issues in a year (mainly from JBBB) only 4% actually go into default. Just to clarify, JBBB does not invest in junk bonds. These CLO tranches differ fundamentally from junk bonds in both structure and risk profile. There have been **no defaults** in the BBB and BB tranches since the GFC and the total cumulative default rate since the early 90s is just 0.28% for BBB and 0.88% for BB tranches. In contrast, junk bonds are unsecured corporate debt with higher default rates, historically averaging 4% annually and significantly lower recovery values. The biggest risk with these is not credit risk but liquidity risk. Unlike junk bonds, the CLO BBB tranches trade over-the-counter in a relatively illiquid secondary market. In a major financial crisis, the market can seize up, causing the NAV to drop sharply. However, if you can hold out, you will continue to get your distributions and they will eventually recover. >Also some funds only invest in senior loan obligations. So if a company goes bankrupt the senior loans would have priority to be payed off by the assets the company has left. So again you are not going to loose all your money. So the risk from CLOA and CLOI might be lower than your think Also having 3 high yield funds reduces the risk even more. This isn't entirely accurate but you are correct that the risk from CLOA and CLOI is probably lower than he thinks.
Reasonable goal so 100K in money market fund or several bond funds. >The remaining 140K will be in fixed income assets, of which 40K (JBBB,CLOZ, CLOI) will pay the highest rate but could default and I could theoretically permanently lose that 40K Also reasonable but I think your risk estimate is overly high. Of all the junk bonds issues in a year (mainly from JBBB) only 4% actually go into default. A good fund manager would know this and would either avoid companes in poor financial condition or have or have bonds from 100 or more companies so that a 4% default rate would mean only 96% of the bonds would pay out as expected. So the loss of 40K is highly unlikely. Worst case the dividend might be reduced slightly in a bad year. Also some funds only invest in senior loan obligations. So if a company goes bankrupt the senior loans would have priority to be payed off by the assets the company has less. So again you are not going to loose all your money. So the risk from CLOA and CLOI might be lower than your think Also having 3 high yield funds reduces the risk significantly. Index funds are good thing to have in a bad economy since they can be sold for cash. But Keep in mind the in a bear market you hav sequence of return risks which can be significant. What I have been doing is a money market for for Cash A mix of high yield stock dividend funds and loan obligations with a goal of about 10 separate funds. With an overall yield of about 8% with enough income from these funds that they would cover my my living expenses if needed. Then Stock index funds for a long term asset I can sell.if needed. So in my case I have a lot more money in high yield funds since I want enough income to cover living expenses. With a smaller ammount in cash and index funds.
Some prominent examples include the Panagram BBB-B CLO ETF (CLOZ), the VanEck CLO ETF (CLOI), and the BlackRock AAA CLO ETF (CLOA). Other options include the PGIM AAA CLO ETF (PAAA), the Invesco AAA CLO Floating Rate Note ETF (ICLO) and the AXS First Priority CLO Bond ETF (AAA).
You forgot CLOA..it's hanging from a cliff.
Gold is good. Managed futures (CTA, DBMF), collateralized loan obligations (CLOA), junk bonds (HYBD). I don’t hold futures or CLOs in a market upswing. I do keep gold, and junk bonds are probably less than 10% of my bond allocation.
Put a third each in JAAA, CLOA and PAAA. All are private credit CLOs. They may all be at a discount to NAV now, at least JAAA is. JAAA may carry more junior debt than the other two.
Take a look at some of the AAA rated CLO funds like CLOA, CLOI, or PAAA or JAAA, etc.. those are paying out around 5.5% - 6% APY currently. or if you have the appetite, check out the BBB rated ones for even higher returns. (7% - 9%)
Since the drop in short term interest rates, as every one of my T bills has matured I’ve put the $$ into BINC and CLOA. Both currently yielding approximately 6%. Both considered very safe cash alternatives. I’m a Rick Reider fan boy!
1/3 SPXL and 2/3 CLOA, rebalance every quarter
GSY and MINT tend to do a little better than the risk-free rate, but not by very much. BOXX offers a box spread strategy that can defer taxes you'd otherwise pay on dividends in favor of the long-term CG rate. Ultra-short corporates and commercial paper proxies like SRLN, BKLN, JAAA, AAA, CLOA, etc. can boost your cash-like returns with very minimal risk. They've been excellent over the past couple of years.
SCHG, JEPI, BKLN, MO, PPA, CLOA, QQQX, NVDA, SPHD and ARCC are my biggest holdings but only like 3 months deep.
You could look at corporate loans. There is a product called a CLO that aggregates hundreds of corporate loans. I personally like CLOA for AAA relaunches and CLOZ for BBB traunches.
What goes in a Roth can always be taken out. You just can't put it back after 60 days, and only once a year. Always max out Roth if you can. TFLO is a great no risk etf. CLOA if willing to take a bit of risk.
Dude that cash is earning nothing. Check out JAAA and CLOA. 7%. Triple A CLOs which have never defaulted. BINC and JPiE for high quality bonds with a little duration. The only stocks I own are a few regionals banks I bought in may, reits, COWZ, and GCOW.
My pick for moderate-risk cash park for a "might use" situation would be IG CLOs. Never been a single default of a traunch in AAA-A CLOs even from before 2007. Great opportunity to capture junk yields with investment grade risk. CLOA or JAAA are both great picks for this. CLOs are typically floating rate, so duration is very low and they will track with rate hikes so you're not locked in. CLOA's duration is 0.2yr and SD is close to 2%. Current 30-day yield is 6.46%, YTM of 7.14%. I think they're a great buy.