Posts belonging to Category Bonds

Church Bonds Have Claimed Many Victims


In recent years, church bonds have been hazardous for investors. Many of these investor losses can be attributed to the fact that church bonds were routinely sold by promoters and investment advisers as safe investments. These representations were simply untrue.

Bubble, Bubble, Toil and Trouble?


Rising bond prices are indicative of bond risk not safety, Wall Street Journal columnist Brett Arends writes in his article, “Bonds–Headed From Bull Market to Bubble?” He cites bond guru Bill Gross for the proposition that stocks are dead in terms of being suitable investments for long-term growth, and that bonds (historically considered safer than […]

Bumpy Waters Ahead for Bonds?


Bond investors need to be cautious in the current environment. Many bond investors are scared of the stock market but hungry for yields that are higher than those offered by presumably safe Treasuries and are loading up on investment grade corporate bonds. With the global sovereign debt troubles and the U.S.’s fiscal cliff approaching, these […]

Regulators Warn Investors About Floating Rate Bond Funds


Investors in search of higher yields are increasingly being steered into funds that buy floating rate bank loans. They are pitched as paying 5% with little if any interest rate risk. However, the Financial Industry Regulatory Authority (FINRA) warns that these loans come with significant risks, including potential credit, valuation and liquidity problems.

OppenheimerFunds Penalized More Than $35 Million for Misrepresenting Bond Funds


OppenheimerFunds has agreed to pay more than $35 million to settle SEC charges the investment management company and its sales and distribution arm made misleading statements about two of its mutual funds in the midst of the credit crisis in late 2008. The settlement payments consist of a penalty of $24 million, disgorgement of $9,879,706, […]

Floating-Rate Bond Funds May Not Be All They Are Cracked Up To Be


Investors need to be cautious when considering floating-rate bond funds. Such funds are attractive to investors because of their relatively high-yields and of their inflation-protection based on the fact that they are floating rate. With inflation running at 2.3 percent, and 10-year U.S. Treasuries paying 0.6 percent less than that, floating rate funds paying an […]

Dangers Lurk for High Yield Junk Bonds


Junk bonds have benefitted both investors and issuers over the past few years, providing borrowers with some of the lowest interest rates ever, while providing yield-hungry investors with better returns than they could receive by investing in investment grade debt. Junk bonds produce higher yields because of the increased risk of default by the issuer. […]

Chasing Higher Yields Involves Taking Greater Risk


The prospect of several more years of extremely low interest rates is causing people who depend on interest income to accept Wall Street’s recommendations to purchase relatively illiquid and opaque alternative investments like structured products, non-traded REITs, hedge funds and variable annuities. (“Itchy Investors Ramp Up the Risk,” Wall Street Journal). Regulators worry that the […]

Junk Bond Exchange Traded Funds Have Hidden Risks


Wall Street Journal columnist Jason Zweig is warning junk bond enthusiasts to think twice before investing in junk bonds, especially junk bond exchange traded funds. In addition to the junk bonds themselves being overbought, the exchange traded funds that own them trade at a premium over the net asset value of the junk bonds. When […]

Corporate Bankruptcies Expected to Increase


An increase in corporate borrowing costs and Eastman Kodak’s recent bankruptcy filing have set off a round of speculation about whether it is the start of a growing trend in corporate bankruptcy filings. While Chapter 11 bankruptcy filings have been falling since 2009, George Putnam of is expecting an uptick in corporate bankruptcy filings. […]