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3 Top-Rated Government Intermediate Bond Mutual Funds To Consider

Mutual funds investing in debt securities are among the most secure investment options which provide regular income while protecting the capital invested. Funds which are part of this category bring a great deal of stability to portfolios with a large proportion of equity, while providing dividends more frequently than individual bonds. U.S. government bond funds usually invest in Treasury bills, notes and securities issued by government agencies. They are considered to be the safest in the bond fund category and are ideal options for the risk-averse investor. Meanwhile, intermediate-term funds usually provide a safer option for investors, when compared to small-term funds. Fixed income securities having an average maturity period between 3 and 10 years are classified as intermediate securities. These funds are believed to ensure more stability and provide a higher return than what short-term funds offer. Below, we will share with you 3 top-rated government intermediate bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all government intermediate bond funds, investors can click here to see the complete list of funds . Hartford US Government Securities HLS IB (MUTF: HBUSX ) invests a major portion of its assets in securities that are affiliated to the U.S. government or its entities. HBUSX invests in U.S. treasury instruments and other securities of the U.S. government. HBUSX may also invest in mortgage-backed securities of the U.S. government. The Hartford US Government Secs HLS IB fund has a three-year annualized return of 1.2%. Michael F. Garrett is the fund manager since 2012. AMG Managers Intermediate Duration Government (MUTF: MGIDX ) seeks total return more than that of market indices related to mortgage-backed securities. MGIDX primarily invests in debt securities of the U.S. government or other agencies authorized by the government. MGIDX invests in securities having an impressive credit quality to reduce risk. The AMG Managers Intermediate Duration Government fund has a three-year annualized return of 2.6%. As of June 2015, MGIDX held 369 issues with 11.99% of its assets invested in Freddie Mac Gold Single Family TBA 4% 2046-03-01. Performance Trust Strategic Bond (MUTF: PTIAX ) invests a large portion of its assets in fixed-income instruments which include corporate, government and municipal bonds, asset-backed and mortgage-backed securities and other fixed-income instruments issued by various U.S. governments, municipal or private-sector entities. PTIAX seeks interest income and potential capital appreciation. The Performance Trust Strategic Bond fund has a three-year annualized return of 3.8%. PTIAX has an expense ratio of 0.84% as compared to the category average of 1.01%. To view the Zacks Rank and past performance of all government intermediate bond mutual funds, investors can click here to see the complete list of funds . By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past, but are also expected to outperform going forward. Pick the best mutual funds with the Zacks Rank. Original Post

Where’s The Gold-Hedged S&P 500?

Back in 2010, there was a fair amount of hoopla generated by the launch of the E-TRACS S&P 500 Gold Hedged Index ETN (NYSEARCA: SPGH ) , a first-of-its kind product designed to smooth out bumps in a then-nascent equity market recovery. By tying together two historically divergent assets-gold and stocks-note holders should have been able to simulate S&P 500 returns hedged against the fluctuations of the U.S. dollar versus gold. Why “should have”? Well, that’s an interesting story. But let’s not get ahead of ourselves. First, you need to know that SPGH notes are unsecured debt obligations of BBB-plus-rated UBS AG (NYSE: UBS ) (Jersey). Um, that’s the Isle of Jersey, not the Garden State. You also should know that the SPGH offering was one of the Swiss bank’s most lightly subscribed ETN issues. In October, when a significant liquidity event occurred (more on that in a minute), more than 99 percent of SPGH notes issued remained in the hands of UBS Securities LLC, the bank’s selling agent. One of the reasons for the light interest was the note’s call feature. Starting in 2011, UBS AG had the right to redeem the notes at market value whenever it pleased. Note buyers, in effect, were forced to give away a put option of indeterminate length with an unknown strike price. No wonder interest was sparse. Then came that liquidity event. Last fall, UBS AG announced it was suspending issuance of new notes in a wide swath of its ETRACs ETNs, including SPGH. The notes continued to trade on the NYSE Arca mart and UBS Securities LLC could still sell from its inventory the 3.9 million notes it already held. But no matter; the announcement had a chilling effect on already frozen sales. Then, the ETN dropped off the securities masters of retail brokerages and financial websites. Just try to pull up a quote for SPGH on, say, TD Ameritrade’s (NASDAQ: AMTD ) platform or on Yahoo! Finance nowadays. You get nuthin’. Zip. Nada. Bupkes. And that’s too bad. The notes’ intrinsic value has shot up recently as the equity market faltered and gold finally found a bid. The index underlying the SPGH notes was up 12 percent in January versus a 4 percent gain in the S&P 500. And, in February, the correlation between gold and stocks grew even more negative (see the chart below). Click to enlarge Obviously, the value of these notes can’t be realized by new investors. Oh, sure, you can still find a two-way market posted on NYSE Arca, but you’d have a hard time getting a trade executed if your broker won’t recognize the security. Still, there is hope for those who’d like a self-balancing stock-and-gold package. There’s a new gold-hedged S&P 500 product-this time a fund, not a note-awaiting launch. The REX Gold Hedged S&P 500 ETF (NYSE Arca: GHS) will track virtually the same index as SPGH while carrying lower annual expenses. And it won’t expose holders to the risk of dealing with a capricious debt-issuing bank. Details can be found at www.rexetf.com . Brad Zigler is REP./WealthManagement’s Alternative Investments Editor. Previously, he was the head of marketing, research and education for the Pacific Exchange’s (now NYSE Arca) option market and the iShares complex of exchange traded funds.

Adding Risk Parity To A Portfolio

We’re always trying to build a better mousetrap around here by adding non-correlated asset classes to our portfolio. While there is no “free lunch” in economics, true diversification is about as close as you’re ever going to get. And by “true diversification,” I mean adding assets to the portfolio that really do zig when the others zag. A portfolio of 100 stocks doesn’t offer much diversification benefit when the entire market rolls over. At any rate, Dr. Phillip Guerra and I have cooked up a suite of alternative portfolios based on the principles of risk parity. We’ve been running our Active Risk Parity Portfolio With 7% Annual Volatility Target live since September, and we’ve backtested it to 1996. The results aren’t too shabby, if I do say so myself. Average annual returns of 11.5% with a maximum drawdown of just 9.8% and a correlation to the stock market of just 0.24. Rather than target returns – which are impossible to know with any accuracy in advance – we target volatility. While volatility will also fluctuate over time, we find it to be more accurate to target, and also that it gives us a better handle on risk. The key to making money over time is first to avoid losing it. I don’t consider this a replacement for a traditional long stock portfolio. In fact, most of the money I manage is long-only and dividend-focused. But I certainly do consider this a nice addition to a traditional stock portfolio. With bonds not likely to offer much in the way of return anytime soon, you need viable alternatives for the “40” in the old 60/40 portfolio of stocks and bonds. A risk parity model can certainly fill that role. This article first appeared on Sizemore Insights as Adding Risk Parity to a Portfolio . Disclaimer: This article is for informational purposes only and should not be considered specific investment advice or as a solicitation to buy or sell any securities. Sizemore Capital personnel and clients will often have an interest in the securities mentioned. There is risk in any investment in traded securities, and all Sizemore Capital investment strategies have the possibility of loss. Past performance is no guarantee of future results. Original Post