Financial Advisor: Solid Yields On Cash
Financial Advisor magazine published, "Solid Yields On Cash Are Still Possible, Advisors Say," which tells us, "Inflation is edging up, making further interest-rate cuts less likely anytime soon, experts say. In this unsteady, unpredictable market, where should clients be putting their cash? Advisors say there are several good options, each with its own pluses and minuses. For instance, one solution is Treasurys. 'T-bills offer 4.3% for three months [and] 4.2% for six months,' said Eric Lutton, CIO of Sound Income Strategies." The article continues, "But bonds aren't liquid. For some clients, tying up cash in a bond -- even a short-term one -- isn't desirable, especially when there are more liquid choices for generating solid yields, said Lutton. He cited 'ultrashort-term exchange traded funds,' which are ETFs that invest in short-term bonds, such as AllianceBernstein's Ultra Short Income ETF. It's an actively managed fund that primarily holds investment-grade instruments (corporates, Treasurys and others) with a duration of one year or less, chosen to deliver high-yield and capital preservation, according to the AllianceBernstein web site." The piece also says, "Another good option is to move cash to a money market fund through a brokerage account, he said. Their payouts are significantly higher than money market accounts from the bank, though they're not quite as safe. Still, advisors say they're about as safe as a non-bank account can be. 'Money market funds hold Treasury bills, government agency securities and repurchase agreements backed by these securities,' said Brian Therien, a senior fixed income analyst at Edward Jones.... They 'typically offer stable value by targeting a net asset value of $1 [per share], but there is no guarantee.' ... As of early April, money markets yielding 4% or higher were not hard to find, while inflation remains under 3%, said Peter Crane, president of Crane Data in Westborough, Mass."
