In March I wrote a post titled Fixed Income Alternatives where I disclosed to investors some of my activities with fixed income products that often fly under the radar of investors and the market. I highlighted the benefits of one group of investments called CorTS’ (Corporate Backed Trust Securities) that had been trading at depressed prices in the fall of 2008 at the height of the credit crisis.
I wanted to provide an update on these investments as well as two other series of preferred shares I purchased and held in my foreign fixed income portfolio within my RSP. What I want to show is the return of each investment based on my cost versus a potential investment in the common stock over the same time period.
All but four of the fixed income investments beat their common share peer and there was no decrease in dividend/income from the fixed income group with a number of the common shares cutting their dividends.
So far the Fixed Income Alternative shares of the group have returned 4.61% in income and appreciated significantly. There is a temptation to sell the CorTS’ which are trading above their par value, but when I consider the income, yields on cost and the high credit ratings of the group I still intend to hold them for a 3-5 year period.
Don’t forget to contribute your questions to The Personal Finance Clinic which closes on May 31st, 2009.