iShares Advantage High Yield Bond ETF (CHB-T)

You should look at this as a proxy for the high-yield market. There was a big selloff over the last 6 weeks, because high yields have rallied so hard and so fast, there was a revaluation.

Generally doesn’t like just high-yield, because high-yield means junk bonds. If you are relying on this for income, your money would be better off someplace else. He wouldn’t have this in his portfolios.

With rates hitting an all-time bottom a few months ago, and now starting to creep up, and it is the longer rates that are being hurt, especially the 5-10 years duration. When they start to reinvest, they will be investing into a higher rate, but in the meantime, you’ll be seeing a drop in value. He would prefer a ladder of GICs. For the next 2 to 5 years, you are certain to lose money in a traditional bond ETF or bond mutual fund.

(Top Pick Jul 27/13, Up 6.51%) Wanted a reasonable yield. Was a good performer and he uses it as an alternative to cash. It’s never going to move that much. It is US corporate securities. Paid monthly so you can be in and out of this. The fund is winding down because authorities don’t like the structure of the fund. He still uses it but recognizes that it will run off and will not be as safe as before.

With all the talk about interest rates going up, is it time to Sell or Hold if she is satisfied with just the income? Depends on how prepared you are to tough it out. He wouldn’t be surprised if in a year or 2, you didn’t make any money. Whatever money you made in income, you might lose in principal if there were some rate hikes. If all you are concerned with is the yield and you are not concerned with the NAV, it would probably be worth hanging onto.

(A Top Pick Jan 20/12. Up 12.79%.) Outperformed bond market fairly substantially. Any hint that interest rates were going up and he would exit this position very quickly.

Return of capital is very tax effective as there is no tax on it. The problem with return of capital is that it is grinding down your adjusted cost base so at some point it could lead to higher taxes down the road. High-yield is not a bad way to go in the bond market. He is increasingly starting to look at this.

Doing very, very well. Return expectations have been exceeded. At this point, it’s all about being very selective because some things have narrowed substantially and is not worth getting into. Unfortunately, this is a passive type of portfolio and will usually just invest in what is in the index. Don’t expect the same kind of returns this year.

Are priced to perfection. The easy money if off the table. The return won't continue. It's not sustainable.