On the other hand, housing didn't produce returns as high as high-grade bond funds or gold.
Even junk issues have been inhaled by investors desperate for any yield pick-up over puny Treasury and high-grade bond yields.
That said, the Bank of American Merrill Lynch High-Grade Bond Master Index is up 3.75% through April 30 as a result of spread compression across the credit markets from the more lofty levels of the fourth quarter.
The third came in 1998 when the long-term capital management debacle and Russia's default sent low-grade bond prices plummeting, crushing high-debt REITs like Criimi Mae and Laser Mortgage Management with margin calls.
Guggenheim Investments filled that gap with its BulletShares ETFs, a menu of investment-grade and high-yield corporate-bond funds.
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Carlson has delivered a 13% compound annual return since then, a percentage point better than the emerging market index and better than double what you would have earned from the collection of high-grade U.S. paper in the Vanguard Total Bond Market Index Fund .
Spreads on both investment-grade credit-default swaps (insurance against bond default) and on high-yield indices have increased sharply.
The multitudes of bond haters continue to screech about how overvalued Treasurys and investment-grade and high-yield corporate bonds are, but some split-rated bonds deserve to be in your portfolio.
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Despite the rather dour comments from Lockhart, the tide appears to be shifting in the corporate bond market as liquidity has begun to return and both investment-grade and high-yield premiums over Treasury yields have begun to narrow in recent sessions.
Mark Follett, head of the firm's high-grade debt capital markets desk for Asia excluding Japan, says that is because many Chinese companies plan to tap the bond market and diversify their funding from a heavy reliance on bank loans.
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