The fund’s goal is to generate current income. In particular, they want to offer an attractively higher yield than comparable maturity US Treasury securities without taking significant default or interest rate risk.
The managers invest primarily in shorter duration corporate bonds, both investment grade, and high yield. They might also own other income-producing securities such as securitized loans and convertible securities. Generally, the majority of securities in the portfolio are part of smaller issues of less than $500 million.
Income is an important component of any retirement portfolio. The challenge for retirees seeking income is not taking on too much risk in the process. Often funds with the highest yield are less diversified and riskier than their lower-yielding brethren.
Investing in a riskier fund is fine if you do it in moderation and plan to hold for the long haul. As long as you don’t need to sell the fund, you can continue taking the income from its yield and not worry what the price does. Also keep an eye on fees, as actively managed income funds can creep up the expense scale. All that said, here are five solid income funds for retirement
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The Wall Street Transcript interviews Mark Travis, Intrepid CEO and manager of the Intrepid Capital Fund.