Stock-Net.com

Stock-Net reports on a hot fund that could be a good addition to your portfolio. Many investors search for capital gains, and others search for high yield, but can you find both in one fund? In this case, yes you can.

The fund is Alpine Dynamic Dividend, ADVDX. This fund has been on a hot streak recently, besting the market plus delivering some surprisingly high dividend yields. The fund has a goal of optimizing investments to deliver dividends, and its dividend capture strategy has been paying off recently. The fund sports a current yield of 12.8%, and has beat the market over the past 3 years in total return.

The dividends are targeted to be categorized as qualified dividends, ensuring that you pay the lower tax rate on the yield. By trading frequently, the fund captures dividends more frequently than a buy-and-hold strategy, enabling the fund to ratchet up the yield to shareholders.

Alpine also offers a closed-end fund with a similar strategy, Alpine Global Dividend, AGD. Alpine Global Dividend is curently yielding 7.7% and has demonstrated strong gains since its inception about a year ago.

For more information, you can read this article: Fund manager’s stock strategy mixes dividends and growth – MarketWatch.

I’ve always been amazed at the high costs of many bond funds in comparison to their yields.  Stock-Net’s research shows that the average high-quality bond mutual fund charges over 1% a year in expenses, putting a major dent in your investment income.   Additionally, 73% of high expense bond funds delivered below average returns for their category, indicating that high expenses are a major drag on performance.  Finally, many top bond funds are sold as loaded funds, taking another notch out of your investment income.   The message is clear, high bond fund costs directly lower your returns.

Considering this effect then, a good way to increase your returns is to seek low-cost bond funds.   Fortunately, more low-cost bond fund options are becoming available.   Barclays Global Investors recently launched more iShares ETF bond-index funds, bringing its bond offerings up to 14 funds.  These Barclay Bond ETF funds charge expenses of 0.15% or 0.20%, much lower than a typical bond mutual fund.

Vanguard plans to launch 4 low-cost bond ETF’s soon.  These new Vanguard ETF’s are planned to be similar to existing Vanguard bond mutual funds, and sport the signature low cost structure of Vanguard.  The Vanguard bond mutual funds have beaten between 70 and 90% of their competitors over the past 10 years.

You can also buy some bonds directly.  Go to Treasury Direct and you can buy bonds directly from the US Government.  Some stock brokers like Fidelity and Charles Schwab offer no/lower cost access to new government treasuries.    A final option for income investors are closed-end bond funds.  Many closed end bond funds can be bought at a discount to NAV, giving you an additional advantage in your search for yield.

By doing your homework, a smart investor can dramatically cut income investment costs, increasing yield and ensuring higher income in the future.