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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: Dolomight who wrote (16990)10/3/2001 8:51:12 AM
From: rgammon  Read Replies (1) of 18931
 
Scott,
PPR and VVR both invest in senior unsecured corporate debt, that is bank loans. These loans are tied quite closely to the Prime Rate, and feature a Reset provision that changes the interest rate on the loan every 30 to 90 days (depending on the loan provisions). Income is paid monthly. With the recent changes in interest rates by the Fed, the dividend has been falling. Investors in both funds seem to be saying that they don't like the fall in rates, and have sold off the funds of late. With the Prime Rate now near 6%, the dividend rate is hovering near 8.45% for both funds. Both hit their 52 week low earlier this month.

Symbol 52 week range
PPR 5.88-8.81
VVR 6.51-8.87

Tom's fund invests in a different class of investments. A well diversified fixed income portfolio has room for BOTH ACG and either PPR or VVR. A GNMA fund will also be an essential part of a fixed income portfolio, as will a small amount of a foreign government income fund like TGG.

I have a limited history with PPR, only in for a bit less than a year. Both PPR and VVR are only about 3 years old, so no one has the sort of history with them that TOM has with his fund.

A yield chaser would buy into ACG, Tom's fund and that would be it. A balanced approach would divide the investment among multiple fixed income funds, each with a very different portfolio. A Fixed Income portfolio has just as much need for diversification as an equity portfolio does.

Robert
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