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CFA, bonds, REITs
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By Rom Badilla, CFA

In last week's post, we covered why it makes sense to invest in individual bonds versus using a fund. A fund's "one-size fits-all" approach can be convenient but may not be suitable for an individual who is looking for a tailored solution toward reaching their investment goals. By choosing to own individual bonds, you will have greater control that could lead to better performance. Furthermore, you should have a better grasp of your investments and where you stand today in reaching your goals.

Below is Bondsquawk's High Yield Bond Portfolio which consists of 12 bonds, one from each diverse sector. The model is used to illustrate an active High Yield portfolio that has bonds rated from BB+ or lower. The goal of this model portfolio is total return so both income and price changes are considered in determining the allocation.

CUSIPCompanyTickerCoupon (%)MaturityPrice ($)Yield (%)*S&PReason
85375CAX9Standard Pacific CorpSPF8.37505/15/18116.004.97BAnalysis
704549AK0Peabody Energy CorpBTU611/15/18105.254.97BB+Coming Soon
48020UAA6The Jones GroupJNY6.87503/15/19103.816.13B+Analysis
25470XAB1Dish Network CorpDISH7.87509/01/19118.504.64BB-Coming Soon
12543DAL4Community Health SystemsCYH811/15/19108.885.89BComing Soon
80007PAL3SandRidge EnergySD8.7501/15/20108.566.30BComing Soon
688225AD3Oshkosh CorpOSK8.503/01/20111.134.97BBComing Soon
880779AX1Terex CorpTEX6.504/01/20106.885.01B+Coming Soon
81180WAF8Seagate TechnologySTX711/01/21104.816.08BB+Analysis
852061AM2Sprint Nextel CorpS11.511/15/21136.256.16B+ /*+Coming Soon
345370BJ8Ford Motor Co.F8.87501/15/22126.935.13BB+Coming Soon
983130AT2Wynn ResortsWYNN5.37503/15/22106.314.32BBB-Coming Soon
Bondsquawk High Yield Portfolio7.807.4 Years112.785.38

* Yield shown is the Yield to Worst measure which is calculated by using the lower of either the Yield to Maturity or the Yield to Call on every possible call date.

Notes

  • CYH 8.0% 11-15-19 is currently callable. The next call date is 11-15-15 at 104.00
  • SD 8.75% 1-15-20 is currently callable. The next call date is 1-15-15 at 104.375
  • OSK 8.5% 3-1-20 is currently callable. The next call date is 3-1-15 at 104.25
  • TEX 6.5% 3-1-20 is currently callable. The next call date is 4-1-16 at 103.25
  • STX 7.0% 11-1-21 is currently callable. The next call date is 5-1-16 at 103.50
  • WYNN 5.375% 3-15-22 is currently callable. The next call date is 3-15-17 at 102.688

Information and market quotes on the bond investments are provided by Trade Monster's Bond Trading Center.

The portfolio can change at any time. Bonds can be removed if price targets are achieved or original thesis is no longer valid.

Guidelines

  • High Yield Ratings (BB+ to C- ratings by Standard & Poor's Ratings Services at time of inclusion)
  • 1 to 30 Years Maturity
  • Taxable Bonds
  • Fixed Rate Coupon
  • U.S. Dollar Denominated Only
Source: Bondsquawk's High Yield Bond Portfolio