Non-existent CD yields don't tickle your fancy. Government debt makes you think that higher yields (and lower bond values) will harm your principal. And perhaps you're not convinced by the sudden interest in U.S. stocks. Well, then... what should you do?
Grab a stake in the iShares Barclays 1-3 Year Credit Bond Fund (CSJ). This ETF pursues the performance of an index that tracks investment grade bonds from sovereign, local and non-agency (corporate) sources. Moreover, since most of the holdings mature withing 1-3 years, and the fund is highly diversified, one can be extraordinarily comfortable in the income stream produced by CSJ.
At the present time, CSJ boasts a distribution yield close to 4%, with a 30-day SEC yield closer to 3.5%. That alone seems to be a better cash flow stream that a 10-year U.S. Treasury bond with the same yield.
Through 7/16/2009, CSJ has accumulated a total return of 5%. That's a fairly decent combo of 3% "cap app" and another 2% that's come via monthly income.
What's more, the iShares Barclays 1-3 Year Credit Bond Fund (CSJ) is in a technical uptrend. It currently resides above a 50-day and a 200-day moving average. Stronger evidence exists with the 50-day moving above the 200-day in May.
Short-term credit bonds may not solve all of yourinvestment concerns. Yet it can serve as a strong diversifer for an overall portfolio. Or, it may serve as one of the chief holdings for an ultra-conservative investor who wants to do something more than maintain a 100% cash position.