• unusual bonds with high yields.
• certain fixed income closed end funds at a discount.
• dividend paying stocks, and occasionally (ugh) preferred stocks.
• non- or low dividend paying stocks that fit my eight rules, and sell out-of-the-money calls against them.
• lever the fund by borrowing at LIBOR.
• Use my mean reverting REIT, utility, LP strategy. Backtests have it generating a 20% return annually, and I haven’t tweaked it.

The thing is, though, yield is a conceit. People like to think that they are merely scraping the income off of the portfolio, when in many cases, they are truly consuming capital, but the accounting doesn’t make it look that way. Think of a high yield fund with a single-B average credit quality. During good times, the full yield, and maybe a tiny amount of capital gains comes into income. During bad times, the yield shrinks, and capital losses get passed through. Over a full cycle, the NAV of a high yield fund shrinks.

Roger Nusbaum submits: I got to thinking it might be interesting to see how some of the low beta, high yielding, defensive investment products came through the recent dip. The following list is not comprehensive; feel free to add any of your own.

• Claymore Sabrient Defender ETF (DEF) was down 3.00% on February 27 and from the close on 2/26 to the close on March 5 it was down 4.97%
• Claymore Yield Hog (CVY) was down 2.33% on February 27 and from the close on 2/26 to the close on March 5 it was down 5.52%
• iShares Dividend Select ETF (DVY) was down 3.21% on 2/27 and from the close on 2/26 to the close on 3/5 it was down 5.15%
• SPDR S&P Dividend ETF (SDY) was down 2.26% on 2/27 and for the same week as the others it was down 4.81%
• WisdomTree High Yielding Equity ETF (DHS) was down 2.80% on 2/27 and down 4.95% for the week measured as above
• Madison Claymore Covered Call Fund (MCN) was down 0.93% on 2/27 and down 1.73% for the week
• S&P 500 Covered Call Fund (BEP) was down 3.80% on 2/27 and down 5.56% for the week
• First Trust Covered Call Fund (FFA) was down 1.60% on 2/27 and down 3.98% for the week
• NFJ Div, Int, Prem Strategy Fund (NFJ) was down 2.91% on 2/27 and down 3.58% for the week
• Macquarie Infrastructure Trust (MIC) was down 1.52% on 2/27 and down 6.0% for the week
• Eaton Vance Enhanced Equity Income Fund (EOI) was down 2.15% on 2/27 and down 3.66% for the week
• Eaton Vance Tax Managed Diversified Equity Income Fund (ETY) was down 0.06% on 2/27 and down 2.35% for the week
• Alpine Global Dynamic Dividend Fund (AGD) was down 3.28% on 2/27 and down 6.26% for the week.
• DB Currency Harvest ETF (DBV) was down 1.75% on 2/27 and down 3.70% for the week.