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Looking For Income

July 2022

Potential Benefits of Diversifying Income Portfolios

In today’s market, the search for yield and income is more challenging than ever. With treasuries, corporate bonds, and bank products yielding near historic lows, the tools investors used in the past to generate income may no longer be as effective. The question is, where can investors go to find income in today’s markets?

The History of Treasury Yields

(January 1, 1940 – June 30, 2022)

Chart showing the The History of Treasury Yields

Annual Income Comparisons Over Time

By analyzing the income generated by certain income-oriented strategies, we can see the effect over time that the current low-yielding market is having. The graph below illustrates the annual income generated by hypothetical $100,000 bond investments at various points in time.

Chart showing Annual Income Comparisons Over Time

Looking Beyond Bonds

Given the relatively low interest rate environment, pass-through securities are becoming more attractive as investors focus on income-oriented investments. The current income yields in these sectors are significantly higher than those of traditional investments such as stocks and bonds, and we believe they can provide a dynamic complement to an income portfolio.

Income Sector Yields vs. Traditional Investments

(Last twelve months as of 06/30/22)

Chart showing Income Sector Yields vs. Traditional Investments

 

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