CONSUELO MACK: This week on WEALTHTRACK, star Portfolio Manager, Brian McMahon of the Thornburg Investment Income builder fund is searching for growing income streams in many out of the way places. Where is he finding income in a yield starved world? That’s next on Consuelo Mack WEALTHTRACK.
Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack.
Finding investment income is not getting any easier. The Federal Reserve’s most recent decision to hold firm and keep short term interest rates at record lows means there is no relief in U.S. bond yields yet. The Fed’s decision has been pushed out to the upcoming December policy meeting which will be the seventh anniversary of what’s called its zero bound range.
The situation is not any better in most overseas markets. Less than 10% of Europe’s investment grade bonds yield more than 1.5%, compared to 95% which did so in January of 2012.
Meanwhile many professional and individual investors looking for income have turned their attention to dividend paying stocks for current income and future growth. It’s become a popular and in many cases increasingly expensive choice as more investors pile in. And the yield on the S&P 500 is hovering around a mere 2% .
Well this week’s guest has found another route to income. Looking overseas where dividend yields are generally higher and dividend paying cultures are stronger. Here’s a sampling of estimated yields for various country indices next year: Canada 3.4%, Emerging Market Latin America 3.7%, the U.K. 4/7%, Europe ex the U.K., 3.9%, China 3.7% and Australia 5.7%.
Our guest is Brian McMahon, CEO and Chief Investment Officer of Thornburg Investment Management where he manages the firm’s Global Equity Portfolios including the Thornburg Investment Income Builder Fund which he launched in late 2002. The fund, which is rated 4 star by Morningstar and is one of its World Allocation Fund favorites has delivered nearly 8% annualized returns over the last 10 years, beating its benchmark and the vast majority of its peers. McMahon has also run the five star Thornburg Global Opportunities fund since its 2006 inception. Thornburg is a WEALTHTRACK sponsor but McMahon is here because of his strong long-term track record. I asked him where he is finding income in this income challenged world?