Finding investment income is not getting any easier. The Federal Reserve’s most recent decision to keep short term interest rates at record lows means there is no relief yet. Many professional and individual investors have turned their attention to dividend paying stocks for current income and future growth. This week’s guest is among them, but with a twist. He is looking overseas, where dividend yields are generally higher and dividend paying cultures are stronger. Thornburg Investment Management’s Chief Investment Officer and Portfolio Manager Brian McMahon discusses how he finds growing sources of income around the world in his Thornburg Investment Income Builder Fund.
WEALTHTRACK Episode #1220; Originally Broadcast on November 06, 2015
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- Chief Investment Officer,
- Thornburg Investment Management
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. The yield on the S&P 500 is hovering around 2%.
This week’s guest, Brian McMahon, has found another route to income. He is looking overseas, where dividend yields are generally higher and dividend paying cultures are stronger.
McMahon is CEO & 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 Morningstarand 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 5-starThornburg Global Opportunities Fund since its 2006 inception. We’ll find out how he is finding income in this income challenged world.
If you can’t watch the show on Public Television this week, it will be available on our website, as streaming video or a podcast. You can also find the One Investment picks of our guests and my Action Points there, along with our online EXTRA features, to give you greater insights into our guests and the topics they are covering.
IF YOU ARE ELIGIBLE TAKE ADVANTAGE OF 2 CURRENT SOCIAL SECURITY CLAIMING STRATEGIES
TWO SOCIAL SECURITY STRATEGIES FOR MARRIED COUPLES ENDING
- “File and suspend”: one spouse files for benefits but suspends collecting them until full retirement age
- Filing a restricted claim for spousal benefits: collecting half of spouse’s benefits while waiting to collect full benefits in later years
WINDOW OF OPPORTUNITY
- 62 or older by year-end
- Retain right to collect spousal benefits starting at 66 = full retirement age
- Spouse has to have claimed retirement benefits or requested to file & suspend benefits within 6 month window
Source: Mary Beth Franklin, Author Maximizing Your Social Security Benefits
GLOBAL & DOMESTIC INCOME
China Mobile Ltd ADR (CHL)
- Price $61.49 on 11/4/15
- 52-week range: $55.01 – $75.52
MFA Financial Inc (MFA)
- Price: $6.98 on 11/4/15
- 52-week range: $5.78 – $8.45
Thornburg Investment Management’s Chief Investment Officer Brian McMahon invests in both stocks and bonds in his Thornburg Investment Income Builder Fund, as he has throughout his career. I asked him about the relationship between stock and bond investing.