The Top 7 Bond Funds Around

10/13/2011 10:30 am EST

Focus: FUNDS

Neil George

Editor-in-Chief, Income Publication and Products, Agora Financial

The stuff that Wall Street doesn't tell you to buy while loading up for its own coffers continues to work...specifically, bonds, writes Neil George of The Pay Me Strategy.

When was the last time you heard brokers peddling bonds? That's the play that the brokers tell you is for losers. So, you keep losing with the stocks.

Forget Wall Street's playbook. It's time to make your own playbook and start running it.

Bonds from the nations beyond the wilds of Europe; bonds from the solid municipalities of the US; bonds from credit-proven corporations—bonds are what's working. The key is to buy and own bonds that aren't being sold by Wall Street.

I'll start with the bonds from nations that are thought to be the riskiest of the market: Bonds from nations that aren't in the first-tier nations and aren't part of the G7 markets.

While Europe implodes and takes down who knows how many creditors that trusted the primary nations as safe zones for credit, it's the nations being asked to bail them out—from China and Brazil to Indonesia and beyond—that are flush with cash and amply paying their bills.

This is why you need to continue to buy and own my four favorite bond investment companies that don't have a shred of European government bonds.

AllianceBernstein Global (AWF), Pimco Strategic (RCS), Templeton Emerging (TEI), and Western Assets (ESD) should continue to be bought collectively to keep your retirement portfolio humming along while Wall Street burns.

Now, some of these are down in price again recently. And for a reason: Too many traders take these to be stocks, because they trade as stocks right on the New York Stock Exchange. But if you look at the trading history going back from the beginning for each of these in decades past, when the stock market is down and these are on sale, that's the time to re-invest and buy more.

Because the underlying assets keep working, even as the stock prices gyrate around.

Right now, the four collectively are paying a dividend yield of over 9.46%. And those dividends keep coming in, month after month. One or two of these might slip in price now and again, but together they work well off-setting short-term price blips along the way.

Muni Madness
Beyond buying the bonds of nations beyond Wall Street's recommendations, you need to look at other bonds that Wall Street doesn't want you buying—munis.

Remember last year about this time, when the Wall Street Darling, Meredith Whitney, made the
markets quake in near-panic with her call that there would be hundreds of billions of dollars in default across the muni-bond market this year? She was the guest of choice for all of the networks and papers.

But you know what's happened? Pretty much business as usual. The sky didn't fall, and munis keep paying. Well, most of them, just like usual.

I've been recommending three closed-end funds for this: The AllianceBernstein Muni (AFB), the Nuveen Quality (NQU), and the Blackrock Muni (BLE).

The average yield paid by these three collectively is running at near 7%, paid in monthly checks. And the average value of the funds is more than the average stock price in the market by as much as 5.2%.

So, you can buy not just any single muni bond, but good groups of them, at a discount to the market, and get them to pay you monthly.

And so far this year alone, even as Wall Street keeps rolling out its doom and gloom for munis, these three are averaging a positive return of over 12%—while the funds keep writing checks to investors.

If you've like to cut your tax liability and get paid well along the way, buy some of these three.

Subscribe to The Pay Me Strategy here...

Related Reading:

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