In Search of Yield.

As we all are painfully away of, interest rates are paying next to nothing.  The U.S. 10 year note is yielding 1.45% as of 7/16.  This yield is at historic lows and has caused many investors to look other places to replace lost income.  As an investment advisory team we get asked frequently about investments which have staggering yields.  What many investors dont understand is the underlying risk that is inherent with investments paying out extremely high yields.    Jason Zweig recently wrote an insightful article which delves into a closed end mutual fund and seeks to understand how they are paying out these exorbitant yields.   What Jason points out is that these investors are not getting these exorbitant yields, rather their own money is simply being returned to them as the fund is paying out over 10 times the amount of net investment income that the fund is earning.   Below is the link to the full article. 

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