Tag Archives: Relative Value Partners

High Yield with Low Risk is a Proven Investment Strategy

One of the first thing people learn when they begin to understand the rules of investing is that investors are rewarded for taking higher risks by receiving higher yields. The corollary to this understanding is that low risk investments will therefore yield less lucrative results. Yet, many investment groups have proven that rewards can still be great even when risks have been minimized.

One way to reduce risks yet maximize yield is through the use of Master Limited Partnerships, or MLPs. Investors who are interested in income will enjoy these high-yield investments whose income is 80 percent shielded from taxes.

“Investors have this thirst for income,” said Maury Fertig, CIO of Relative Value Partners in Northbrook, Ill. “For someone who wants income, but realized the bond market is not there, if they’re willing to take a little risk, they’re constructing a scenario where they can dip a toe in the market.”

Uriel Cohen, White Bay Group, is one investor who has been able to lower risk while maintaining high yield. This trading group has two main philosophies; the first is that they strictly adhere to investment guidelines when making investments. The second point is that WBG carefully quantifies risk to reward with the understanding that high yields do not necessarily have to be correlated with high risk.

Mutual fund investments are another vehicle for reducing risk while striving towards higher yields. Through diversification these reliable investment funds spread risk among many sectors and businesses while at the same time taking advantage of the historic upward march of the stock market. The Vanguard High Yield Corporate mutual fund, managed by Wellington Management Company, Michael L. Hong CFA, Vice President, is what is known as an aggressive return fund. It is highly diversified, investing in over 300 corporate bonds which pay variable rates of interest. The fund boasts the fact that it offers leveraged rates of return yet does not expose investors to the more risky asset classes.
With a bit of understanding of the many options for investing today, a savvy investor can reduce his risk substantially without losing the high yield benefits of investing.