Here is this month’s income investor dashboard update. Prices are as of the close of trading on Feb 28, 2011, the last day of the month.
Almost everything got a little more expensive last month, with yields coming down across the board. In general, stocks did better than bonds. In stocks, developed markets performed better than emerging markets and investors are continuing to take money out of emerging markets and put money into developed markets. In bonds, long term treasuries and muni bonds had a decent month showing gains, a nice reversal.
As far as relative value, foreign stocks look to be a better value than US stocks at this point whether it be the overall indexes (EFA vs SPY) or even in the dividend sectors (IDV vs DVY). However, the higher yielding US stock sectors look to be even better relative value, in particular mortgage REITs (REM) and MLPs (AMZ). In bonds, muni bonds, leveraged (BFK) or not (MUB) appear to be the best relative value. For contrarians out there, fund flows show investors continue to take money out of muni bond funds and pour it into taxable bonds funds. Usually, it pays to do the opposite of what the heard is doing. Below is a chart that shows investment grade and high yield bond spreads.
Investment grade bonds are trading below their long term average yields but still not as expensive as they have been pre crisis. High yield bonds are definitely pricey and are trading at the high end of their historical valuations. As history shows, they can stay at these levels for long periods of time but their is not much upside left.
Any other insights into the income investor landscape this month?
Full Disclaimer - Nothing on this site should ever be considered advice, research or the invitation to buy or sell securities. These are my personal opinions only.