What the experts say

Looking beyond bonds; Think locally, invest globally; ‘Tiger’ stocks take a beating

Looking beyond bonds

With bond prices high and inflation threatening to chip away at their returns, investors may want to cash in some of their fixed income for other high-yielding investments, said Andrew Bary in Barron’s. Consider utility and telecom stocks, bank preferred stock, and convertible securities. It’s also worth looking at master limited partnerships—publicly traded groups that own pipelines used to transport natural gas, heating oil, gasoline, jet fuel, and other petroleum products. Thanks to their “outstanding cash flow,” MLPs have generated “some of the best returns of any asset class in the past decade.” They’re not well known among individual investors—but that could soon change, considering that such partnerships currently are paying out 7 percent and 8 percent yields, most of which is tax-deferred.

Think locally, invest globally

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Globalization has eliminated many benefits of investing in foreign multinationals, but small overseas companies still offer undiluted international exposure, said Elizabeth Ody in Kiplinger’s Personal Finance. “Plus, because many of these companies receive little attention from analysts, there are plenty of gems to uncover.” The best way to tap this niche is via a no-load fund with a long-term track record. Oakmark International Small Cap I stands out in this category with 10-year annualized returns of 10.3 percent and a veteran manager with a knack for finding deals abroad. “There are small companies, and then there are tiny companies,” such as those favored by the Wasatch International Opportunities Fund. This fund isn’t “for the faint of heart,” but its performance this year has been truly astonishing. “From the bottom of global stock markets on March 9 through Oct. 8, the fund gained 95.2 percent.”

‘Tiger’ stocks take a beating

When celebrities like Tiger Woods get caught up in a scandal, “one way or another” it will affect the shares of the public companies they endorse, said Sarah Morgan in SmartMoney.com. In the days following Tiger Woods’ recent car accident, stocks linked to Woods rose by less than those in the broader market. Companies like Nike and Electronic Arts, which produces Tiger Woods PGA Golf Tour, are often bound to the fortunes of the “marquee athletes” who promote their wares. Still, they’ve become savvy at dealing with scandals concerning their football and basketball partners. They’ll survive this, too.

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