- Calamos Convertible Opportunities and Income Fund (CHI): A convertible bond fund that yields 9%. Convertibles tend to be less sensitive to interest rates because the bonds can convert into common stock.
- PowerShares DB Currency Harvest Fund (DBV): Goes long the three highest-yielding currencies in the Group of 10 and short the three lowest-yielding currencies in a carry trade of sorts, as I've
- CurrencyShares British Pound Sterling Trust (FXB): This very small fund (averages just under 7,000 shares daily and a market cap that doesn't quite make $60 million) simply owns British pounds and goes up when the pound goes up against the U.S. dollar (and down in the reverse case).
- Alpine Global Dynamic Dividend Fund (AGD): A closed-end fund that makes use of the
- BlackRock Enhanced Equity Yield Fund (EEF): A
call-writing closed-end fund that appears to be a little less volatile than other funds that use the same general strategy.
|Reallocated Portfolio |
Low correlation to S&P
|Ticker||Beta||Correlation to SPX|
| Good Stress Test |
Most portfolio enhancements held up better than the portfolio's original mix during the first quarter
|Click here for larger image.|
|Source: Yahoo! Finance|
An investor implementing the above portfolio on the first trading day of the year would have been up 6.58% as of the close on May 25, compared with a return of 7.53% (including dividends) for being 100% invested in Spyders during the same period. I would expect the results to look more favorable once a year's worth of dividends has been paid. This sort of trade-off is a compelling. Keep in mind that this is just an example, but I hope this serves as springboard for you to develop your own ideas.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider PowerShares DB Currency Harvest Fund, CurrencyShares British Pound Sterling Trust and BlackRock Enhanced Equity Yield Fund to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.