Forbes.com on "Enhanced Yield"
Last week, Forbes.com wrote the article, "Enhanced Yield: Buyer's Guide to Short-Term Bond Funds." They ask, "Where should you put your rainy-day fund?" The piece tells us, "A low-risk piece of paper from the U.S. Treasury yields 2.8%. You're probably not getting anything like that on the cash you have sitting in a bank. What follows is an instruction manual on extracting the most from uninvested cash. We'll look at money funds, CDs, bond ETFs, terminating ETFs and Treasury notes. Some of these options entail a bit of risk. All of them offer better returns than the stingy amounts paid on checking accounts." On "Money funds," Forbes writes, "These days the yield curve is rather flat, which is another way of saying that you don't get a particularly rich reward for stretching out the maturity of your fixed-income portfolio and taking the risk that rates will rise. So, there is much to be said for parking your cash in a money-market fund. You'll be at the low end of the yield curve but you won't be taking chances." The post adds, "The tricky business is attaching a money market fund to your transaction account (where you receive direct deposits and disburse electronic payments).... You can stash your rainy-day kitty in an exchange-traded fund that owns short-term bonds, those due in three years or less."
