(New York)
Those seeking to buy income-focused investments have a dilemma on their hands right now. Is it safer to buy high-yielding blue chips like AT&T, or better to buy a diversified high yield fund? Barron’s tries to answer this question and gives a definitive opinion—the bond fund. While both may offer similar yields of between 5-6%, holding money in just one or a small handful of blue chips offers much more risk. Not only could dividends be cut, but underlying businesses could deteriorate. And without the benefit of diversification that a broad ETF offers, a portfolio could see heavy losses.
FINSUM: This is a good, basic article to share with any clients who ask why they are buying debt instead of just owning a few stocks.