Table of Contents
Safe Yields by Lipper Category
Chart #1 shows Total Return for the past 12 months of funds in Lipper Categories versus risk as measured by the Ulcer Index which is based on the length and duration of drawdowns. Three clusters of categories can be seen. The upper leftmost cluster are those with low risk and higher returns. The size of the sphere is proportional to the yield. The lower left most cluster are those with lower returns and higher risk. The center cluster represents those with moderate risk and returns. What the chart shows is that most higher yielding funds have higher risk.
Figure #1: Seeking Yield with Low Risk
Source: Created by the Author Based on Mutual Fund Observer Screens
Table #1 contains the data used in Chart #1. All categories have at least 2% yield. The green area is the low risk categories with moderate 12-month returns. The yield divided by Ulcer Index represents the yield that an investor receives for the risk (Ulcer Index) that they are taking. Martin Ratio is the risk free, risk-adjusted return. The yellow cells contain categories that have slightly more risk, decent 12-month returns and slightly higher yields. The categories in the red shaded area are higher risk categories which have also had lower returns. I added a fourth category of funds that have exhibited low risk, but I believe with COVID recurring in some regions have higher risk. The top two categories are the ones where I prefer to invest.
Table #1: Lipper Categories by Return, Yield and Risk
Source: Created by the Author Based on Mutual Fund Observer Screens
Table #2 contains some of the top-ranked funds from my ranking system based on risk, risk-adjusted returns, momentum, income, and quality. These correspond to the green shaded “lowest risk” categories in Table #1 above.
Table #2: Group #1: Lowest Risk Category – Top-Ranked Funds
| Rank | Symbol | Name | APR | MAXDD | Ulcer Index | Martin Ratio | Yield |
| 100 | TMSRX | T. Rowe Price Multi-Strat Tot Rtn | 10.3 | -4.7 | 1.4 | 6.9 | 2.4 |
| 97 | BNDX | Vanguard Tot Intern Bond | 2.2 | -2.5 | 0.9 | 1.6 | 3.2 |
| 95 | VTABX | Vanguard Tot Intern Bond | 2.1 | -2.5 | 1.0 | 1.5 | 3.2 |
| 94 | OSTIX | Osterweis Strat Inc | 4.4 | -7.6 | 3.0 | 1.2 | 4.3 |
| 93 | DRSK | Aptus Defined Risk | 15.4 | -2.7 | 0.9 | 16.6 | 1.4 |
| 92 | PFFD | Global X US Prfrd | 4.1 | -13.3 | 4.9 | 0.7 | 5.5 |
| 91 | FIXD | First Trust Opport Fxd Inc | 8.2 | -1.1 | 0.4 | 19.9 | 2.0 |
| 90 | PREF | Principal Spectrum Prfrd Sec Active | 5.7 | -13.7 | 4.6 | 1.1 | 4.7 |
| 89 | IAGG | iShares Core Intern Agg Bond | 2.1 | -2.2 | 0.8 | 1.7 | 2.1 |
| 83 | ADVNX | Advisory Research Strat Inc | 8.3 | -3.3 | 1.0 | 7.7 | 2.5 |
| 81 | DIAL | Columbia Diversified Fxd Inc Alloc | 6.4 | -5.5 | 1.7 | 3.3 | 2.8 |
| 79 | FCDSX | Fidelity Series Intern Credit | 5.8 | -8.0 | 2.7 | 1.9 | 2.9 |
| 78 | GPAIX | Grant Park Multi Alt Strat | 4.1 | -2.0 | 0.7 | 5.0 | 11.2 |
Source: Created by the Author Based on Mutual Fund Observer Screens
Table #3 contains some of the top-ranked funds from categories corresponding to the yellow shaded “low risk” categories in Table #1 above. Note that while the categories, on average, are riskier than those in Table #2, these funds have low Ulcer Indexes and are suitable for most investors.
Table #3: Group #2: Low Risk Category – Top Rated Funds
| Rank | Symbol | Name | APR | MAXDD | Ulcer Index | Martin Ratio | Yield |
| 99 | ISTB | iShares Core 1-5 Year USD Bond | 4.6 | -1.2 | 0.3 | 11.5 | 2.4 |
| 99 | VCOBX | Vanguard Core Bond | 9.1 | -0.8 | 0.4 | 21.0 | 2.1 |
| 99 | VBIIX | Vanguard Inter-Term Bond Index | 8.8 | -1.4 | 0.5 | 16.7 | 2.3 |
| 99 | EXCPX | Manning & Napier Uncons Bond | 5.8 | -4.6 | 1.5 | 3.3 | 2.6 |
| 99 | VFSTX | Vanguard Short-Term Invest-Grade | 4.8 | -3.1 | 0.9 | 4.4 | 2.4 |
| 99 | SWAGX | Schwab US Agg Bond Index | 6.8 | -0.8 | 0.4 | 17.0 | 2.5 |
| 98 | SCHZ | Schwab US Agg Bond | 7.0 | -0.9 | 0.4 | 17.0 | 2.5 |
| 97 | SUBFX | Carillon Reams Uncons Bond | 8.5 | -3.0 | 0.9 | 8.9 | 2.4 |
| 97 | NUBD | Nuveen ESG US Agg Bond | 7.1 | -1.1 | 0.5 | 13.9 | 2.3 |
| 97 | FNDSX | Fidelity Sustainability Bond Index | 7.1 | -0.9 | 0.4 | 17.7 | 2.1 |
| 96 | SPSB | State Street Short Term Corp Bond | 4.0 | -2.5 | 0.7 | 4.6 | 2.3 |
| 95 | PBDIX | T. Rowe Price US Bond Enh Index | 7.3 | -1.7 | 0.6 | 11.7 | 2.4 |
| 95 | FSIGX | Fidelity Series Invest Grade Bond | 8.5 | -3.0 | 0.9 | 8.7 | 2.7 |
| 95 | DODIX | Dodge & Cox Inc | 7.7 | -3.1 | 0.9 | 7.6 | 2.6 |
| 95 | IUSB | iShares Core Tot USD Bond | 6.7 | -2.0 | 0.6 | 9.4 | 2.7 |
| 93 | SWSBX | Schwab Short-Term Bond Index | 4.7 | -0.1 | 0.0 | 124.0 | 1.8 |
| 92 | PRWBX | T. Rowe Price Short-Term Bond | 4.3 | -2.7 | 0.8 | 4.3 | 2.1 |
| 92 | VBISX | Vanguard Short-Term Bond | 4.7 | -0.1 | 0.0 | 238.0 | 1.9 |
| 87 | FTHRX | Fidelity Inter Bond | 6.5 | -2.5 | 0.7 | 7.8 | 2.2 |
| 86 | BSBAX | Northern Trust Short Bond | 3.5 | -2.0 | 0.6 | 4.5 | 2.1 |
| 85 | BAB | Invesco Taxable Municipal Bond | 6.6 | -6.6 | 3.0 | 2.0 | 3.2 |
| 84 | JANFX | Janus Henderson Flexible Bond | 9.0 | -3.3 | 1.0 | 8.3 | 2.5 |
| 84 | FNSOX | Fidelity Short-Term Bond Index | 4.7 | -0.1 | 0.0 | 132.0 | 1.7 |
| 83 | FSHBX | Fidelity Short-Term Bond | 3.9 | -1.6 | 0.4 | 7.0 | 1.9 |
Source: Created by the Author Based on Mutual Fund Observer Screens
Top-Ranked Lipper Categories
Table #4 contains the top-ranked Lipper Categories from my ranking system of over a thousand mutual funds, exchange traded funds and closed end funds. Bear refers to the average performance during the past three recessions. The funds are separated into nine buckets based on risk or characteristics.
Table #4: Top-Ranked Categories
| Lipper Category Data | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| S&P 500 Index | 79 | 7.0 | (19.6) | 2.0 | 1.8 | 8.9 | 15.1 | (28.6) |
| Bucket 1: Safety | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. Short-Intmdt Invst Grade Debt | 91 | 0.5 | (1.8) | 23.7 | 2.3 | 0.6 | 5.1 | 2.4 |
| 2. GNMA | 89 | 0.1 | (0.2) | 40.4 | 2.0 | (0.0) | 3.8 | 6.5 |
| 3. Core Bond | 88 | 0.6 | (1.7) | 17.6 | 2.4 | 1.0 | 7.3 | 4.6 |
| 4. U.S. Gov Short | 85 | 0.1 | (0.2) | + | 1.7 | 0.3 | 3.3 | 5.0 |
| Bucket 2: 1 to 2 Years | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. Mxd-Ast Trgt Today | 74 | 1.9 | (6.1) | 3.9 | 2.7 | 2.9 | 7.1 | (6.8) |
| 2. Mxd-Ast Trgt Alloc Consv | 73 | 2.6 | (7.7) | 4.4 | 1.9 | 2.8 | 7.0 | (6.1) |
| 3. Core Plus Bond | 69 | 1.0 | (3.2) | 5.9 | 2.6 | 1.1 | 6.2 | 5.0 |
| 4. Corp Debt A Rated | 66 | 2.0 | (5.1) | 5.1 | 2.9 | 1.3 | 10.8 | 3.5 |
| 5. U.S. Treasury Gen | 44 | 1.6 | (3.3) | 10.6 | 1.8 | 0.1 | 13.3 | 13.8 |
| Bucket 3: 3 to 4 Years | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. Convertible Securities | 84 | 4.7 | (14.9) | 7.0 | 2.4 | 13.7 | 33.7 | (22.7) |
| 2. Mxd-Ast Trgt Alloc Mod | 71 | 4.1 | (11.9) | 2.2 | 1.8 | 4.8 | 9.0 | (14.8) |
| 3. Mxd-Ast Trgt Alloc Growth | 70 | 5.6 | (15.8) | 2.1 | 1.8 | 6.3 | 11.4 | (19.4) |
| Bucket 4: 4 to 5 Years | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. S&P 500 Index | 79 | 7.0 | (19.6) | 2.0 | 1.8 | 8.9 | 15.1 | (28.6) |
| 2. Mxd-Ast Trgt 2040 | 62 | 6.3 | (16.7) | 1.7 | 3.7 | 6.6 | 10.5 | (27.6) |
| 3. Consumer Goods | 57 | 6.5 | (16.3) | 1.3 | 1.9 | 9.7 | 8.7 | (13.6) |
| Municipal Bonds | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. Muni Short Debt | 81 | 0.3 | (0.8) | 5.8 | 1.4 | 0.4 | 2.3 | 3.3 |
| 2. Muni Short-Intmdt Debt | 78 | 0.8 | (1.9) | 3.9 | 1.6 | 0.9 | 3.6 | 4.0 |
| 3. Muni Gen & Ins Debt | 74 | 2.3 | (5.9) | 1.7 | 2.4 | 1.3 | 3.8 | 2.8 |
| Yield | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. Income & Preferred Stock | 99 | 2.5 | (7.8) | 1.4 | 6.0 | 1.9 | 4.2 | (14.1) |
| 2. Flexible Income | 86 | 3.9 | (11.0) | 3.5 | 4.4 | 5.0 | 5.8 | (26.9) |
| 3. U.S. Mortgage | 76 | 0.3 | (0.7) | 42.8 | 2.5 | 0.5 | 4.7 | 5.4 |
| 4. Retirement Income | 73 | 3.1 | (8.7) | 2.4 | 1.8 | 3.4 | 6.2 | (16.6) |
| 5. Gen Bond | 69 | 2.0 | (5.3) | 5.7 | 2.7 | 1.3 | 7.9 | (0.3) |
| 6. Corp Debt BBB-Rated | 69 | 1.7 | (5.4) | 5.1 | 3.1 | 1.3 | 7.9 | 2.0 |
| Inflation Resistant | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. Inflation Protected Bond | 90 | 0.5 | (1.6) | 18.4 | 1.1 | 3.0 | 10.0 | 5.3 |
| 2. Real Return | 45 | 6.6 | (13.7) | (0.4) | 2.4 | 3.4 | (2.0) | (17.6) |
| Global & International Bonds | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. Global Income | 64 | 2.1 | (6.1) | 2.8 | 2.6 | 2.1 | 4.6 | 1.9 |
| 2. Global High Yield | 64 | 5.6 | (14.1) | 0.3 | 4.8 | 4.4 | 2.6 | (10.7) |
| Global & International Equity | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 1. Global Multi-Cap Growth | 65 | 5.6 | (16.8) | 5.9 | 0.5 | 11.0 | 31.5 | (27.6) |
| 2. Pacific Region | 65 | 8.2 | (19.5) | 2.0 | 2.1 | 7.7 | 13.2 | (30.2) |
| 3. Global Health Biotech | 61 | 3.9 | (10.8) | 6.1 | 1.2 | 3.8 | 23.7 | (14.1) |
| Gold & Alternatives | Rank | Ulcer | MaxDD | Martin | Yield | RTN 3Mos | APR | Bear |
| 2. Alt Event Driven | 72 | 2.7 | (7.2) | 4.1 | 1.7 | 4.6 | 8.5 | (2.5) |
| 3. Alternative Multi-Strategy | 67 | 1.9 | (5.5) | 4.3 | 3.7 | 3.1 | 7.1 | (11.9) |
| 4. Absolute Return | 65 | 2.7 | (6.4) | 11.5 | 1.2 | 2.7 | 21.0 | 9.6 |
| 5. Alt Credit Focus | 63 | 1.9 | (5.4) | 3.9 | 3.0 | 2.6 | 5.6 | (4.8) |
Source: Created by the Author Based on Mutual Fund Observer Screens
Of the more than a thousand funds that I extracted from Mutual Fund Observer for September, Table #5 contains the Categories with the highest fund flows. As a cautionary note, some categories do not have many funds. In general, materials and natural resources, growth, and industrials attracted funds. Some investors may be rebalancing to short term bonds. I also note that absolute return funds are attracting funds.
Table #5: Categories with High Fund Flows
| Fund Flows | Rank | Flow | Ulcer | MaxDD | Martin | RTN 3Mos | APR | Bear |
| 1. Basic Materials | 37 | 7.6 | 10.8 | (26.5) | 1.1 | 11.8 | 13.1 | (37.5) |
| 2. Intrntnl Large-Cap Growth | 57 | 7.3 | 6.7 | (17.6) | 3.6 | 9.9 | 21.4 | (29.8) |
| 3. Global Natural Resources | 20 | 6.9 | 17.5 | (32.2) | (0.6) | 1.4 | (12.3) | (25.9) |
| 4. Global Multi-Cap Growth | 65 | 6.6 | 5.6 | (16.8) | 5.9 | 11.0 | 31.5 | (27.6) |
| 5. Multi-Cap Core | 48 | 6.0 | 7.7 | (20.6) | 1.8 | 8.3 | 13.2 | (28.5) |
| 6. Absolute Return | 65 | 5.9 | 2.7 | (6.4) | 11.5 | 2.7 | 21.0 | 9.6 |
| 7. Pacific Ex Japan | 60 | 5.5 | 6.3 | (16.7) | 5.7 | 9.9 | 26.6 | (33.1) |
| 8. Ultra-Short Obligations | 78 | 5.2 | 0.4 | (1.3) | 8.5 | 0.3 | 2.0 | 2.9 |
| 9. Industrials | 21 | 4.4 | 12.8 | (27.2) | 0.2 | 9.8 | 0.4 | (27.1) |
| 10. Small-Cap Growth | 36 | 3.9 | 8.4 | (23.9) | 3.1 | 9.3 | 21.3 | (28.2) |
Source: Created by the Author Based on Mutual Fund Observer Screens
Table #6 contains the top-ranked funds for Charles Schwab, Fidelity, and Vanguard mutual funds, closed end funds, and exchange traded funds. These correspond to the top rated categories in the previous table.
Table #6: Top-Ranked Funds from Top-Ranked Categories
Source: Created by the Author Based on Mutual Fund Observer Screens
Since closed end funds tend to be more volatile, I am more selective when screening them. Table #7 contains the top-ranked closed end funds.
Table #7: Top-Ranked Closed End Funds
| Closed End Funds | ||||||||
| Symbol | Name | Bucket | Author’s Rank | YTD | 1 Year | Ulcer Index | Martin Ratio | Yield |
| TSI | TCW Strategic Income | Income | 99.3 | 3.1 | 4.2 | 2.5 | 1.4 | 6.0 |
| BME | BlackRock Health Sciences Trust | Bucket #4 | 96.0 | 8.8 | 22.9 | 4.0 | 5.5 | 5.6 |
| MIN | MFS Intermediate Income Trust | Income | 95.7 | 6.6 | 7.0 | 0.7 | 9.6 | 8.6 |
| NUV | Nuveen Municipal Value | Municipal Bond | 91.7 | 2.6 | 3.1 | 3.3 | 0.7 | 3.5 |
| NIE | AllianzGI Equity & Convertible Income | Bucket #3 | 90.6 | 18.3 | 28.7 | 4.9 | 5.7 | 5.5 |
| NXR | Nuveen Select Tax-Free Income Portfolio 3 | Municipal Bond | 89.3 | 3.5 | 4.0 | 2.8 | 1.2 | 3.1 |
| CLM | Cornerstone Strategic Value | Bucket #4 | 81.9 | 6.2 | 14.2 | 6.5 | 2.1 | 23.6 |
| BUI | iShares Util Infra & Power Oppor | Bucket #3 | 77.2 | 2.1 | 8.1 | 7.9 | 0.9 | 6.8 |
| ETJ | Eaton Vance Risk-Managed Div Equity Income | Alternatives | 75.7 | 12.5 | 17.7 | 1.7 | 10.2 | 9.3 |
Source: Created by the Author Based on Mutual Fund Observer Screens
Table #8 contains top-ranked funds from other mutual fund families. I own COTZX and TMSRX.
Table #8: Top-Ranked Mutual Funds From Other Families
| Other Fund Families | ||||||||
| Symbol | Name | Bucket | Author’s Rank | YTD | 1 Year | Ulcer Index | Martin Ratio | Yield |
| COTZX | Columbia Thermostat Inst | Bucket #3 | 100.0 | 20.8 | 24.5 | 0.4 | 64.5 | 1.7 |
| TMSRX | T. Rowe Price Multi-Strategy Total Return | Alternatives | 99.5 | 8.3 | 10.3 | 1.4 | 6.9 | 2.4 |
| BBNIX | BBH Income | Global Bond | 95.6 | 8.3 | 8.3 | 1.5 | 5.1 | 3.0 |
| PBDIX | T. Rowe Price US Bond Enh Index | Bucket #1 | 94.4 | 7.3 | 7.3 | 0.6 | 11.7 | 2.4 |
| MAPIX | Matthews Asia Dividend Inv | Global Equity | 92.9 | 14.6 | 22.3 | 7.7 | 2.8 | 1.6 |
| OSTIX | Osterweis Strategic Income | Income | 92.9 | 3.9 | 4.4 | 3.0 | 1.2 | 4.3 |
| PRIPX | T. Rowe Price Inf Prot Bond | Inflation | 90.5 | 9.1 | 9.8 | 0.4 | 21.7 | 0.4 |
| BTTRX | American Century Zero Coupon 2025 | Bucket #2 | 86.6 | 9.1 | 8.3 | 0.4 | 21.3 | 3.3 |
| ALSRX | Alger Small Cap Growth | Bucket #4 | 80.7 | 39.7 | 46.4 | 4.1 | 11.2 | 0.1 |
| SCFTX | Virtus Seix High Grade Muni Bond | Municipal Bond | 80.1 | 5.0 | 5.5 | 1.4 | 3.4 | 1.3 |
Source: Created by the Author Based on Mutual Fund Observer Screens
Short List of Funds
Chart #2 and Table #9 show a final list of funds for seeking yields with safety. The funds were chosen to have a balance of total return, yields, and low risk. One needs to take into account how these funds might perform in a low interest rate environment. I included some traditional income funds for comparison.
Chart #2: Finalist Funds
Data by YCharts
Table #9: Finalist Funds
| Rank | Symbol | Name | Lipper Category | APR | MAXDD | Ulcer Index | Martin Ratio | Yield |
| 100 | BBNIX | BBH Income I | Global Income | 8.3 | -4.8 | 1.5 | 5.1 | 3.0 |
| 97 | EXCPX | Manning & Napier Unconstrained Bond Series S | Absolute Return Bond | 5.8 | -4.6 | 1.5 | 3.3 | 2.6 |
| 95 | LASYX | Natixis Loomis Sayles Strategic Alpha Y | Absolute Return | 6.1 | -6.2 | 2.1 | 2.5 | 2.4 |
| 94 |
SUBFX |
Carillon Reams Unconstrained Bond I | Absolute Return Bond | 8.5 | -3.0 | 0.9 | 8.9 | 2.4 |
| 93 | MIN | MFS Intermediate Income Trust | Corporate Debt BBB-Rated | 7.0 | -2.3 | 0.7 | 9.6 | 8.6 |
| 92 | VTABX | Vanguard Total International Bond Index Admiral | International Income | 2.1 | -2.5 | 1.0 | 1.5 | 3.2 |
| 91 | SWLRX | Schwab Monthly Income — Maximum Payout | Retirement Income | 5.0 | -3.7 | 1.1 | 3.9 | 2.4 |
| 90 | VASIX | Vanguard LifeStrategy Income Inv | Mixed-Asset Target Alloc Consv | 6.8 | -4.3 | 1.3 | 4.7 | 2.4 |
| 89 | TMSRX | T. Rowe Price Multi-Strategy Total Return | Alternative Multi-Strategy | 10.3 | -4.7 | 1.4 | 6.9 |
2.4 |
Source: Created by the Author Based on Mutual Fund Observer Screens
What’s Next?
My past few articles have been on Flexible Portfolio Funds, Alternatives, and Absolute Return Funds, among others. My investing objective is to build a low risk portfolio suitable for this environment with high valuations and low interest rates. This article is the basic research for low risk funds with above-average yields. These are a few ideas that I will be looking into further in my next article on Mutual Fund Observer.
Disclosure: I am/we are long COTZX, TMSRX, FMSDX, FIKFX, FTHRX, DODIX, SWLRX, VEMBX, VTABXVTINX, VBIIX, VGSTX, VWIAX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I am an engineer with an MBA nearing retirement and not an economist nor an investment professional. The information provided is for educational purposes and should not be considered as advice. Investors should do their due diligence research and/or use an investment professional. In September 2019, I began contributing to the Mutual Fund Observer monthly newsletter.