Safer Havens.

Some investors are moving assets to the safe and sure, if Payden & Rygel's year-old GNMA fund is any indicator. Starting from scratch, the fund now boasts of $100 million in assets.

The acronym GNMA refers to the Government National Mortgage Association, often called "Ginnie Mae." GNMA issues mortgage-backed securities guaranteed by the U.S. government. As of last week, GNMAs were yielding about 150 basis points (1.5 percent) higher than similar-maturity U.S. Treasuries.

David Ballantine, Payden & Rygel's GNMA portfolio manager, calls those securities "a very reasonable, liquid option to U.S. Treasuries." The downside is that homeowners can prepay (usually by refinancing) their mortgages, if interest rates plunge. That curbs capital appreciation in GNMA bonds, when interest rates go down.

However, Ballantine said he has enough flexibility to move a portion of his fund assets (up to about one-third) into U.S. Treasuries and capture such appreciation, although, of course, Ballantine must do that before rates decline.

And everyone knows how such efforts to predict interest rates have flummoxed many.

In any event, Ballantine foresees stable interest rates ahead. "That's a pretty good environment for Ginnie Maes," he said.

If Ballantine is right, more investors may tind themselves looking into GNMAs in the future. With the U.S. government projected by some experts to ran large surpluses for the next 15 years, some market watchers are predicting that U.S. Treasuries may actually become scarce while GNMA notes may become a favored alternative for credit risk-averse investors.

Contributing columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal.