Printer Friendly

MONEY SMALL INVESTOR INDEX: INVESTORS GRAB 8 PERCENT GINNIE MAES

 MONEY SMALL INVESTOR INDEX: INVESTORS GRAB 8 PERCENT GINNIE MAES
 /ADVANCE/ NEW YORK, June 14 /PRNewswire/ -- Faced with lowly 3.5 percent yields on certificates of deposit and money-market funds, investors are flocking to mutual funds that promise to pay as much as 8 percent, according to data gathered for Money magazine's Small Investor Index.
 These funds invest in huge pools of mortgages backed by government- chartered agencies such as the Government National Mortgage Association (Ginnie Mae).
 At several mutual fund companies, these funds are now the hottest- selling income investments. For example, the Putnam U.S. Government Income Trust, with assets of $4.1 billion and an 8.1 percent yield, has attracted an astounding $1 billion of fresh cash so far this year. Similarly, the $395 million Scudder GNMA Fund, which pays 8 percent, had net sales of $18 million in May, compared with $6 million in January.
 Although the government backing protects investors against losses resulting from defaults on the mortgages, Ginnie Maefunds' share prices can suffer if homeowners pay off large numbers of the mortgages. And with mortgage rates now at their lowest levels in 15 years, the number of refinancings has quadrupled in the past year.
 As a result, analysts warn that the funds' payouts may not be as generous as they look. Once the possible effect of mortgage refinancing is taken into account, says Robert Hennes, manager of the Investors Preference Fund for Income in Albany, N.Y., "Some 8 percent Ginnie Mae funds are actually paying effective yields as low as 5.5 percent." To get an idea of a fund's real return, he advises potential investors to ask for its so-called 30-day SEC yield.
 Last week, the Small Investor Index, which tracks the average individual's holdings, fell $210 to $45,929. Stocks lost $256, while bonds added $32. CDs and money funds contributed $14.
 This Last Year % Change from a
 Week Week Ago Week Ago Year ago
 102.12 102.58 93.46 -0.45% +9.27%
 Latest changes for each asset
 % change from a
 Category Index Week Ago Year Ago
 Stocks
 NYSE 102.47 -0.96% +11.71%
 ASE/OTC 101.50 -3.50 +15.58
 Equity funds 102.25 -1.83 +11.46
 Bonds
 Taxable Bonds 101.92 +0.24 +12.83
 Municipals 103.07 +0.42 +12.19
 Bond funds 102.49 +0.16 +12.57
 Short-term assets
 CDs 102.04 +0.08 +5.17
 Cash 101.76 +0.07 +4.41
 Other
 Real estate 98.02 -0.22 -5.14
 Gold 94.12 +0.72 -11.63
 Dec. 27, 1991 equals 100
 Where average small investors have their money now
 Current Year Ago Current Year Ago
 NYSE 22.11% 21.88% Bond funds 5.50% 4.41%
 ASE/OTC 6.98 6.91 CDs 15.91 19.24
 Equity funds 5.31 4.08 Cash 23.33 21.96
 Taxable bonds 12.67 13.12 Real estate 0.76 0.77
 Municipals 6.90 7.07 Gold 0.51 0.57
 Sources: Bank Rate Monitor, IBC/Donoghue's Money Fund Report, the Federal Reserve, Investment Company Institute, Lehman Bros., Lipper Analytical Services, Merrill Lynch, Morgan Stanley Capital International, National Association of Real Estate Investment Trusts, Prudential Asset Management, Standard & Poor's, Robert Stanger & Co., World Gold Council
 -0- 6/15/92
 /NOTE TO EDITORS: This material is also available in printable form from AP GraphicsNet and Access services for graphics and tables (under the file name MoneyIndex) and from PR Newswire for full text/
 /CONTACT: Jordan Goodman of MONEY, 212-522-3618, or Patti Straus of MONEY public relations, 212-522-2695/ CO: ST: IN: SU: ECO


SH -- NY064 -- 9804 06/12/92 16:03 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jun 12, 1992
Words:612
Previous Article:UGI'S ELECTRIC UTILITY FILES $4.6 MILLION RATE INCREASE
Next Article:U.S. ALCOHOL TESTING OF AMERICA INC. ANNOUNCES DIVIDEND PAYMENT
Topics:


Related Articles
MONEY SMALL INVESTOR INDEX: SMALL INVESTORS PICK STOCK FUNDS OVER STOCKS
SMALL INVESTORS STICK WITH 4 PERCENT MONEY FUNDS
MONEY SMALL INVESTOR INDEX: INVESTORS FLOCK TO SINGLE-STATE MUNIS
MONEY SMALL INVESTOR: INVESTORS PULL $65 BILLION OUT OF CDS STOCKS AND BONDS
SMALL INVESTORS STUMBLE DESPITE STOCK SURGE
INVESTORS SURGE INTO FOREIGN-STOCK FUNDS
MONEY SMALL INVESTOR INDEX: INVESTORS SCORE BIG GAINS IN BUSH YEARS
MONEY SMALL INVESTOR INDEX: INVESTORS BUY AS JAPANESE STOCKS PLUNGE
MONEY SMALL INVESTOR INDEX: INVESTORS BAIL OUT OF BOND MUTUAL FUNDS
MONEY SMALL INVESTOR INDEX: MORE INVESTORS HOLD ON TO THEIR CDs

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters