ARM funds for safety and yield. (adjustable rate home mortgage security mutual funds)

Financial Executive, July, 1992 by Anderson, Alexander M.

The adjustable rate home mortgage security (ARM) mutual fund has become an attractive alternative form of investment since low short-term interests are showing indications of rate improvement. The growing popularity of ARMs is attributed to its ability to provide higher yield while allowing fixed-income investments in a portfolio to remain safe. Investors should expect a minimum issue holdout of from six months to a year to ensure profitable returns. Since ARMs are complicated investment options, investors ppanning to invest in ARMs should consider the volatility risk profiles of collateralized mortgage obligations being bought by the ARM fund, the fund's rate reset frequency, and the par value of the fund in relation to interest rate trends. ARMs serve as a profitable alternative...

Read the rest of this article with a Free Trial at HighBeam Research.

Premium Content Partnership | HighBeam Research provides an in-depth online archive library of reference works.