Harry Domash, Online Investing | Stock market could offer a bumpy

Recent news is pointing to a slowing economic outlook. If that happens, the stock market could get bumpy, to say the least.

To me, that means that it’s time to consider a relatively conservative strategy, specifically preferred stocks, corporate bonds and related investments.

The best way to do that is via exchanged-traded funds (ETFs) and/or closed-end-funds (CEFs). That’s a lot easier and probably more profitable than learning the ins and outs of analyzing preferreds and bonds on your own.

If your not familiar with closed-end-funds, they are similar to exchanged-traded funds, but with one major difference: rather than selling and redeeming shares as needed, closed-end funds sell a fixed number of shares via an IPO. After that, the fund trades just like a stock.

Thus, the market price often varies from the per-share value of the funds holdings (net asset value). That said, the closed-end-funds that I’ll recommend today all recently traded close to their net asset values.

Here’s the list. All pay dividends monthly.

Preferred stocks

Although preferreds trade the same as common stocks, they are actually more like bonds. Investors buy them mostly for the steady dividends, although, depending on market conditions, mid-single digit annual appreciation is also possible.

First Trust Preferred Security & Income exchanged-traded fund (FPE): An actively managed exchanged-traded fund, FPE holds preferred tocks as well as other types of corporate securities. About 60% of its holdings were issued by U.S.-and Canadian-based corporations and the balance mostly by European corporations. About 65% of its holdings are credit-rated investment quality and the balance are below investment quality (junk) rated. The fund has returned 12% in the past 12 months and averaged 8% annually for the past three years. It’s paying a 4.5% dividend yield.

Global X US Preferred exchanged-traded fund (PFFD): Holds a mix of about 50% credit-rated investment grade preferreds, and 50% junk-rated preferred stocks mostly issued by U.S.-based financial industry corporations. Coincidentally, Global X recent returns were the same as First Trust, 12% for 12 months and 8% annually for three years. However, Global is paying a 5% dividend yield.

iShares Preferred & Income Securities exchanged-traded fund (PFF): iShares mostly holds credit-rated investment grade or unrated preferreds issued by U.S.-based financials industry corporations. The fund has returned 14% for the past 12 months and averaged 7% annually for three years. It’s paying 4.4% dividend yield.

Corporate bonds etc.

Rather than focusing on preferred stocks, these funds hold a mix of various types of corporate bonds and possibly common stocks as well. Thanks to the volatile market, both of these funds have recently racked unusually strong returns that are unlikely to be repeated.

Virtus AllianzGI Diversified Income closed-end-fund (ACV): Holds around 65% convertible corporate bonds and 35% common stocks. Virtus has…