The tail-end of 2008 left most investors frustrated. One of the few beacons of hope appeared to be U.S. Treasury bonds. Retirement-oriented investors still wonder where to go next for better returns.

Although many seem to lean toward Treasury investments, they may now be priced too expensively. Chief Investment Officer Mohamed El-Erian of Pimco and popular financial columnist Andrew Bary both advise people to stay away from treasury bonds for a variety of reasons best outlined in a Barrons article, Get out now, published January 5, 2009 (search for title at: http://online.barrons.com/article).

So, what other asset classes might provide relief to beleaguered investors in search of steady income and safety of capital in 2009? A growing number of experts suggest the following four asset classes may indeed fill that bill. We will discuss the first three. The fourth was already published; see the link below.

* Securities backed by Mortgages * TIPS: Treasury Inflation-Protected Securities * Municipal Bonds * Investment-Grade Corporate Bonds: refer to the AboutETFs.info article at http://www.aboutetfs.info/Monthly-Income-Strategies.php

1. Mortgage-backed securities have experienced declining yields after the Federal government decision to buy upwards of 500 billion dollars of mortgage bonds from Fannie Mae, Freddie Mac and Ginnie Mae. Taking a historical perspective, current yields are still enticing. Also, consider that these instruments carry essentially the same Federal guarantee as Treasuries while offering higher yields. With that in mind, look into (MBB) iShares Barclays MBS Bond Fund, (AGZ) iShares Barclays Agency Bond Fund and (MBG) SPDR Barclays Capital Mortgage Backed Bond ETF.

2. Treasury Inflation Protected Securities, or TIPS, may react to fears of inflation that have recently shifted to forecasts of worldwide deflation. This reversal in sentiment has sent TIPS prices plummeting and has driven yields higher. There is the strong possibility during the next several years that burgeoning Federal stimulus programs will lead inflation higher. TIPS will thrive as inflation heats up. With other expert forecasts published about TIPS, take a careful look at iShares Barclays TIPS Bond Fund (TIP). Also, consider SPDR Barclays Capital TIPS (IPE).

3. Tax-free Municipal Bonds are approaching attractive levels compared to US Treasuries. For example, investment grade munis with their current 4-5% tax-free rates, are comparable to taxable yields on certificates of deposit that pay 6-7%. Among the worthy products to consider are the following: (PZA) PowerShares Insured National Municipal Bond Index Fund, (TFI) SPDR Lehman Municipal Bond ETF and (MUB) iShares S&P National Municipal Bond Index Fund.

Investors also may look to regional choices. California is arguably one of the prominent arenas for political and economic opportunity. With the advent of stimulus packages earmarked for infrastructure, one could anticipate more Federal assistance for California. One offering to investigate is Barclays (CMF) iShares S&P California Municipal Bond Fund.

What about safety of principal? For investors wanting more assurance, (PRB) Market Vectors Pre-Refunded Municipal Index ETF may be the hot item. This ground-breaking ETF invests only in pre-refunded municipal bonds. The collateral for these bonds are U.S. Treasury securities which means they are the only municipal bonds fully backed by the U.S. Government.

4. Investment Grade Corporate Bonds offer great value at current prices. Many investment fund managers are buying up corporate bonds on the assumption that bailout and stimulus programs will lead to fewer corporate defaults. For a more complete picture, read The 15 Best Asset Classes in 2009 for High Yielding, Secure Retirement Income in the strategy section of http://www.AboutETFs.info.

In future articles, we may examine two additional income-producing asset classes: senior loans and preferred stocks. But for now, your best bets for principal safety and steady income seem to be mortgage-backed securities, Treasury inflation protected securities (TIPS), municipal bonds and high-grade corporate bonds.

As always, results are not guaranteed and these strategies may not be suitable for your personal investment objectives. You should consult with a professional before buying or selling any securities. This article is not intended to be investment advice for the purchase or sale of any mentioned securities.

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