Templeton's Hasenstab Runs into Serious Problem With Big Bond Bet Scott said: "I think what concerns me is the idea that a mutual fund owns more than half of a country's foreign debt..."
Hi Scott: That would be a very high percentage. However, as a percent of the fund's holdings, suspect it's still a relatively small amount, probably
10% or less of total investments. It's likely the fund's prospectus restricts how much can be invested in a single country and what % of any country's outstanding debt can be held. 50% of one issuer's outstanding debt would seem extraordinary high.
The numbers on fund performance didn't look terrible. One, anyway, was overall positive for the year - but lagged its "peers". How you put international bond funds or EM bond funds into a peer group eludes me. The world's a big place. These funds all take different approaches to international investing - choosing to favor some areas and avoid others. Some hedge against currency risk. Others choose not to. Makes a big difference in results. But, if looking for a pure play against the Dollar, the unhedged will give you more of that.
Here's the fact sheet for the Global Total Return Fund. I'm assuming it's the more aggressive of the two mentioned in the Bloomberg article:
https://www.franklintempleton.com/forms-literature/download/407-FF Note that the Singaphore Dollar is the last currency listed as a substantial holding. It comprised 6.39% of fund's assets as of reporting. We can assume the Ukranean currency was something less than 6.39% of the fund's currency exposure. Correct?
Here's an article from May, 20
14: "Templeton Fund Snaps Up a Third of Ukraine Sovereign Eurobonds"
http://www.emergingmarkets.org/Article/3342021/Templeton-fund-snaps-up-a-third-of-Ukraine-sovereign-Eurobonds.html. This article puts this fund's total assets at around 7
1 billion dollars and the total investment in these bonds of just over 3 billion. That puts the total investment at around 4.25% of fund assets. Reasonable I think. Obviously, it was a speculative play that didn't work out.
Templeton's Hasenstab Runs into Serious Problem With Big Bond Bet "Investors last year pulled a record $14 billion from the U.S. and European versions of the Templeton Global Bond Fund and Templeton Global Total Return Fund, which have a combined $150 billion in assets ..."
Same old. Same old. Money pours in. Money pours out.
If these "in-and-out" investors are making a lot of money in the process, that's fine. I'm all for making a fast buck any way you can as long as you can keep reinvesting it for greater and greater returns. However, all the evidence I've read or viewed on this forum indicates just the opposite. That average fund investors who move in and out of their funds fail to achieve the returns those funds themselves achieve over time. So, in all this coming and going, something doesn't add up. Investors do worse than the funds they own. And, where did these investors get the idea that investing outside the U.S., especially in emerging markets, is NOT risky?
Not sure what my main point is here. But, hate to see mutual funds designed for "longer-term investors" (as almost every prospectus reads) subjected to rapid inflows and outflows. Hurts the funds and probably doesn't do much for 90% of those who are running in and out. In the end, all of us pay a bit more in the form of added operating costs the funds experience in aggregate. Old school I guess. Back in the 70s and 80s you needed to wait until next morning to learn the % of change & NAV of a fund, and maybe 3 months to learn how it was performing relative to so-called "peers". Time to reflect and take a deep breath. People were much more long-term focused. We expected our funds would experience both good and bad years. Nowdays, we sit at computer screens watching green and red numbers flashing.
Fund disappointed? How dare it? .... Shoot the ##**!!**
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*Slightly edited, mainly to delete an incorrect reference to Russian securities (not pertinent)
Fixed Interest Rates on Savings StarOne still only paying 0.85% today while I can get
1.00% in FDIC savings at two banks listed at
Best Savings Account RatesI can't see tying up money in a CD now when savings pay more.
MikeM: Ally bank is listed as paying 0.99% for a savings account. If I put "CD -
1 YR & under $40K" into the tool at "
Ally Bank Savings Rates" it says
1.20%.
Is it worth locking money up for a year for an extra 0.20% if we expect the Fed to raise rates by 0.25% this year? Perhaps if that is the only rate bump.... hard to say.
What do others think? Will the Fed raise rates by more than 0.25% this year?
What Are Your Favorite Fixed Income Investments? Added Pimco Foreign Bond PFORX early last year to my FI holdings, and it did well in 2014.
What Are Your Favorite Fixed Income Investments? Last month I bought an individual, new issue, 10yr T I P for my IRA and it is already up 2.9% with the plunge in rates. I'm tempted to cash it in and wait in cash for the spread (real yield) to go positive again to buy another one.
The New England Patriots Win And The Market FYI: In terms of the AFC vs. NFC breakdown, of the 48 prior Super Bowls played, the NFC has the upper hand in championships with 26 compared to 22 for the AFC. Thankfully for the bulls, the S&P 500 has historically performed much better for the remainder of the year when the NFC wins. Following the 26 prior NFC victories, the S&P 500 has averaged a gain of
10.6% with positive returns over 80% of the time. That is more than twice the return of the S&P 500 following the 22 AFC victories. In those years, the S&P 500 averaged a gain of just 4.3% with positive returns less than two-thirds of the time. The AFC hasn't been a total slouch, though. The last six times an AFC team won the Super Bowl, the S&P 500 has been up for the remainder of the year every time for an average gain of
13.6%.
Regards,
Ted
http://www.bespokeinvest.com/thinkbig/2015/2/1/super-bowl-and-the-market.html?printerFriendly=true
Can somebody help in selecting funds for 401k @hank,
@00BY: Thanks for those inputs.
@Maurice: The 5-year period is what I am looking at now. It can be extended or curtailed short - I cannot say at this point of time, but with the view available to me at present, that is the situation. I do get taxed and will get if I withdraw earlier, but the addition of employer contribution would be more than helpful.
Withdrawal in a non-earning year is an excellent idea. I would keep that in mind. Thanks.
I have selected the two MS funds (debt portion; short and intermediate), the Invesco fund, Davis and Wells Fargo funds in
10,
10,40,20,
10 percents.
What Obama's Attempt To Tax 529 plans Says About The Safety Of Roth IRA Assets
Templeton's Hasenstab Runs into Serious Problem With Big Bond Bet
How far down will yields go - USA 10year 1.64%
How far down will yields go - USA 10year 1.64% Hi
@Old_SkeetYou noted: " It seems many of my hybrid income, conserative and moderate allocation funds have been reducing their allocation to fixed income for sometime along with reducing the duration."
>>>I will assume (a dangerous proposition) that the areas you mentioned "seem" to be reducing their allocation to fixed income. Is this based upon prospectus data that is 3 or more months old; or do you see this from another source?
You also noted: "Currently, I don't feel fixed income is paying enough to justify holding as much of it as I have in the past....."
>>>By paying, I again with presume you mean "yield". This is true of course, because of buying in these sectors. The yield is of little consequence at this point, with the price appreciation being the major value with fixed income. Fixed income is also a widely used term in writings. 'Course, I know that you know and understand that "fixed income" has many flavors. Even the much media bashed PTTRX is +2.62% YTD with "fixed income".
Lastly, you noted: " increase my allocation to other assets by
10%."
>>>What are other assets? I ask, as I know your holdings cover a lot of turf.
Just trying to get a drift of your words.
Thank you Old_Skeet, for your continuing investing thoughts posted to this fine site.
Take care,
Catch
What Are Your Favorite Fixed Income Investments? Good afternoon,
I don't know how low yields will go ... but, they are now low enough for me to start to make some changes within my portfolio's overall asset allocation. Some of my past favorite fixed income investments are now becoming suspect.
I have now lowered my allocation to fixed income within my portfolio form 25% to 20%. It seems many of my hybrid income, conserative and moderate allocation funds have been reducing their allocation to fixed income for sometime along with reducing the duration.
I can remember when a 30% to 35% allocation to fixed income was of the norm for me and of that allocation I held a good slug in tax free muni's. Not so now.
In addition, since domestic equities in general appear to be mostly overbought I am thinking of changing my allocation to 20% cash, 20% income, 20% domestic equity, 20% foreign equity, 20% other assets. To do this, I'll have to reduce my domestic equity allocation by 10% and increase my allocation to other assets by 10%.
Currently, I don't feel fixed income is paying enough to justify holding as much of it as I have in the past and with domestic equities being mostly overbought well it is time for a change to my overall allocation.
I'll be interested to learn how one of the board's master investors, Ted, positions going forward.
Old_Skeet
How far down will yields go - USA 10year 1.64% Good afternoon,
I don't know how low yields will go ... but, they are now low enough for me to start to make some changes within my portfolio's overall asset allocation.
I have now lowered my allocation to fixed income within my portfolio form 25% to 20%. It seems many of my hybrid income, conserative and moderate allocation funds have been reducing their allocation to fixed income for sometime along with reducing the duration.
I can remember when a 30% to 35% allocation to fixed income was of the norm for me and of that allocation I held a good slug in tax free muni's. Not so now.
In addition, since domestic equities in general appear to be mostly overbought I am thinking of changing my allocation to 20% cash, 20% income, 20% domestic equity, 20% foreign equity, 20% other assets. To do this, I'll have to reduce my domestic equity allocation by 10% and increase my allocation to other assets by 10%.
Currently, I don't feel fixed income is paying enough to justify holding as much of it as I have in the past and with domestic equities being mostly overbought well it is time for a change to my overall allocation.
I'll be interested to learn how one of the board's master investors, Ted, positions going forward.
Old_Skeet
How far down will yields go - USA 10year 1.64%
What Are Your Favorite Fixed Income Investments? LOL - Non-productive exercise trying to pick a favorite fixed income fund I think. Sorta like picking a favorite color or rock star. They come in many different shades tailored to various needs.
I'm hopeful the good performance of junk munis is telling us something positive about the prospects for the economy and risk markets in general over the next several years. When the economy slumps, state and municipal governments really take it on the chin. Tax receipts fall as social welfare expenses rise. Those underfunded pension funds will fare much better too with rising stock and real-asset prices.
Fees are extremely important in choosing fixed income funds. Essentially, because potential returns after fees aren't as great as for equities. Don't know how the money market and short term bond funds are staying alive. Operating costs must be greater than meager returns from investment. Perhaps they're willing to subsidize these in hopes their investors will move the money into other funds,
I find the whole fixed-income picture so confusing, I've largely abdicated my responsibilities. Let the guy or gal running Spectrum Income (RPSIX), Dodge & Cox Income (DODIX) or similar diversified income funds decide how to invest it. At .43%, another reason to like the second.
Re: MFLDX- I feel for them. Off 13.3% year over year. Largely a victim of circumstance I think. (crashing energy and commodities prices and an investor stampede) But that's another story. Obviously, their mandate was to make money for investors and they failed miserably.
