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Fund Spy: A Brave New Bond World

By Eric Jacobson

"There's a challenge creeping up on bond managers--and by extension fund shareholders--that has thus far been met with the sound of crickets, but it’s a big one.

Falling market yields would typically prompt the idea of dramatically shortening a portfolio's duration, and vice versa. Effectively, the idea would be to take less risk after high-quality bonds have rallied (when their yields fall) and to add risk after they've lost ground and their yields have gone up. In other words: Buy low, sell high."



  • When I decided I was supposed to take all the good advice and have more bond funds, because it's ballast and all, I definitely looked for lower durations.

    Your post got me looking at my bond funds today. Some of them have gotten longer, and slopped into BBB. DODIX is up to five years and now BBB. Might be time to take some profits and flip to something like FTHRX. Still A. Still 4.04.

    I do have exposure to longer durations through old Wellington and Wellesley holdings.
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