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ICMUX

ducrow
in Fund Discussions
i dont know anything about bond funds. all my bonds are in my mutual funds which are dodbx mtrix lcorx vgwlx pmaix. im looking to invest in a low risk bond fund with good returns. I have read good reviews of icumx on this site. going forward with interest rates falling how will the fund perform.. i have also looked at avefx but its returns are less than icumx. i will appreciate all the opinions and suggestions I receive. this is money i want to invest with safety and low risk in mind.

Comments

  • larryB
    Look at the yield relative to bond funds with higher quality portfolios. Given the high yield of ICMUX ask yourself why is the yield so much higher. Leverage? Less than investment grade bonds? Longer duration? Are you looking for a long term hold or a quick speculative position? Have you an interest in what used to be called “junk?” Risk and reward are linked. High yield doesn’t generally go with”safety and low risk in mind.” There is a guy who posts here and is generally described as the most successful bond investor ever and he certainly knows more than I. Maybe he will answer.
  • DrVenture
    That is not me. But, I'll add my two cents. As @larryB said, bond returns are directly/positively correlated with risk.

    You should look at bond funds that suit your risk tolerance. BOND is a great starting point. Bonds rated BBB or above are considered investment grade. Intermediate duration is considered the sweet spot right now between risk and return.

    BOND is smack dab in the middle ground and managed by a top investment house: PIMCO. The current rate environment (falling FED rates) is beneficial to bond funds. As far as risk goes (IMO) risk is minimized in this environment. One can take more risk, but that should not necessarily be considered a long term position. Eventually rates will go up again. That is not good for bonds.

    Also, you should familiarized yourself with the various types of bond (fixed income) risk, Google can help you there. It can get complicated.
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