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Bond Fund Investors Face Rough Times Ahead

https://www.forbes.com/sites/mikepatton/2020/02/08/bond-fund-investors-face-rough-times-ahead/#12bf43581116


Bond Fund Investors Face Rough Times Ahead

Do you own one or more bond funds? If so, 2019 was a very good year, but don’t expect that to continue. You see, bonds do well when interest rates trend lower – as they did last year – but typically lose money when rates rise. And, with interest rates stuck at artificially low levels, at some point rates will rise, and bond funds will struggle to achieve a positive return. Here’s why.

Comments

  • I agree with this article. Rates now are at one of the lowest levels ever seen. You can still make 4-5% in bonds using Multisector+Non Trad funds which I posted about at Bond mutual funds analysis
    Several funds to consider are
    SD lower than1=SEMMX,ANFIX,ANGLX
    SD lower than 1.5=IISIX,TSIIX
    SD lower than 2=VCFIX,/VCFAX,JMUIX/JMUTX,PIMIX
    SD lower than 2.7=IOFIX,PUCZX,DPFNX,JMSIX
  • have read this article before, many times

    it makes sense each time
  • have read this article before, many times
    Yes, like in 2017, 2018, 2019... That stopped clock will be correct sooner or later I suppose.
  • Maybe...... or rates could go even lower. Only the shadow knows.....
  • Most don't think rates are going to go lower unless there is some crisis for which that is the right approach (part of the problem of having low rates).

    But I also meant that every Jan or Feb for a decade (more?) I have read the same article about how this year is going to be one where you shouldn't "expect [past good returns] to continue. You see, bonds do well when interest rates trend lower – as they did last year – but typically lose money when rates rise. And, with interest rates stuck at artificially low levels, at some point rates will rise, and bond funds will struggle to achieve a positive return", yada yada yawn. It is like boilerplate text. The byline is never Braham or Waggoner or such.

    I assume these articles are a source of tired mirth in the bond offices of Pimco, Fido, D&C, Vanguard, MetWest, etc.
  • Broken record. Brocken record. Broken record.
  • Ha, we heard the same thing during the 2013 Taper Tantrum.
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