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carew388 said:I'm a federal retiree with a TSP account. The F fund is an index fund based on the Bloomberg Barclays Aggregate Bond Index. IIRC, the duration is around 4.5. The 8.65 1 year return reflects capital gains from falling interest rates, similar to the gains recorded by core bond funds/intermediate bond funds.
I'm a federal retiree with a TSP account. The F fund is an index fund based on the Bloomberg Barclays Aggregate Bond Index. IIRC, the duration is around 4.5. The 8.65 1 year return reflects capital gains from falling interest rates, similar to the gains recorded by core bond funds/intermediate bond funds.
With the large spending stimulus in 2020, there is a possibility of inflation returning as a new reality. If that should occur, bonds could turn out to be a wise investment.
Inflationary conditions generally lead to a higher interest rate environment. Therefore, inflation has the same effect as interest rates. When the inflation rate rises, the price of a bond tends to drop, because the bond may not be paying enough interest to stay ahead of inflation.
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3.99 compound over that time period !
P.S. That 3.99 % was from 2019- back ten yrs.
Tsp acct shows F at 20.949/share presently
Was at 13.97 in june2010
49.9%returns total over 10years/1month
That would be 4.04% per year (compounding continuously) in the growth of the share price. Consistent with Derf's note.
Are there also dividends which would figure into your total return?
So the recent 8.65% is a big improvement over historical performance; what are they doing better now?
FedSmith is an advertising-based publication directed at Federal employees and retirees from what I can make out. It reminds me a bit of the publications sent free of charge to me from organizations like AARP and NEA / MEA (related due to prior employment). I’d be loath to criticize the content of any of these. They mean well. But neither do they provide the depth of financial insight / information you’d find on this board generally, or at any mainstream financial information service like WSJ, Bloomberg, Barron’s, etc. That may be because FedSmith (and the ones I cited above) are aimed at a broader, less financially astute population.
Excellent point about the declining interest rate trend we’ve grown accustomed to. If you’re under 50 you may not even remember previous decades of generally rising interest rates (assuming you can only remember such things back to when you were 20). Some of us who lived through and were investing during the 70s and 80s can assure you that what you’ve lived through is somewhat of an aberration as interest rates go. Rates can and do go in either direction - rising or falling. Someone here recently mentioned paying a 12 or 14% rate on a mortgage for a first time home.
The fund referenced in the article sounds a lot like the T Rowe Price U S Bond Enhanced Index Fund (PBDIX) which I happen to own. As bond funds go, its fairly “safe” holding all / mostly investment grade bonds having short-intermediate maturities. But in a serious ramp-up of interest rates it would certainly lose money,
In this regard, the TSP funds resemble variable annuity portfolios. The TSP funds are not mutual funds and are not required to distribute their earnings in the form of dividends. "The net earnings are reflected in the share price of the funds."
I’d be loath to criticize the content, but neither is the financial insight / information equivalent to what you’d find on this board generally, or at any mainstream financial information-based service like the WSJ, Bloomberg, Barron’s, etc.
I'm not so loathe. The FedSmith content includes: Fidelity (and virtually any mainstream financial service) writes: https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/bond-prices-rates-yields
As expected it did its job as ballast to stocks.
What is going to be its performance in the next 5 years? maybe 2-2.5% annually.
I don't expect inflation to rise beyond Fed expectations. I have seen many predictions by experts to be off in over 10 years.
But he didn’t have to document that inverse bond price / interest rate relationship (over-kill). It falls, for most of us, under the clause: “We hold these truths to be self evident ...”