Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Comments

  • Well, will skip the writer's note about "Whip Inlfation Now" and Jimmy Carter; although the writer did get the proper decade.
    As to bonds and safety....tis just a matter of full faith and trust and how many folks want to hold and buy them........otherwise, just very expensive T.P. and/or the collaspe of the financial system.
    The writer also noted for bond investors with a 5-10 year time frame to "let bonds take their natural interest rate path".
    Hopefully, there might be something in place within 5-10 years that would resemble a "natural" path for bond interest/yield rates.
    Rates for the past 5 years have been artificial and may have to remain so for a few more years.
    Flip a coin.....
  • I don't give Jimmy Carter much credit for anything and certainly not the WIN campaign. It would behoove younger readers to research the "Whip Inflation Now" campaign started by President Ford.

    It is going to be hard to figure what bonds will do in the future. Like most other investments, only the insiders and the heads of the five families know what will happen. The rest of us are along for the ride as the computers do their magic.
  • Five families = mafia? tyia
  • Reply to @JohnChisum: "five families" - Rothschilds, Rockefellers and....?
  • beebee
    edited August 2013
    Five Guys and Fries? They always seem to know "what's - ketchup" (or at least what Catch22 is up to) before the rest of us.
  • My mind is not working tonight but as I recall the list included the two mentioned above plus JP Morgan, Goldman Sachs, and the fifth one that eludes my memory at the moment.

    I guess I am in the camp of getting my fixed income allocation as short duration as possible and holding on until the smoke clears.
  • With the exception of Treasuries, bonds have never been 'safe' investments. And now long-term Treasuries might be the un-safest of all. There has always been risk investing in bonds, including inflation risk, interest-rate risk, issuer risk, and others. The fact is that most investors are realizing there is no 'safe' place to get 3-5% anymore. I am not sure that selling one's bond funds solves anything, since cash is for sure a negative return after taxes and inflation. But it may offer some temporary mental relief.

    Most bond managers have said for some time that prices were too high and that they would be content to pay their coupons and just try to hold onto values. Even that was a too-rosy outlook, as we have all seen in recent months. But just as hot money flowed into and out of EM bonds over the last year, many of those bonds' underlying currencies likely have stronger long-term futures than the dollar. And if that is true, perhaps 'buy low' is a good opportunity now, especially with current yields of 5-6.5%.

    But I also gree with JohnChisum. We are keeping our domestic bonds either in very short average-duration funds or in flexible-mandate bond funds. If investors have not already sold their TIPS and long-term Treasuries, now would be a good time. While the Detroit fiasco sent a shudder through the muni markets, we are less concerned about muni bonds in general. Yes, their prices were way too high, and in some cases they still are. But after most long-term muni funds already down 6-8% for the year (almost all of it in the last 3 months), perhaps (just perhaps) there will be a recognition of some good values in this sector. In the meantime, the selloff has boosted current yields to an attractive level for contrarian investors.

    We look at funds like Loomis LSBRX, Osterweis OSTIX, Goldman GSZIX, and a few others as good examples of flexible-mandate funds that have certainly beaten the odds this year, with positive numbers in a very difficult environment.

    Going forward, be cautious, be flexible, avoid knee-jerk reactions to daily hedlines. Remember that today's headlines and tomorrow's reality are seldom the same.
  • Pimco-PIMIX seems to be hanging in there. MWTRX lagging slightly. Emerging market funds are still disappointing.
  • Reply to @BobC:
    Hi Bob C,

    I like USAA's Muni offerings; USSTX, USATX, and USTEX. Using the shortest duration USSTX as a reference, the other two funds have pulled back to a point where I see the same buying opportunity. Charting longer term munis with a short term muni help me to see the over and under performance and help me extend or shorten my positions within these funds. Here the 1 year chart and as you mentioned there has been a pull back relative to the short term munis. I like these in my taxable account.

    image
  • edited August 2013
    Feeling the heat in allocation and balanced funds this year. It's clear the unusually large underperformance of bonds relative to equities is affecting those of us who, due to age or other factors, rely heavily on conservative or hybrid products containing various % allocations to investment grade bonds or other fixed income. Sorry - don't have specific numbers. Maybe Charles does. Especially noticeable in funds like TRRIX (only 40% equities). DODBX, on the other hand, has managed to buck the trend due to an aggressive equity-tilted approach by management going back some years. Unlike some others, I have no crystal ball. Just an observation. I suspect even a temporary reversal in the interest rate environment (towards lower rates) would erase some this very large disparity. Remains to be seen.
  • My AOMIX is feeling the pressure. It is a moderate AA fund. Meanwhile my ACMVX has done very well. Hindsight tells me a lot but only after the facts are in. It makes one wonder if allocation funds are in for a long and tough period of time with these bond issues?
  • Reply to @hank: Didn't seem to hurt MAPOX, VILLX to name just 2.
  • edited August 2013
    Reply to @JohnChisum: (-:
  • Reply to @ron: Those both look like fine balanced funds. Looks like many of those with a 60% or greater mandate to equities are doing quite well. OAKBX and DODBX, both of which I own, are having nice years - up 13% and 17% respectively. The ones more focused on income is where the pain is. TRRIX (40% equities) and RPSIX (14% equities), both of which I also own, are up only 5% and 1% respectively.
  • Yes, MAPOX (balanced) is up 20.71% over the past year. DLFNX and PREMX are getting hammered in terms of share price. I notice my monthly div. is a bit lower than it has been from PREMX, but there's a new portfolio reported to M* But the yield is back up over 5%.......SFGIX is so far, a disappointment. My bright spots are small positions: TRAMX and MSCFX. (Up 23.4% and 40.74%, respectively.) But my Matthews stuff is not doing badly. In terms of bonds, MAINX is not faring as badly as my others. And MAPIX and MACSX are up nicely over the past year: 20.27 and 17.07%. Break a leg, everyone.
  • Reply to @hank: Same with Vanguard Wellsely but its up and is a major holding of my AA. May never sell it.
Sign In or Register to comment.