FYI: If you have been putting off, or can’t bear the thought of, rebalancing your portfolio, here are three ways to make the process simpler and, perhaps, more tolerable.
Rebalancing your holdings—and, ideally, reducing the level of volatility in your savings—is frequently a difficult exercise. It’s hard to sell assets that have been performing well because we tend to assume they will continue to perform well. And it’s difficult to buy into assets that seem problematic. (Think: bonds, where yields are all but nonexistent.)
Regards,
Ted
http://blogs.wsj.com/totalreturn/2015/04/07/portfolio-rebalancing-for-cowards/tab/print/?mg=blogs-wsj&url=http%3A%2F%2Fblogs.wsj.com%2Ftotalreturn%2F2015%2F04%2F07%2Fportfolio-rebalancing-for-cowards%2Ftab%2Fprint&fpid=2,121
Comments
My bond yields are out performing the "Market"..... should I Rebalance?
I have had quite a bit of success with PFORX over the past year or so. I am thinking of cutting back a bit and with the proceeds opening a position in PDIIX.
What are your thoughts regarding these two funds going forward.
Best Regards,
Mona
PFORX is primarily getting its return from price appreciation and not yield. The current 30-Day SEC Yield is 1.21%, but the fund is up 11% over the past year.
There are a lot of moving parts and the success is dependent on elements such as the right currency, country and duration decisions. Certainly they made the right call on the strengthening of the USD, which I believe will be more difficult to predict going forward, which is giving me pause (the reason I sold PQTIX a few months back).
Below is the performance summary as of 2-28 (as of 3-28 will be out shortly) and commentary. As you can see, Pimco has listed the contributors and decorators to the monthly performance of the fund.
Contributors
. Overweight to Italian and Spanish duration as European sovereign peripheral speads compressed.
. Shorts to the euro and yen as these currencies depreciated versus the USD.
. Underweight to U.K. duration as yields rose.
Detractors
. Overweight to the long end of the Japanese curve as yields rose.
. Exposure to local duration in Mexico, Brazil and Poland as yields rose.
. Short U.S. Agency MBS as sector spreads tightened.
https://investments.pimco.com/ShareholderCommunications/External Documents/Foreign_Bond_(Hedged)_Monthly_Commentary_770.pdf
I hope you can see it is not a fund that you can dumb down to getting a desired yield.
Mona
Generally, the things I hold (except the energy related) haven't done much the past 3-6 months in terms of outperformance and underperformance. Furthermore, rebalancing in retirement often consists of simply pulling IRA distributions from areas that have done the best.
However, if you are looking for things to rebalance, The link below shows the best 5 and worst 5 market segments for first quarter 2015. Just keep tapping the "next" tab to view.
Among the best performing fund sectors (which you might want to rebalance out of) are Japan, India, health care and U.S. small cap funds. Among the worst areas. (which you might want to rebalance into) are Latin America, natural resources, energy, utilities and precious metals. Keep in mind, however, that utilities are somewhat of an indirect play on interest rates. (That's because they finance a large portion of their infrastructure by floating bonds.) If you think rates will rise sharply, you may not want to get into them.
http://www.investmentnews.com/gallery/20150401/FREE/401009999/PH/the-first-quarters-best-and-worst-mutual-fund-groups&Params=Itemnr=8