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Interest rates eventually will cause LT bond mutual funds to reset lower with each incremental interest rate increase, but I believe this is an easier set of events to plan for.
This recent price appreciation (out performance) has been more of a revision to the mean for Long Term Bond mutual funds. Some appreciation might be also assiociated with a trade away from 'risk assets' to a 'flight to safety' investment. Selling opportunities comes along when when LT bond mutual funds periodically outperform risky assets.
Right now provides a selling opportunity (I like to use a 10% gain as a sell trigger). Then again, The next few month might be choppy enough in the equity and geo-political areas of the world that LT bonds funds hold their price value or even appreciate further.
The case is in hindsight only. If someone had suggested buying long dated bonds at the beginning of the year, they would have been put in a padded cell.
Even the Moose call switched to EDV after a rise of 12% or so this year close to its 52 week high. Is there a case now? The case for holding it is the same as it was at the beginning of the year and so is the case for not holding it. Only one of them will be right going forward.
Comments
Interest rates eventually will cause LT bond mutual funds to reset lower with each incremental interest rate increase, but I believe this is an easier set of events to plan for.
This recent price appreciation (out performance) has been more of a revision to the mean for Long Term Bond mutual funds. Some appreciation might be also assiociated with a trade away from 'risk assets' to a 'flight to safety' investment. Selling opportunities comes along when when LT bond mutual funds periodically outperform risky assets.
Right now provides a selling opportunity (I like to use a 10% gain as a sell trigger). Then again, The next few month might be choppy enough in the equity and geo-political areas of the world that LT bonds funds hold their price value or even appreciate further.
Even the Moose call switched to EDV after a rise of 12% or so this year close to its 52 week high. Is there a case now? The case for holding it is the same as it was at the beginning of the year and so is the case for not holding it. Only one of them will be right going forward.