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.
Were you a buyer of short term bond funds a while back as recommended by advisors? If you were, this article points out why it may have been bad advice.
About a year ago and in the belief that interest rates would be rising I looked for ways to reduce the duration within my fixed income sleeve within my portfolio and I switched out some intermediate term bond funds for some with a shorter duration. Overall I still have received decent income and returns from the sleeve.
My income sleeve currently consists of six funds. They are ITAAX, LALDX, THIFX, LBNDX, NEFZX and TSIAX. The sleeve produces a yield of 3.53% with a duration reading of 3.17 and the year-to-date total return has been 4.59% as I write. The one, three and five year annual returns score at 9.11%, 6.38% and 9.20% respectively.
In comparison, a bond index fund that I follow has a yield of 2.53% with a duration reading of 5.21 and a year-to-date total return 3.22%. It's one, three and five year annual returns score at 3.42%, 2.98% and 3.97% respectively.
I’ll gladly take this and move on without any regrets; and, also in belief when interest rates start rising … I’ll still have a good performing fixed income investment sleeve.
And, with this, Old_Skeet plans to keep on keeping-on with a short duration orientation.
At the time everyone was touting short term bonds with their reasoning, there is no evidence this gentleman said anything. Few years later if things did not work out that way he is writing "I told you so". Why did he not make the argument few years back if horizon is "long term" (sic) then keep invested in intermediate bonds? Maybe because it was NOT popular opinion back then, but now, after the fact, it might be?
Or is this another case of "invest for the long term bond-style" article? Yes I think it is.
Much is written about investor behavior. About them buying and selling at the wrong time. Yes, I'm sure some people invest without taking time to learn anything about it. I've admitted to doing it when I had hair and possibly losing it because of my mistakes. There is something to be said about making decisions acting on data available in the PRESENT. It is not always about the future. On paper it is always about it, but not in real life.
It is not always about "if you invested 10000 in this fund 25 years back you would have 200.000". That's not intelligent writing. That is putting salt on investors wounds. It would seem all individual investors are stupid idiots. It would be nice to see someone write about intelligence demonstrated by investors. I guess I would settle for "Bill Gross fund has seen 60 billion dollars of outflows" as a sign of investor aptitude because in this case Bill Gross is the target, not the investor. In 5 years if Bill Gross proved right, another article would pop up about how stupid investors were to sell PTTRX. And given short memories, it might even be the same person.
Don't hate me because I'm celebrating my independence today.
I'm still more in the Intermediate slot with funds such as PIMIX, EVBAX, DODIX, MWTRX, BSBIX, THOPX, BHYAX, RSIVX and SXFIX. Very good returns thus far. I recently added FPNIX just to tamp down any interest rate volatility should it come in the next year or so.
Comments
About a year ago and in the belief that interest rates would be rising I looked for ways to reduce the duration within my fixed income sleeve within my portfolio and I switched out some intermediate term bond funds for some with a shorter duration. Overall I still have received decent income and returns from the sleeve.
My income sleeve currently consists of six funds. They are ITAAX, LALDX, THIFX, LBNDX, NEFZX and TSIAX. The sleeve produces a yield of 3.53% with a duration reading of 3.17 and the year-to-date total return has been 4.59% as I write. The one, three and five year annual returns score at 9.11%, 6.38% and 9.20% respectively.
In comparison, a bond index fund that I follow has a yield of 2.53% with a duration reading of 5.21 and a year-to-date total return 3.22%. It's one, three and five year annual returns score at 3.42%, 2.98% and 3.97% respectively.
I’ll gladly take this and move on without any regrets; and, also in belief when interest rates start rising … I’ll still have a good performing fixed income investment sleeve.
And, with this, Old_Skeet plans to keep on keeping-on with a short duration orientation.
I wish all … “Good Investing.”
Old_Skeet
At the time everyone was touting short term bonds with their reasoning, there is no evidence this gentleman said anything. Few years later if things did not work out that way he is writing "I told you so". Why did he not make the argument few years back if horizon is "long term" (sic) then keep invested in intermediate bonds? Maybe because it was NOT popular opinion back then, but now, after the fact, it might be?
Or is this another case of "invest for the long term bond-style" article? Yes I think it is.
Much is written about investor behavior. About them buying and selling at the wrong time. Yes, I'm sure some people invest without taking time to learn anything about it. I've admitted to doing it when I had hair and possibly losing it because of my mistakes. There is something to be said about making decisions acting on data available in the PRESENT. It is not always about the future. On paper it is always about it, but not in real life.
It is not always about "if you invested 10000 in this fund 25 years back you would have 200.000". That's not intelligent writing. That is putting salt on investors wounds. It would seem all individual investors are stupid idiots. It would be nice to see someone write about intelligence demonstrated by investors. I guess I would settle for "Bill Gross fund has seen 60 billion dollars of outflows" as a sign of investor aptitude because in this case Bill Gross is the target, not the investor. In 5 years if Bill Gross proved right, another article would pop up about how stupid investors were to sell PTTRX. And given short memories, it might even be the same person.
Don't hate me because I'm celebrating my independence today.