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Dan Fuss is as good as they get.........I look at Dan Fuss, Jeffrey Gundlach and Bill Gross as 3 of the most and possibly the most knowledgeable bond guys out there. 3 pillars of a stool.....
They think rates are going up, bonds will take a hit, and that we should go more towards short duration and high quality, e.g, more Treasuries.......less high yield/junk
"Dan Fuss and co-managers Matt Eagan and Elaine Stokes have put 27% of the fund's $25 billion fund in assets into short-term U.S. and Canadian government issues. Fuss says that's the highest weighting the fund has ever held in such super-safe instruments."
"It's increasingly difficult to find undervalued assets in any corner of the bond market. "Valuations across the spectrum are unattractive," he says."
"Eagan and his colleagues believe the long-term bull market in bonds, which began in 1982, is over, and that Fed action, combined with an improving economy, will push rates higher"
"....junk is now one of the riskiest places in the bond market."
"...the fund has tended to hold large stakes in junk bonds and emerging markets, two categories that tend to mirror the performance of stocks"
"........the fund will suffer some if rates rise. Should they climb one percentage point, the fund's price would fall by about 4%."
"......you'd be foolish not to pay attention to the fund's dramatic portfolio shift—given Fuss's long and superior record"
Dan Fuss is great, and I held LSBRX 2006 - 2013. Overall I did well, but it was too correlated with the equity markets for what I want in a bond fund. I do think Fuss is great at what he does and is refreshingly honest and open, not just talking his book. The comments rjb112 cites confirm that.
If I recall correctly, Bill Gross make a similar prediction some time ago and was flat out wrong. I'll be interested to see if Dan Fuss and crew does better.
For me, the wildcard is Kathleen Gaffney and EVBAX. Could be a bumpy ride during a downturn.
If I recall correctly, Bill Gross make a similar prediction some time ago and was flat out wrong. I'll be interested to see if Dan Fuss and crew does better.
For me, the wildcard is Kathleen Gaffney and EVBAX. Could be a bumpy ride during a downturn.
I'm sure Gaffney is aware of the risks of the fund moving forward. I'll be curious to see how she navigates as well.
Dan and his co-managers have been saying that few opportunities exist in high yield bonds, i.e. expensive. I do think their view on low future returns on bonds is realistic. This will pose considerable challenges for those who depends on bonds for income. I respect and have invested in all three bond managers you mentioned. Over time, I moved on elsewhere from Bill Gross because I lost faith on his investment process and the needless appearance at CNBC, while his fund lagged his peers for several years. With regard to Jeffrey Gundlach, I can live without his ego, but his calls have been spot on and his Total Return fund is doing well since its launch. In the meantime, I am watching Kathleen Gaffney's EVBAX closely to see if she is taking any changes.
@Bitzer: "If I recall correctly, Bill Gross make a similar prediction some time ago and was flat out wrong"
I know for a fact [because I either heard him say it or read it in his monthly Outlook that he writes] that Bill Gross did say something to the effect that "the long-term bull market in bonds, which began in 1982, is over." I don't recall exactly when he said it, but IIRC, it was a few years ago.
I think Bill Gross is a super smart guy and an astute bond expert, but I also recall many years ago when he made a bold prediction about the stock market falling a LOT, which turned out to be completely wrong.
@expatsp: "Overall I did well, but it was too correlated with the equity markets for what I want in a bond fund"
There's a lot of interest in Kathleen Gaffney here at MFO, and I'm quite interested too. But I wonder about the 18.59% of her fund in stocks, and is that going to as you mentioned with respect to Loomis Sayles, will that make Gaffney's fund too correlated with the stock market to serve the needs of bond fund investors.
Seems to me that it would not serve the need of a stock heavy investor to diversify, but would serve the needs of a bond heavy investor to diversify! So if my portfolio was say 100% bond funds, it would serve me very well to have these aggressive bond funds that have junk bonds, emerging market bonds, and even some stocks in them. But if my portfolio had 80% stock funds and I wanted a mellow diversifier, I'd probably go towards Treasuries, or at a minimum investment grade bond funds.
@sven: "I do think their view on low future returns on bonds is realistic. This will pose considerable challenges for those who depends on bonds for income."
I agree that it is realistic, and has already been causing major problems for the income investor, retirees who always depended on safe certificates of deposit in banks and Treasury bonds. And probably will continue to do so in the future.
And of course many say that the stock markets are way overvalued, and will have poor returns over the next 5-10 years, e.g., Jeremy Grantham/GMO most recent 7-year forecast, posted on MFO.
If both the stock market and the bond market are way overvalued and will have poor returns going forward for the next 5-7 years, we are really in investment trouble!
@rjb112 I've been in LSBRX since 2005. Last week, giving the most recent portfolio a little closer scrutiny than I usually do, I was struck by how.... tapped-down it seemed. Consistent with what Sven has posted. I've heard him say something very similar several months ago elsewhere, but not reflected in the port then--- now it is. I can't recall seeing LSBRX this subdued. Loomis is clearly concerned about something in a major way.
I can't recall seeing LSBRX this subdued. Loomis is clearly concerned about something in a major way.
It's a good point, and I've always been impressed by Dan Fuss. I think his current viewpoint and his portfolio changes deserve very serious consideration.
Watching what Gaffney does is like wanting to hear what the student has to say over what the teacher thinks; although this student may have become her teachers peer.
According to M*, Kathleen's fund, EVBAX, is only 41% in what they classify as bonds. Sounds like she has already spoken her thoughts on the bond market. She is searching for returns elsewhere.
It is interesting that the manager with the most experience here is Mr. Fuss, who also happens to be least likely to be quoted or appear on camera. I implicitly trust him, while I find Mr. Gross and Mr. Gundlach shills for their companies. The may be smarter, but spending so much time 'on message' and in front of the camera means they are perhaps more interesting in raking in new investor dollars than actually running their funds. Loomis Sayles is a class company and always has been. Mr. Fuss is an example of that class. Investors might want to watch Mr. Eagan's LASYX, which could be a good hold when interest rates do move up. It's actually done ok since its start, averaging 4.28% over the last three years.
I cut some money off to Kathleen Gaffney's EVBAX last week and opened a position in her fund and sold ITTAX. The sleeve now holds the following funds ... EVBAX, LALDX, LBNDX, THIFX, TSIAX & NEFZX. This change has also been noted in Old Skeets Favorite Links & Portfolio Sleeve Management System link for those that might be following my portfolio activity and have saved the path to it.
It is interesting that the manager with the most experience here is Mr. Fuss, who also happens to be least likely to be quoted or appear on camera. I implicitly trust him, while I find Mr. Gross and Mr. Gundlach shills for their companies. The may be smarter, but spending so much time 'on message' and in front of the camera means they are perhaps more interesting in raking in new investor dollars than actually running their funds. Loomis Sayles is a class company and always has been. Mr. Fuss is an example of that class. Investors might want to watch Mr. Eagan's LASYX, which could be a good hold when interest rates do move up. It's actually done ok since its start, averaging 4.28% over the last three years.
I agree that Dan Fuss is a class act. I have tremendous respect for him. I don't know that much about Gundlach. Bill Gross I think is extremely knowledgeable, but I don't like the way he writes and find him difficult to understand. I read his monthly Outlook for years, and always felt that he was not that clear or easy to understand. Just come right out and say what you mean so those listening to your interviews and reading your Outlook don't need a PhD in "bond speak" and don't need a special "decoder ring" to understand you.
Comments
MFOers, what do you all think of this?
Dan Fuss is as good as they get.........I look at Dan Fuss, Jeffrey Gundlach and Bill Gross as 3 of the most and possibly the most knowledgeable bond guys out there. 3 pillars of a stool.....
They think rates are going up, bonds will take a hit, and that we should go more towards short duration and high quality, e.g, more Treasuries.......less high yield/junk
"Dan Fuss and co-managers Matt Eagan and Elaine Stokes have put 27% of the fund's $25 billion fund in assets into short-term U.S. and Canadian government issues. Fuss says that's the highest weighting the fund has ever held in such super-safe instruments."
"It's increasingly difficult to find undervalued assets in any corner of the bond market. "Valuations across the spectrum are unattractive," he says."
"Eagan and his colleagues believe the long-term bull market in bonds, which began in 1982, is over, and that Fed action, combined with an improving economy, will push rates higher"
"....junk is now one of the riskiest places in the bond market."
"...the fund has tended to hold large stakes in junk bonds and emerging markets, two categories that tend to mirror the performance of stocks"
"........the fund will suffer some if rates rise. Should they climb one percentage point, the fund's price would fall by about 4%."
"......you'd be foolish not to pay attention to the fund's dramatic portfolio shift—given Fuss's long and superior record"
For me, the wildcard is Kathleen Gaffney and EVBAX. Could be a bumpy ride during a downturn.
Here is an interview with Dan Fuss who shared his investment process.
morningstar.com/cover/videocenter.aspx?id=643979
Dan and his co-managers have been saying that few opportunities exist in high yield bonds, i.e. expensive. I do think their view on low future returns on bonds is realistic. This will pose considerable challenges for those who depends on bonds for income. I respect and have invested in all three bond managers you mentioned. Over time, I moved on elsewhere from Bill Gross because I lost faith on his investment process and the needless appearance at CNBC, while his fund lagged his peers for several years. With regard to Jeffrey Gundlach, I can live without his ego, but his calls have been spot on and his Total Return fund is doing well since its launch. In the meantime, I am watching Kathleen Gaffney's EVBAX closely to see if she is taking any changes.
I know for a fact [because I either heard him say it or read it in his monthly Outlook that he writes] that Bill Gross did say something to the effect that "the long-term bull market in bonds, which began in 1982, is over." I don't recall exactly when he said it, but IIRC, it was a few years ago.
I think Bill Gross is a super smart guy and an astute bond expert, but I also recall many years ago when he made a bold prediction about the stock market falling a LOT, which turned out to be completely wrong.
@expatsp: "Overall I did well, but it was too correlated with the equity markets for what I want in a bond fund"
There's a lot of interest in Kathleen Gaffney here at MFO, and I'm quite interested too. But I wonder about the 18.59% of her fund in stocks, and is that going to as you mentioned with respect to Loomis Sayles, will that make Gaffney's fund too correlated with the stock market to serve the needs of bond fund investors.
Seems to me that it would not serve the need of a stock heavy investor to diversify, but would serve the needs of a bond heavy investor to diversify! So if my portfolio was say 100% bond funds, it would serve me very well to have these aggressive bond funds that have junk bonds, emerging market bonds, and even some stocks in them. But if my portfolio had 80% stock funds and I wanted a mellow diversifier, I'd probably go towards Treasuries, or at a minimum investment grade bond funds.
@sven: "I do think their view on low future returns on bonds is realistic. This will pose considerable challenges for those who depends on bonds for income."
I agree that it is realistic, and has already been causing major problems for the income investor, retirees who always depended on safe certificates of deposit in banks and Treasury bonds. And probably will continue to do so in the future.
And of course many say that the stock markets are way overvalued, and will have poor returns over the next 5-10 years, e.g., Jeremy Grantham/GMO most recent 7-year forecast, posted on MFO.
If both the stock market and the bond market are way overvalued and will have poor returns going forward for the next 5-7 years, we are really in investment trouble!
According to M*, Kathleen's fund, EVBAX, is only 41% in what they classify as bonds. Sounds like she has already spoken her thoughts on the bond market. She is searching for returns elsewhere.
Regards,
Ted
https://www.fidelity.com/insights/markets-economy/bond-fund-managers-turn-bearish?print=true
Old_Skeet
I don't know that much about Gundlach.
Bill Gross I think is extremely knowledgeable, but I don't like the way he writes and find him difficult to understand. I read his monthly Outlook for years, and always felt that he was not that clear or easy to understand. Just come right out and say what you mean so those listening to your interviews and reading your Outlook don't need a PhD in "bond speak" and don't need a special "decoder ring" to understand you.