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What To Expect From Your Bond Mutual Fund

TedTed
in Fund Discussions
FYI: Oh, right. Stability. That's what bond mutual funds are for.
When stock markets tumbled around the world last week, bond funds remained solid once again. They continued to inch ahead, while stock indexes swung up and down by more than 1 percent for five straight days. So many investors poured money into bonds in search of safety that the yield on the 10-year Treasury note temporarily dropped below 2 percent for the first time in more than a year. Yields for bonds drop when demand increases and their prices rise.
Regards,
Ted
http://bigstory.ap.org/article/047201cf943c4e37807c334064489812/what-expect-your-bond-mutual-fund

Comments

  • expatsp
    It would have been nice if this article interviewed someone other than a bond fund manager talking up their product -- but in any case, thanks for posting, Ted.
  • Tampabay
    My two bond funds have annual returns of +9.7% 5yr, 7+% 10 yr
    I EXPECT the same for the future, I guess that's stability... or stable enough
  • JohnChisum
    Could you post the ticker symbols of those funds?
  • Tampabay
    I have a few times on this site, but as Mona Says: "Do it again"
    PRHYX, VWEHX
  • msf
    VWEHX has a five year return (annualized) of 9.43%, and a ten year return of 6.78%. Each of those is under the stated returns.

    I ran a search on bond funds with 5 year returns of at least 9.7% and 10 year returns of at least 7%. There are only 44 funds - 43 of them have "high yield" or "high income" in their name. M* classifies 42 of those as high yield funds; the 43rd, AGDAX (Alliance Bernstein High Income) is classified multisector.

    The44th fund is also classified multisector. It's a high octane version(!) of LSBDX -
    Loomis Sayles Strategic Income (NEFZX).
  • Tampabay

    Performance PRHYX More... source morningstar


    Growth of 10,000 10,429 9,996 10,563 13,388 16,083 21,131
    Fund 4.29 -0.04 5.63 10.21 5yr +9.97 10 yr+7.77

    Guess I need glases, I'll live with ultra/low cost VWEHX of +9.43 +6.78
  • hank
    edited October 2014
    Tampabay said:

    My two bond funds have annual returns of +9.7% 5yr, 7+% 10 yr
    I EXPECT the same for the future, I guess that's stability... or stable enough

    I hope you're right. 7-10% annualized returns for junk bond funds going foreward would seem indicative of a robust economy and correspondingly strong stock market (not that I mind). Remember, however, that junk, like most bonds. also had declining interest rates as a tail wind over the past 10 years. I'm not at all certain rates can continue to decline.
  • Tampabay
    I guess I'll have to trust my excellent bond buying managers, to duplicate their past performance. Till I see or sense any different....I'm in
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