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.
Not to keep beating the same drum but since January of 2014 (13 months ago) it's been junk muni bond funds. But for some unfathomable reason, and much to my delight, investors have always (like forever) seemed to have had a problem embracing anything termed junk - be it junk munis or junk corporates. By the way, it has been something like 9 or 10 consecutive trading days that junk corporates as measured by the Merrill Lynch High Yield Master II Index have risen, albeit at a snail's pace. Could that be the next big thing in Yieldland?
A bear market in equities won't be good for corporate junk bonds. A rebound in stocks and they could really be off to the races. A bit vague maybe but you put your money down but be ready to take it off the table real quick if proven wrong. Unfortunately that is a mindset foreign to most investors. Like my friend here who bet on SUBFX early last year as a bet AGAINST lower yields. For all I know he still holds that fund and it may indeed work out someday. But in the meantime, what a waste of time and capital sitting on such a loser while he could have been making money in something that was working instead (kind of like the MFLDX aficionados) Hold for the long run has been the conventional pablum shoved down investors throats since the beginning of time. I don't know about you, but in the long run I am dead.
I don't know about you, but in the long run I am dead.
Hmmm, I know you are a by-the-numbers sorta guy, and the current data certainly lean in your favor; but if I were a gambling sorta guy, I'd give some serious thought to taking the other side of that wager. However, being a reformed contrite sinner and among the washed, I must (for now) only deal in "contingent charitable contributions." Still... I must admit the temptation is there.
No favorites here. Being a devoted member of the church of "What Have You Done for Me Lately" I trade CEF's around as the good preacher Mr. Price dictates. I never have both feet in the door like Junkster and to be honest nearly all of the money I have in fixed income is looking for a better home in equities. I consider SS as my fixed income investment.
Hold for the long run has been the conventional pablum shoved down investors throats since the beginning of time. I don't know about you, but in the long run I am dead.
Similar to what happened in the 1930s, if there is another large decline, investors will not go back into stocks for many years. This also might lower bond yields.
Investing has been and always will be a war between love(greed?) and fear.
Due to Junkster pointing out HY muni bonds I am sleeping very well. And as a byproduct, my tax forms will be very easy to file this year.
LOL - Non-productive exercise trying to pick a favorite fixed income fund I think. Sorta like picking a favorite color or rock star. They come in many different shades tailored to various needs.
I'm hopeful the good performance of junk munis is telling us something positive about the prospects for the economy and risk markets in general over the next several years. When the economy slumps, state and municipal governments really take it on the chin. Tax receipts fall as social welfare expenses rise. Those underfunded pension funds will fare much better too with rising stock and real-asset prices.
Fees are extremely important in choosing fixed income funds. Essentially, because potential returns after fees aren't as great as for equities. Don't know how the money market and short term bond funds are staying alive. Operating costs must be greater than meager returns from investment. Perhaps they're willing to subsidize these in hopes their investors will move the money into other funds,
I find the whole fixed-income picture so confusing, I've largely abdicated my responsibilities. Let the guy or gal running Spectrum Income (RPSIX), Dodge & Cox Income (DODIX) or similar diversified income funds decide how to invest it. At .43%, another reason to like the second.
Re: MFLDX- I feel for them. Off 13.3% year over year. Largely a victim of circumstance I think. (crashing energy and commodities prices and an investor stampede) But that's another story. Obviously, their mandate was to make money for investors and they failed miserably.
Being a devote member of the church of "What Have You Done for Me Lately"
A great one! May have to steal that line from you sometime.
I used to hear Louis Rukeyser say that line (What Have You Done For Me Lately) on a regular basis on his weekly show, Wall Street Week with Louis Rukeyser. He was referring to his panelists and guests and their advice on the show, and how well that advice worked out.
@MFO Members: I taking a close look at BBN along VUSTX and increased position in PFF and KKR. Regards, Ted
Ted, The syntax is somewhat problematic. Are you saying that you are taking a favorable view of VUSTX and are considering investing in it? Thank you. MPS
I don't know how low yields will go ... but, they are now low enough for me to start to make some changes within my portfolio's overall asset allocation. Some of my past favorite fixed income investments are now becoming suspect.
I have now lowered my allocation to fixed income within my portfolio form 25% to 20%. It seems many of my hybrid income, conserative and moderate allocation funds have been reducing their allocation to fixed income for sometime along with reducing the duration.
I can remember when a 30% to 35% allocation to fixed income was of the norm for me and of that allocation I held a good slug in tax free muni's. Not so now.
In addition, since domestic equities in general appear to be mostly overbought I am thinking of changing my allocation to 20% cash, 20% income, 20% domestic equity, 20% foreign equity, 20% other assets. To do this, I'll have to reduce my domestic equity allocation by 10% and increase my allocation to other assets by 10%.
Currently, I don't feel fixed income is paying enough to justify holding as much of it as I have in the past and with domestic equities being mostly overbought well it is time for a change to my overall allocation.
I'll be interested to learn how one of the board's master investors, Ted, positions going forward.
In terms of specifically fixed income and not stock-related, I like the CHS preferred shares (there are five different pfd shares, but no common stock.) The CHS pfds held up beautifully in 2008.
I don't know how low yields will go ... but, they are now low enough for me to start to make some changes within my portfolio's overall asset allocation. Some of my past favorite fixed income investments are now becoming suspect.
From a capital appreciation point of view you might have captured a large part of it.
From an income point of view, yields could remain low for several years and you might miss those yields.
Any opinion or observation concerning DHGAX ? A little research led me to feel it may be a reasonable defensive play due to it's 2008-09 performance.The fund is available no-load in my Schwab I R A. Advice/opinion ??? http://quotes.morningstar.com/fund/f?t=DHGAX®ion=usa&culture=en-US
I guess I don't have a particular fixed income product I could call my favorite at the moment. For years I enjoyed good returns from GNMAs via BGNMX. With the possibility of rising rates hanging over us for a couple of years now, I pulled out of that fund that I had owned since the early 90's. It is still producing decent returns despite the Sword of Damocles ready to drop.
I am spread out all over with a bit of bias towards high yield as of now. All of my funds are active managed. I'll let the fund managers decide what is best, as long as they don't muck it up too badly.
@TSP_Transfer This is off the top of my head. I'm pretty sure the manager who delivered that 2008-09 performance is gone and is no longer with Dreyfus. I can't recall his name (Rhao?); he was youngish yet seasoned, had a good deal of experience in global bond dynamics, and was fairly conservative, demanding a good price before establishing a stake. All of this had me looking at that fund, as a toned-down fund alternative to TPINX several yrs ago. When he left, I lost interest. You might want to "follow him" and see where he's landed. Again, I can't remember which firm now employs his talents, but I know I stumbled across it several months ago and saw his fund was doing just fine.
@Ted, we invested in Vanguard Long-Term Government Bond Index Fund Admiral Shares (VLGSX). The rate stayed put and the fund worked out nicely. YTD is up 8.8% already, a bit ahead (I think). Will trim back if it continues in coming months while equities are doing no so great.
Last month I bought an individual, new issue, 10yr T I P for my IRA and it is already up 2.9% with the plunge in rates. I'm tempted to cash it in and wait in cash for the spread (real yield) to go positive again to buy another one.
@Ron: I bought PFF in March of 2009 at 19.07, with a $2.49 Dividend in 2014 my yield is 13.0% +, and have almost doubled my inital investment. One preferred stock fund is enough plus I own a number of individual preferred stocks. Regards, Ted
@TSP_Transfer : Ah, yes, the Dreyfus/Standish Global Fixed Income Fund. Sometimes it pays to be less than fastidious in cleaning up the old Ideas folder (and what a shameful mess mine is). I found a 2010 prospectus. Rhao, it is not (though he is an internatl. fund mgr.). The name of the portfolio mgr I was trying to remember is: David C. Leduc. FWIW
"The name of the portfolio mgr I was trying to remember is: David C. Leduc."
I believe that he is a distant French cousin of Donald, and may also be related to Scrooge.
I believe Donald's third nephew's name recalls that French family heritage, and that he's the fourteenth in a long line of Leduc-Ducks given that appellation.
After just now reading DS, I am looking at RSIVX and comparing it with PONDX and PDI. DODIX looks good recently too. Thoughts about those?
A comparison between RSIVX with PONDX is [probably not productive]. They are two different animals. If you want to compare RSIVX with another primarily high yield fund, use OSTIX
Comments
A bear market in equities won't be good for corporate junk bonds. A rebound in stocks and they could really be off to the races. A bit vague maybe but you put your money down but be ready to take it off the table real quick if proven wrong. Unfortunately that is a mindset foreign to most investors. Like my friend here who bet on SUBFX early last year as a bet AGAINST lower yields. For all I know he still holds that fund and it may indeed work out someday. But in the meantime, what a waste of time and capital sitting on such a loser while he could have been making money in something that was working instead (kind of like the MFLDX aficionados) Hold for the long run has been the conventional pablum shoved down investors throats since the beginning of time. I don't know about you, but in the long run I am dead.
Regards,
Ted
That is what has been happening since 1999. Fewer people have been putting their money into stocks. The ups and downs have scared them away, and, the lack of disposable income.
http://ns.umich.edu/new/releases/22365-stock-market-participation-has-dropped-most-among-small-investors
But, if you are a contrary investor, you might want to read this:
http://fortune.com/2014/10/23/retail-investors/
Similar to what happened in the 1930s, if there is another large decline, investors will not go back into stocks for many years. This also might lower bond yields.
Investing has been and always will be a war between love(greed?) and fear.
Due to Junkster pointing out HY muni bonds I am sleeping very well. And as a byproduct, my tax forms will be very easy to file this year.
http://www.mutualfundobserver.com/discuss/discussion/18699/how-far-down-will-yields-go-usa-10year-1-64#latest
I'm hopeful the good performance of junk munis is telling us something positive about the prospects for the economy and risk markets in general over the next several years. When the economy slumps, state and municipal governments really take it on the chin. Tax receipts fall as social welfare expenses rise. Those underfunded pension funds will fare much better too with rising stock and real-asset prices.
Fees are extremely important in choosing fixed income funds. Essentially, because potential returns after fees aren't as great as for equities. Don't know how the money market and short term bond funds are staying alive. Operating costs must be greater than meager returns from investment. Perhaps they're willing to subsidize these in hopes their investors will move the money into other funds,
I find the whole fixed-income picture so confusing, I've largely abdicated my responsibilities. Let the guy or gal running Spectrum Income (RPSIX), Dodge & Cox Income (DODIX) or similar diversified income funds decide how to invest it. At .43%, another reason to like the second.
Re: MFLDX- I feel for them. Off 13.3% year over year. Largely a victim of circumstance I think. (crashing energy and commodities prices and an investor stampede) But that's another story. Obviously, their mandate was to make money for investors and they failed miserably.
The syntax is somewhat problematic. Are you saying that you are taking a favorable view of VUSTX and are considering investing in it? Thank you.
MPS
I don't know how low yields will go ... but, they are now low enough for me to start to make some changes within my portfolio's overall asset allocation. Some of my past favorite fixed income investments are now becoming suspect.
I have now lowered my allocation to fixed income within my portfolio form 25% to 20%. It seems many of my hybrid income, conserative and moderate allocation funds have been reducing their allocation to fixed income for sometime along with reducing the duration.
I can remember when a 30% to 35% allocation to fixed income was of the norm for me and of that allocation I held a good slug in tax free muni's. Not so now.
In addition, since domestic equities in general appear to be mostly overbought I am thinking of changing my allocation to 20% cash, 20% income, 20% domestic equity, 20% foreign equity, 20% other assets. To do this, I'll have to reduce my domestic equity allocation by 10% and increase my allocation to other assets by 10%.
Currently, I don't feel fixed income is paying enough to justify holding as much of it as I have in the past and with domestic equities being mostly overbought well it is time for a change to my overall allocation.
I'll be interested to learn how one of the board's master investors, Ted, positions going forward.
Old_Skeet
From an income point of view, yields could remain low for several years and you might miss those yields.
http://quotes.morningstar.com/fund/f?t=DHGAX®ion=usa&culture=en-US
https://public.dreyfus.com/documents/compliancedocs/factsheets/monthly/6940.pdf
Kevin
I am spread out all over with a bit of bias towards high yield as of now. All of my funds are active managed. I'll let the fund managers decide what is best, as long as they don't muck it up too badly.
Regards,
Ted
I believe that he is a distant French cousin of Donald, and may also be related to Scrooge.