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>>>Matthew Tuttle, chief executive of Tuttle Tactical Management, says the biggest junk-bond ETFs—such as HYG, up about 1.8% this year, and SPDR Barclays High Yield Bond, up about 1.9%—.......<<<<
With junk bond indexes at historic highs I knew the above percentages were way off. HYG is up 3.18% YTD and JNK up 3.51%. Do these guys never look at total return (dividends included) when computing returns? Or was this article dated April 12 written in late February? Most likely the former.
Edit: Wouldn't touch a junk ETF with a ten foot pole. Much better to invest/trade an open end junk bond fund.
@davidrmoran Well, you had your chance. In 2009, FAGIX's NAV was thrown back to... 1985! The hands of Time were rewound for you--- you could have done it all over again. @Junkster ETFs for junk? I'll see your 10-ft pole, and raise it to 20-ft--- no way, Jose!
"Financial innovations created in good times often fool people into thinking a silver bullet has been invented that offers a better deal than traditional investments. (By “traditional” I mean investments that are acknowledged to entail increased risk as the price for targeting increased return . . . not the “miracles” where increased return comes gratis.) Many recent innovations have promised high liquidity from low-liquidity assets. [...] however, no investment vehicle should promise more liquidity than is afforded by its underlying assets. [...][W]e’re back to wondering about whether there will be a buyer for the bonds the bank wants to short, and at what price. Thus we can’t get away from depending on the liquidity of the underlying high yield bonds. The ETF can’t be more liquid than the underlying, and we know the underlying can become highly illiquid." Howard Marks, most recent commentary
I thought expert thinking was that the bonds in a typical junk etf are overvalued because they are in an index and one is better off with an open end bond fund but i suppose a closed end fund at a discount could be ok
Comments
With junk bond indexes at historic highs I knew the above percentages were way off. HYG is up 3.18% YTD and JNK up 3.51%. Do these guys never look at total return (dividends included) when computing returns? Or was this article dated April 12 written in late February? Most likely the former.
Edit: Wouldn't touch a junk ETF with a ten foot pole. Much better to invest/trade an open end junk bond fund.
@Junkster ETFs for junk? I'll see your 10-ft pole, and raise it to 20-ft--- no way, Jose!
"Financial innovations created in good times often fool people into thinking a silver bullet has been invented that offers a better deal than traditional investments. (By “traditional” I mean investments that are acknowledged to entail increased risk as the price for targeting increased return . . . not the “miracles” where increased return comes gratis.) Many recent innovations have promised high liquidity from low-liquidity assets. [...] however, no investment vehicle should promise more liquidity than is afforded by its underlying assets. [...][W]e’re back to wondering about whether there will be a buyer for the bonds the bank wants to short, and at what price. Thus we can’t get away from depending on the liquidity of the underlying high yield bonds. The ETF can’t be more liquid than the underlying, and we know the underlying can become highly illiquid." Howard Marks, most recent commentary
There are bad vapors arising in BondLand.
http://www.bloomberg.com/news/articles/2015-04-12/flash-move-haunts-bond-traders-heeding-dimon-s-warning-of-crisis
haha, would it were so with my body and mind and so much else.
Thanks. But I never look at or care about NAV.
Reinvested, 1985 - 2009 = eightfold increase.