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Have some money for a purchase in the next 2-3 years ...
Global bond funds are highly dependent on the strength of the U.S. Dollar (tend to move in opposite direction). Most haven't been a good place to be over the past several years as the Dollar has strengthened. A lot has to do with Fed policy and our political leadership (fiscal policy) - and so that could change.
Most (but not all) of these funds hedge to some extent against currency risk and are a safer bet than unhedged or local currency funds if this is short term money. Since interest rates are low almost everywhere, a global bond fund would still be exposed to interest rate risk as are domestic income funds.
If you need this money in 2-3 years, there aren't many really safe alternatives to cash, CDs, or short-term bonds. If, on the other hand, it's long term money but you are just hesitant to invest at this time, consider a conservative allocation fund with up to 60% fixed income as a conservative "sleep well" investment.
I'll add that I don't share the predominantly bearish sentiment here and in the media. But guess I'm just an eternal optimist.
From hank: "If you need this money in 2-3 years, there aren't many really safe alternatives to cash, CDs, or short-term bonds. If, on the other hand, it's long term money but you are just hesitant to invest at this time, consider a conservative allocation fund with up to 60% fixed income as a conservative "sleep well" investment."
I'm there, and I would agree--- although I will mention PRSNX, which I own. Morningstar calls it a "World Bond" fund. I like the dividends. Just about .03 cents/share per month, these days. I ended up in there because I just wanted to keep it simple. I already own a big slug with TRP. It's not exactly a category that's on fire, to say the least. But the fund has been dependable.
Keep in mind, although you might get paid to hold such a bond fund with monthly or quarterly dividends, there is the share-price risk. 2-3 years doesn't give you much of a recovery-window, if your selected fund sags. Take the currency risk away by using a solid domestic core fund, instead, eh? My own is DLFNX. Uncle Jeffrey seems to know his way around the bond market.
Better to Inquire about investment ideas @ M F O than some of these advisors !
There's a phrase no one wants to read in a sweeping report about the financial advisers who handle their savings: economy-wide misconduct. By Bloomberg News | March 1, 2016 - 4:28 pm EST A new working paper by business school professors at the University of Chicago and University of Minnesota found that 7% of financial advisers have been disciplined for misconduct that ranges from putting clients in unsuitable investments to trading on client accounts without permission. That's a troubling mark for an industry that relies on the trust of clients. And some large, well-regarded firms have misconduct records that far exceed the average. Many fired advisers end up moving to firms that have higher rates of misconduct than their previous employer did, and they become repeat offenders. "Prior offenders are five times as likely to engage in new misconduct as the average financial adviser," the study found.
"This is eye-opening and suggests not only that some firms have a high tolerance for misconduct on the part of their employees, but that their very business model is to attract the broker who can generate high revenue at the cost of repetitive disciplinary violations," said John Coffee, a professor at Columbia Law School in New York. "FINRA needs to focus on this." Many cases of misconduct arose around the issue of the "suitability" of investments. That would mean, for instance, that an adviser should not suggest that a 75-year-old client put most assets in a high-fee, aggressive-growth mutual fund. Often, the report found, investments involved in reported misconduct cases were insurance products.
@Shostakovich I own this fund in the Global Bond space you mention.DHGAX Assets for the Fund $2,133,975,285 Holdings 206 Dividend Frequency Quarterly Morningstar Category World Bond Lipper Category Global Income Average Maturity 8.30 Years Duration 6.83 Years 30-Day Yield (as of 1/31/16) Class A 1.27% Class I 1.62% TOP TEN SECURITIES1 Australian Govt 3.25% 10/21/2018 10.04% Australian Government 3.25% 04/21/ 2025 4.43% Canadian Government, 2.25% 06/01/ 2025 3.79% Japan (30 Yr Issue) 1.7% 09/20/2044 3.47% Buoni Poliennali Del Tes 2.36142% 09/15/ 2024 2.66% France (Govt Of) 1% 11/25/2025 2.57% Canadian Government, 2.5% 06/01/2024 2.45% Canadian Government 1% 08/01/2016 2.11% U.S. Treasury Note 1.75% 12/31/2020 2.04% Buoni Poliennali Del Tes 1.05% 12/01/ 2019 2.03% https://public.dreyfus.com/documents/compliancedocs/factsheets/monthly/6940.pdf
I've long heard of serious misconduct on the part of "Wells Fargo", so I find it very interesting to see a differentiation being made between Wells Fargo Advisers, and Wells Fargo Securities. I wasn't really aware of the two entities.
The misconduct to which I refer typically involves "advisers" at the local branch level being pressured to push bank clients into purchasing investment products which are not particularly well suited to the particular customer. If the above information is applicable, it looks like their Securities division itself is pretty straight, as opposed to the conduct at the actual customer contact level. Interesting.
For anything less than 5 years, don't bother as there's too much that could go wrong. Another question would be, how much experience do you have? This question is related to what would you do in the midst of a downturn. We all believe we can take the heat, but as Mike Tyson once said, 'Everyone has a plan til they get punched in the mouth'.
Of course, the amount you're proposing to invest would also factor in.
Comments
The use of a low transaction, quantitative tactical allocation process has produced further risk mitigated alpha vs. buy and hold. https://docs.google.com/presentation/d/1pQuBfbPd18ca0G-KiZc5FIWNMx0pNa87INgsLjEwuzY/edit?usp=sharing
https://docs.google.com/presentation/d/1C37CJypoxHWHB09e3g25ewOGjP83wDZhj5j6tlrLJoA/edit?usp=sharing. Current model allocation would suggest to hold off on purchases for now.
Most (but not all) of these funds hedge to some extent against currency risk and are a safer bet than unhedged or local currency funds if this is short term money. Since interest rates are low almost everywhere, a global bond fund would still be exposed to interest rate risk as are domestic income funds.
If you need this money in 2-3 years, there aren't many really safe alternatives to cash, CDs, or short-term bonds. If, on the other hand, it's long term money but you are just hesitant to invest at this time, consider a conservative allocation fund with up to 60% fixed income as a conservative "sleep well" investment.
I'll add that I don't share the predominantly bearish sentiment here and in the media. But guess I'm just an eternal optimist.
I'm there, and I would agree--- although I will mention PRSNX, which I own. Morningstar calls it a "World Bond" fund. I like the dividends. Just about .03 cents/share per month, these days. I ended up in there because I just wanted to keep it simple. I already own a big slug with TRP. It's not exactly a category that's on fire, to say the least. But the fund has been dependable.
Keep in mind, although you might get paid to hold such a bond fund with monthly or quarterly dividends, there is the share-price risk. 2-3 years doesn't give you much of a recovery-window, if your selected fund sags. Take the currency risk away by using a solid domestic core fund, instead, eh? My own is DLFNX. Uncle Jeffrey seems to know his way around the bond market.
There's a phrase no one wants to read in a sweeping report about the financial advisers who handle their savings: economy-wide misconduct.
By Bloomberg News | March 1, 2016 - 4:28 pm EST
A new working paper by business school professors at the University of Chicago and University of Minnesota found that 7% of financial advisers have been disciplined for misconduct that ranges from putting clients in unsuitable investments to trading on client accounts without permission. That's a troubling mark for an industry that relies on the trust of clients. And some large, well-regarded firms have misconduct records that far exceed the average.
Many fired advisers end up moving to firms that have higher rates of misconduct than their previous employer did, and they become repeat offenders. "Prior offenders are five times as likely to engage in new misconduct as the average financial adviser," the study found.
"This is eye-opening and suggests not only that some firms have a high tolerance for misconduct on the part of their employees, but that their very business model is to attract the broker who can generate high revenue at the cost of repetitive disciplinary violations," said John Coffee, a professor at Columbia Law School in New York. "FINRA needs to focus on this."
Many cases of misconduct arose around the issue of the "suitability" of investments. That would mean, for instance, that an adviser should not suggest that a 75-year-old client put most assets in a high-fee, aggressive-growth mutual fund. Often, the report found, investments involved in reported misconduct cases were insurance products.
The first-of-its-kind study names names, listing 10 advisory firms with the highest misconduct rates, as well as those with the lowest.
http://www.investmentnews.com/article/20160301/FREE/160309989?template=printart
@Shostakovich
I own this fund in the Global Bond space you mention.DHGAX
Assets for the Fund
$2,133,975,285
Holdings
206
Dividend Frequency
Quarterly
Morningstar Category
World Bond
Lipper Category
Global Income
Average Maturity
8.30 Years
Duration
6.83 Years
30-Day Yield (as of
1/31/16)
Class A 1.27%
Class I 1.62%
TOP TEN SECURITIES1
Australian Govt 3.25% 10/21/2018 10.04%
Australian Government 3.25% 04/21/
2025 4.43%
Canadian Government, 2.25% 06/01/
2025 3.79%
Japan (30 Yr Issue) 1.7% 09/20/2044 3.47%
Buoni Poliennali Del Tes 2.36142% 09/15/
2024 2.66%
France (Govt Of) 1% 11/25/2025 2.57%
Canadian Government, 2.5% 06/01/2024 2.45%
Canadian Government 1% 08/01/2016 2.11%
U.S. Treasury Note 1.75% 12/31/2020 2.04%
Buoni Poliennali Del Tes 1.05% 12/01/
2019 2.03%
https://public.dreyfus.com/documents/compliancedocs/factsheets/monthly/6940.pdf
The misconduct to which I refer typically involves "advisers" at the local branch level being pressured to push bank clients into purchasing investment products which are not particularly well suited to the particular customer. If the above information is applicable, it looks like their Securities division itself is pretty straight, as opposed to the conduct at the actual customer contact level. Interesting.
Of course, the amount you're proposing to invest would also factor in.