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U.S. Junk Bond Funds Post 4th-Biggest Week Of Outflows Ever
Thanks, guys. With rising rates, yields will fall, isn't that the theory? Still wanna get into PTIAX. Even with gradually falling monthly dividends, it's still juicy, and I'm starting to turn a corner with my portfolio, wanting soon to start taking, rather than re-investing, dividends.
Hi @Crash, with rising rates, in general, prices fall and yields increase.
As far as HY goes, an old rule of thumb is buy HY at a spread to Treasuries of around 8 and sell around 4 **. If you look at the last ten years on this FRED chart, 8 was way too soon during the financial crisis, but about right at the peak spreads of 2011 and 2016. The spread dipped below 4 about the beginning of Q2 this year and continued slowly down till toward the end of October, and is mainly up since.
** That 'rule' refers to HY in general, on average, as that FRED chart tracks. Differently rated HY credits typically run at different spreads, so there's more nuance to get into for real junk aficionados.
FAGIX looks damn good, but the divs and risk/reward profile compared to my PRSNX will make me stand pat. I know FAGIX is domestic, PRSNX is "World Bond" category.
Comments
As far as HY goes, an old rule of thumb is buy HY at a spread to Treasuries of around 8 and sell around 4 **. If you look at the last ten years on this FRED chart, 8 was way too soon during the financial crisis, but about right at the peak spreads of 2011 and 2016. The spread dipped below 4 about the beginning of Q2 this year and continued slowly down till toward the end of October, and is mainly up since.
** That 'rule' refers to HY in general, on average, as that FRED chart tracks. Differently rated HY credits typically run at different spreads, so there's more nuance to get into for real junk aficionados.