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Bond Fund Strategy Now

willmatt72
in Fund Discussions
Just curious what people are doing with their bonds/income generating funds in the current market and looking forward. It appears that munis, REITS, preferreds, Intermediate gov't, treasuries and a few other sectors are on the downswing and bank loans, high yield, emerging markets/world and some multi-sector/non traditional bond funds are in a more advantageous position right now. Are you making any changes to your bond portfolio and if so, why?

Comments

  • CrashCrash
    Took profit in PRDSX and put it into PREMX (EM bonds, mostly hard-currency, dollars, but I guess not exclusively?) It was just a sliver. I figured monthly dividends will be shrinking, though I don't see anything drastic happening. So adding a bit now is my attempt to compensate: more shares = bigger dividend, as per-share div. drops. And for what it's worth, I brought down my cost-basis by a fraction. ...I sold out of MSCFX and put it all into MAPOX, which is holding over 30% bonds these days, too. But I didn't make that move with the bonds in mind. But my quarterly div. from MAPOX ought to rise, too. My entire portf. =37% bonds of all sorts, now. My other dedicated bond fund is PRSNX, world bonds. Also for slow-growth and dividends, I'm building my holding in elec. utility, PNM. And SFGIX will be growing this year, I've made up my mind on that. It pays just in June and December. (PNM and SFGIX are my only two holdings not in tax-sheltered accounts.)
  • TedTed
    @willmatt72: Still sticking with PONCX and PBDCX.
    Regards,
    Ted
  • Old_Skeet
    edited January 2018
    Currently, in my income sleeve my average yield is 3.41%, my average duration is 3.0 years and my average maturity is 5.3 years. With this, I am not doing much. However, I am thinking of removing one of my shorter duration and lower yielding funds (LALDX or THIFX) and replacing it with a multi-sector income fund (FSTAX). Over the past two years FSTAX has had much better performance (about double) over LALDX and THIFX. My holdings within this sleeve are BAICX, CTFAX, FMTNX, GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX. Most likely, the one that will be removed is THIFX. I might even go with a 18 mo to 24 mo CD with yields ranging from 2.0% to 2.3%. Yield on THIFX is 1.87%. Until recently the CD, from a yield perspective, was not a viable option.
  • hank
    edited January 2018
    I wouldn’t have a fund named THIEFX :)

    No changes. Mostly short duration holdings like DODIX. Might slump for a year but won’t strip you of your shirt. However, picked up some GNMAs recently and will add when the 10 year hits 3%. Like gold, these unorthodox (and often unloved) investments could buffer your losses during a steep equity sell off.
  • JunksterJunkster
    edited January 2018
    https://www.mutualfundobserver.com/discuss/discussion/38025/a-mfo-fave-shines-and-gaffney-regains-her-touch#latest

    It worries me bank loans are rapidly becoming groupthink as well as seriously overbought. Junk corporates are seriously lagging equities. World bond looking and performing the best. The big three of PIMIX, PTIAX and PMZDX struggling as expected.
  • willmatt72
    PIMIX is my largest bond holding and yes, it's struggled over the past few weeks for sure. I've been looking at LSYFX but it does seem a bit volatile in that category. Any thoughts on LFRAX ? It seems to be a tamer fund.
  • willmatt72
    Ted said:

    @willmatt72: Still sticking with PONCX and PBDCX.
    Regards,
    Ted

    @ Ted - are those the only bond funds you own?
  • JunksterJunkster
    willmatt72 said:

    PIMIX is my largest bond holding and yes, it's struggled over the past few weeks for sure. I've been looking at LSYFX but it does seem a bit volatile in that category. Any thoughts on LFRAX ? It seems to be a tamer fund.

    LFRAX (assuming it is load waived) is a fine bank loan fund. While not as robust as EIFAX and LSFYX it was positive in 2015 unlike many in that category. But you wouldn’t have wanted to be in bank loans anyway that year. In bull markets in this sector ala post February 2016 it is pretty much straight up with little to no volatility along the way. While PIMIX/PONDX is not my cup of tea and don’t expect returns like the past two years, it is still an excellent fund. It is hard to hop on and off where the momentum is unless you can discern such momentum sooner than later. Most always seem to be weeks to months late to the party.

  • TedTed
    @willmatt72: Yes, along with my preferred stock, and individual bonds they give me an income stream
    Regards,
    Ted
  • Dennis Baran
    @Junkster

    Have you looked at SEMMX in any detail? Thoughts?
  • MikeMMikeM
    I don't do anything fancy with bond fund choices and I'm not smart enough to move to the trending bond types, so I stick with 2 funds MAINX and PONDX, close my eyes and hope for the best.
  • JunksterJunkster
    edited January 2018
    openice said:

    @Junkster

    Have you looked at SEMMX in any detail? Thoughts?

    Too mundane and groupthink for me. But that is not a criticism. It has been one smooth upward ride with little to no volatility. I can understand its appeal and why it is so loved. I try for double digit bond gains annually and that is why it is not a good fit for me.

  • Soupkitchen
    Junkster, any suggestions for those of us looking for buy and hold bond funds for the long term? I can't imagine trying to trade in and out of diiferent funds. Looking for a bond fund for income (already have PIMIX). Considering either VWEHX and/or DODIX.
  • JunksterJunkster
    edited January 2018
    Soupkitchen said:

    Junkster, any suggestions for those of us looking for buy and hold bond funds for the long term? I can't imagine trying to trade in and out of diiferent funds. Looking for a bond fund for income (already have PIMIX). Considering either VWEHX and/or DODIX.

    Sorry can’t be of much help. I would say though as a long term investment to be careful with VWEHX as the junk bull has been running longer than the bull market in equities. Since junk bottomed first ( December 2008) it could very well top first too.before stocks this time around. And junk sure has been lagging stocks the past many months. There are investors in junk bonds now who in the past would never be caught dead there. On the other hand, VWEHX being one of the oldest if not oldest junk bond fund has proved to an excellent long term performer going back to the late 70s.


  • PRESSmUPPRESSmUP
    edited January 2018
    Certain bonds may struggle as rates rise, but any near-term shortfall will be recouped during the next recession in 2019-20, as the Fed backs down in response.
  • willmatt72
    Another bad day for bonds, as PIMIX, munis, preferreds, REITS and some global bonds took a hit.
  • JunksterJunkster
    edited January 2018
    With PIMIX it is all about their exposure to non agency rmbs. That market which had been their driver has stalled. RCTIX and DPFNX two players in non agencies also had a bad day at the office.
  • johnNjohnN
    edited January 2018
    And Att corp bonds
  • johnNjohnN
    edited January 2018
    Still got lsbrx and tones of Private individuals bonds

    Recently bought Teva pharmaceutical Corp bonds and Macy's Corp bonds... Both took beatings but long term looks good... Also bought chimera preferred stocks Cim.b biotechnology yield 6.5% due 2025

    Also
    Hughes systems satellite (private company bonds) and southwestern energy
    all are bbb- rated or higher
  • catch22catch22
    edited January 2018
    Hi @Junkster
    I'm burning the late night candle for this already long day; but I must note...........
    ........you've been shoulder deep in bondland for many a day, many more than I am able to know or ever count for our house, but I sure as heck have a tough time looking around right now for a bond sector I would choose to be involved with...
    We've been in an ever changing mix of bonds since the melt, the only remaining at this point is FCBFX. Your bond method of course is a much different approach than this house, but I suspect we're both to the positive side sufficiently.
    We're up to our arses in equity at this point; approaching the 87/13 of equity to bond.
    This was a point attained when we unloaded equity in June of 2008.
    Is one able to be lucky two times in a decade???
    As the technical indications are riding the high rail and not being sure that fundamentals have a lot of meaning right now; I suspect I will have to track as many articles about every type of retail investor piling into the equity market as my next best signal of a top.
    Okay, time to switch my headphone music from Steppenwolf-Monster to something a bit smoother before pillow time, like Ravel; no, Vivaldi-Four Seasons.

    ADD: Forgot to note, 10y Treasury yield was intraday at 1.375% on July 5, 2016. WHEW!

    Take care of you and yours.
    Catch
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