While we use TIPs funds as our "cash" position; this does not mean that the monies will stay in these funds forever, regardless of other events, including sustained negative price moves.
Most active managed funds are flat for returns (due to recent losses) for the month of October; and have had sustained negative price moves for several days, although maintain YTD returns in the upper 5%-6% range. We consider the YTD acceptable for a cash position.
Where might moved TIPs monies land? Good question, eh? We're not current fans of most equity sectors; and the likely paths for some of the monies may move to FNMIX, FRIFX or PONDX. While all of these funds have had decent returns for 2012; trickling a little more monies into these would add to these existing positions.
Keep in mind that not all TIPs fund are alike, as some also contain other types of investment grade bonds; as well as how the duration of the TIPs holdings are managed. For this year, short duration TIPs ( STPZ ) have managed a little over 2%; while longer durations ( LTPZ ) have performed quite well.
Many investment grade bond sectors have shown weakness this week, to date; especially in the longer duration areas ( TLT EDV ) , which is also reflected in the longer duration TIPs.
Anyway, just a note about what we are watching in the bond area.
TIPs related funds chartTake care of you and yours,
Catch
Comments
Huh, interesting that you mentioned SUBFX; as Old_Joe and I discussed this fund about 6 weeks ago.............should'da done more than discuss.
Among the unconstrained bond funds, which I believe M* can not sort properly, SUBFX is really cruising, too. Don't know if the fund is in the over-bought area or not.
Even PONDX has been riding the 95 scale by technical standards in the relative strength department for many weeks. This is way above the normally viewed 70 for an over-bought condition. But, like anything; it is happy, until it isn't.
Many of the funds that are named by their vendors as unconstrained have YTD returns between .61% and 11%. Obviously, not everyone is in tune. And I do believe some of the named multi-sector bond funds fit into the unconstrained group as well. This makes things a bit more difficult for us to determine who is what and why.
Both PONDX and SUBFX have been tuned this year to be where they need to be and apparently using the tools available within the funds to maintain their course.
I don't have enough time remaining in this day (Wednesday) to access trades; so, I will have to eat whatever will be lost today; as TIPs appear to not be happy again.
Sidenote: Also watching the U.S. 10 year to find if the yield becomes stuck at 1.80%; which is a possible trip point. I find nothing in the economy to drive the yield higher; so this is a traders point of profit or lose to play with for now.
Thank you for your thoughts in this area.
Take care,
Catch/Mark
I was looking at the sector weightings on the portfolio tab on M*. I understand "Government" and "Securitized", but what type of "Corporate" bonds are in the 29.38%?
Thanks.
Mona