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ICI: U.S. Fund Investors Pull Most Cash From Bonds Since February
With two-year CDs paying 3% guaranteed interest, I am considering moving more money from bond funds to a CD ladder. I did that early this year with taxable savings that had been in a short term muni bond fund. I also moved a sizable portion of money from bond funds to the stable value fund in my 401K. Now I’m considering the same move with my IRAs. Bond fund returns have been terrible with no relief in sight, unless you invest in much riskier categories. High yield bond funds are unlikely to provide ballast if stock markets crash.
With two-year CDs paying 3% guaranteed interest, I am considering moving more money from bond funds to a CD ladder. I did that early this year with taxable savings that had been in a short term muni bond fund. I also moved a sizable portion of money from bond funds to the stable value fund in my 401K. Now I’m considering the same move with my IRAs. Bond fund returns have been terrible with no relief in sight, unless you invest in much riskier categories. High yield bond funds are unlikely to provide ballast if stock markets crash.
High Yield has been bleeding funds too.
Just wondering what has been hot outside the U.S. equity indexes? Most foreign markets are flat or down. EM got hammered. Commodities are down - except for oil, which has now stumbled over the past week or two. Gold took a bad beating - but has rebounded a little bit. Still way down. Real Estate’s down as well.
What in heck is “hot” except for some U.S. equity indexes and maybe some small foreign country somewhere? When folks find out they can pull around 3% (maybe more) in safe cash or very short duration bonds the stampede out of riskier areas might pick up.
Hi Guys & Gals: I'm thinking it important to have my portfolio invested based upon my risk tolerance. During times of a bull market run(s) I have found in the past I've let my equity allocation become to aggressive in prior years. However, after the 2008 market swoon I dialed my risk down and have continued to do so through the years and as I have aged. More recently, I decided I was still invested to aggressively by holding 50+% in equities and have decided to pull this on down to about 40% and raise my fixed income area up to about 40% along with cash to 20% which includes cd's, money market funds and US currency.
It concerns me that the FOMC is raising interest rates at a pretty spiffy pace. It is currently easy to get a 3% yield on a 2 year cd and about 2.8% on an eighteen month cd. I've got some money market funds now paying better than a 2% yield (and its rising). I'm thinking fixed income and cash are looking pretty darn good as compared to a heavy equity allocation especially during these uncertain times of rising interest rates, trade debacles with rising tariffs, brexit, domestic and global politics, etc.
I bet President Trump sure wishes he had left Janet in charge at the FOMC. I'm thinking she would have done a better job at looking at the big picture more objectively and would have moved more cautiously over the current FOMC chairman concerning the Fed's rising rate increase campaign. I've seen in the past where the Fed raised rates too far (and fast) until something broke. I just do not think they can move as fast as they are with their rate increase campaign without something in the economy breaking.
Form my perspective if they kill the stock market they kill the goose that lays golden eggs.
Comments
Just wondering what has been hot outside the U.S. equity indexes? Most foreign markets are flat or down. EM got hammered. Commodities are down - except for oil, which has now stumbled over the past week or two. Gold took a bad beating - but has rebounded a little bit. Still way down. Real Estate’s down as well.
What in heck is “hot” except for some U.S. equity indexes and maybe some small foreign country somewhere? When folks find out they can pull around 3% (maybe more) in safe cash or very short duration bonds the stampede out of riskier areas might pick up.
It concerns me that the FOMC is raising interest rates at a pretty spiffy pace. It is currently easy to get a 3% yield on a 2 year cd and about 2.8% on an eighteen month cd. I've got some money market funds now paying better than a 2% yield (and its rising). I'm thinking fixed income and cash are looking pretty darn good as compared to a heavy equity allocation especially during these uncertain times of rising interest rates, trade debacles with rising tariffs, brexit, domestic and global politics, etc.
I bet President Trump sure wishes he had left Janet in charge at the FOMC. I'm thinking she would have done a better job at looking at the big picture more objectively and would have moved more cautiously over the current FOMC chairman concerning the Fed's rising rate increase campaign. I've seen in the past where the Fed raised rates too far (and fast) until something broke. I just do not think they can move as fast as they are with their rate increase campaign without something in the economy breaking.
Form my perspective if they kill the stock market they kill the goose that lays golden eggs.