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Don't Be Fooled By Bond Markets' Risk-On Rally In December As Caution Lies Ahead For 2020
As primarily a bond oef investor, 2019 was a great year to invest in bond oefs, with many bond oefs producing double digit total return. Short term momentum investors, will cite the hottest bond oefs, as the funds to invest in for 2020. My experience is that bond oefs will eventually return to a TR that is close to their history, and so there is a tendency to chase performance, buy funds that won the short term performance race, and assume they are the best investments going forward. Often those hottest performers in a given year, will become below average performers in subsequent years. If you are a momentum investor, who focuses on shorter term performance, then you simply sell a fund when it crosses a moving average loss point, and move on to other funds with a better short term momentum performance pattern. I am not good at trading, so I tend to focus of funds with smoother performance patterns, with good capture ratios, and attempt to be patient when bond oefs have "cooler" performance periods. You have to determine what kind of investor you are, and what roles you want a given bond to play in your portfolio.
The usual suspect. These articles are published for investors to read with minimal ideas. Let's take an example of just one sentence "We've had a nice reversal in Q4 where it's risk back on again," said Peter Palfrey, vice president and co-manager of $7.5 billion Loomis Sayles Core Plus Bond (NERNX). "For the first nine months of the year, it was just a world of worry."
Let's see the reality. In the first 9 months of 2019, the SP500 made 20+%, BND (US bond index) made 8.6%...mmm...I didn't have any worries. It looked to me it was excellent.
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Let's take an example of just one sentence "We've had a nice reversal in Q4 where it's risk back on again," said Peter Palfrey, vice president and co-manager of $7.5 billion Loomis Sayles Core Plus Bond (NERNX). "For the first nine months of the year, it was just a world of worry."
Let's see the reality. In the first 9 months of 2019, the SP500 made 20+%, BND (US bond index) made 8.6%...mmm...I didn't have any worries. It looked to me it was excellent.