MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Bond Fund Investors Face Rough Times Ahead

johnNjohnN
in Fund Discussions
https://www.forbes.com/sites/mikepatton/2020/02/08/bond-fund-investors-face-rough-times-ahead/#12bf43581116


Bond Fund Investors Face Rough Times Ahead

Do you own one or more bond funds? If so, 2019 was a very good year, but don’t expect that to continue. You see, bonds do well when interest rates trend lower – as they did last year – but typically lose money when rates rise. And, with interest rates stuck at artificially low levels, at some point rates will rise, and bond funds will struggle to achieve a positive return. Here’s why.

Comments

  • FD1000
    I agree with this article. Rates now are at one of the lowest levels ever seen. You can still make 4-5% in bonds using Multisector+Non Trad funds which I posted about at Bond mutual funds analysis
    Several funds to consider are
    SD lower than1=SEMMX,ANFIX,ANGLX
    SD lower than 1.5=IISIX,TSIIX
    SD lower than 2=VCFIX,/VCFAX,JMUIX/JMUTX,PIMIX
    SD lower than 2.7=IOFIX,PUCZX,DPFNX,JMSIX
  • davidrmorandavidrmoran
    have read this article before, many times

    it makes sense each time
  • MikeMMikeM
    have read this article before, many times
    Yes, like in 2017, 2018, 2019... That stopped clock will be correct sooner or later I suppose.
  • royal4
    Maybe...... or rates could go even lower. Only the shadow knows.....
  • davidrmorandavidrmoran
    Most don't think rates are going to go lower unless there is some crisis for which that is the right approach (part of the problem of having low rates).

    But I also meant that every Jan or Feb for a decade (more?) I have read the same article about how this year is going to be one where you shouldn't "expect [past good returns] to continue. You see, bonds do well when interest rates trend lower – as they did last year – but typically lose money when rates rise. And, with interest rates stuck at artificially low levels, at some point rates will rise, and bond funds will struggle to achieve a positive return", yada yada yawn. It is like boilerplate text. The byline is never Braham or Waggoner or such.

    I assume these articles are a source of tired mirth in the bond offices of Pimco, Fido, D&C, Vanguard, MetWest, etc.
  • hank
    Broken record. Brocken record. Broken record.
  • Low_TechLow_Tech
    Ha, we heard the same thing during the 2013 Taper Tantrum.
Sign In or Register to comment.