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Just wondering if it’s time to pick up some investment grade intermediates thru a fund (4-7 year duration) as a short or intermediate term hold? At last look the 10 year had risen to nearly 1.8%. Wasn’t it below 1% only a year ago? Things don’t normally move in a straight line. Unlike cash, there’s the possibility of some cap gain with intermediate bonds should equities decide to do a deep dive.
Yet, looking at what I might add, the selloff YTD really doesn’t look very severe (reason not to jump). YTD returns (all negative): PRGMX -0.95%, PBDIX -3.14%, DODIX - 2.6% My guess is that it’s probably too early. But closer to 2% I’d be willing to move a bit in.
Just wondering if it’s time to pick up some investment grade intermediates .... My guess is that it’s probably too early. But closer to 2% (10yT) I’d be willing to move a bit in.
That's where tracking trading ranges can come in handy. When the 10y yield, for example, has hit the top of the range and come down from there at least a couple of times, it could be time to put some $, incrementally, into a core fund.
For an example of that scenario, the S&P 500 recently tested its 50d moving average three times, bounced up each time, and on the third try set a new high.
I agree w/you that may not happen for the 10y T until 2% ... if then.
The stock market is in a very healthy place right now. 93% of the stocks in the S&P 500 are above their 200-day moving average right now. The last time you saw a reading this high was 2013.
My take: We don't appear to be in sell off mode, instead the market is rotating. Industrials are leading when 6 months ago they we laggards.
I'm 29% domestic and 11% foreign equity. I see my small-cap PRDSX and smid-cap int'l PRIDX running hot and cold lately, day after day. On some days, I see PRWCX zigging when the Markets zags. Glad I held onto RPSIX. Sold and advertised as a bond fund, but with a slice of equities. Of my three bond funds, it's the only one right now above the zero-line. Barely.
Agree with the consensus. But looking back to a year ago, the 3 funds I cited had very good years - even starting from a rather low interest rate level. (Price’s GNMA has been a laggard for years - plus they had an incredibly short duration on it when I looked at it around year end, around 4-5 years.)
2020 1-year returns (From Yahoo)
PBDIX +8.15% DODIX +9.45% PRGMX +4.21% Average GMMA fund + 5.65%
What if instead of rotating the markets were really only levitating? Alan Greenspan infamously remarked that you can’t identify a bubble until after it implodes. So, if Ol’ Al couldn’t tell ahead of time, who are we to know?
Accch. Greenspan. The most over-educated, full of naivete gentlemen I ever heard of. "The Markets will self-correct.... The Markets will police themselves, and not let extremes go too far." Oy. The Markets will police themselves? On what planet did he learn that? Later, he did admit the mistake. But for someone who was supposed to be an economic "leader," he fiddled while everything burned.
One of @Catch22 funds FRIFX finally having a nice YTD. @hank, “I wonder if GNMA funds might be a better bond choice going forward.”
Yeah @bee. I pondered that long and hard early this year when I realized it was time to vacate some of the intermediate term funds I had. GNMAs provide a smoother ride with government backing. Return a bit more than treasuries (but unlike treasuries they’re fully taxable).
I’d have to read up on them again, but there’s something in GNMA’s nature that dampens volatility. Has to do with the way they’re structured plus typical homeowner behaviors re refinancing (or not) during periods of rising / falling rates. Vanguard used to have a good GMNA fund - probably still does. We’re not going to get rich with them. Just something better than cash.
BTW - I noticed that Price’s TRRIX (retirement balanced) fund has a heavy weighting in their limited term TIPs fund and almost nothing in cash. Appears to me to be their answer to 0 rates on cash. I’ve largely followed suit with my own money.
Glad @Catch22 has had good luck with FRIFX. Invesco has a real estate income fund which I owned for a while. Was a nice supplement to the portfolio. Unfortunately, I don’t have a lot of $$ with Invesco and needed to re-deploy that money into a different fund.
We've not held FRIFX for several years, but it remains an interesting holding within "its" real estate category. The fund used to be a mix of equity, HY bonds, preferreds and convertibles.
The 10 year treasury yield moved up 1.73% yesterday.
Also, the intraday high hit 1.765, which punched slightly above the previous peak of 1.754 on March 18. Could be noise, or could be another round of pushing up the trading range getting going.
@AndyJ, read several discussion that the 10 years treasury yield will reach 2% by year end. Not sure about holding too much lower quality or junk bonds while trading off the negative correlation to stocks. One can shift some of the bonds to dividend oriented and balanced funds, but this change the overall risk profile. While the Fed is maintaining a near zero interest rate, this low yield environment is challenging for income investors.
@bee et al, REITs are slowly coming back from the depth of drawdown. Shopping malls and hotels were heavily impacted by the lockdown during the pandemic as many tenants cannot pay their rent or low usage. Other sectors of REITs are not as bad. Situation is improving and there is still a way to go before reaching the height prior to March 2020.
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But “ The Fed taking on more debt is like giving a drunk another drink.” <—- so true
Yet, looking at what I might add, the selloff YTD really doesn’t look very severe (reason not to jump).
YTD returns (all negative): PRGMX -0.95%, PBDIX -3.14%, DODIX - 2.6%
My guess is that it’s probably too early. But closer to 2% I’d be willing to move a bit in.
For an example of that scenario, the S&P 500 recently tested its 50d moving average three times, bounced up each time, and on the third try set a new high.
I agree w/you that may not happen for the 10y T until 2% ... if then.
P.S. Munis are another option.
Source:
the-state-of-the-stock-market
2020 1-year returns (From Yahoo)
PBDIX +8.15%
DODIX +9.45%
PRGMX +4.21%
Average GMMA fund + 5.65% What if instead of rotating the markets were really only levitating? Alan Greenspan infamously remarked that you can’t identify a bubble until after it implodes. So, if Ol’ Al couldn’t tell ahead of time, who are we to know?
I’d have to read up on them again, but there’s something in GNMA’s nature that dampens volatility. Has to do with the way they’re structured plus typical homeowner behaviors re refinancing (or not) during periods of rising / falling rates. Vanguard used to have a good GMNA fund - probably still does.
We’re not going to get rich with them. Just something better than cash.
BTW - I noticed that Price’s TRRIX (retirement balanced) fund has a heavy weighting in their limited term TIPs fund and almost nothing in cash. Appears to me to be their answer to 0 rates on cash. I’ve largely followed suit with my own money.
Glad @Catch22 has had good luck with FRIFX. Invesco has a real estate income fund which I owned for a while. Was a nice supplement to the portfolio. Unfortunately, I don’t have a lot of $$ with Invesco and needed to re-deploy that money into a different fund.
We've not held FRIFX for several years, but it remains an interesting holding within "its" real estate category.
The fund used to be a mix of equity, HY bonds, preferreds and convertibles.
@bee et al, REITs are slowly coming back from the depth of drawdown. Shopping malls and hotels were heavily impacted by the lockdown during the pandemic as many tenants cannot pay their rent or low usage. Other sectors of REITs are not as bad. Situation is improving and there is still a way to go before reaching the height prior to March 2020.