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In munis, the term variable-rate demand notes/obligations (VRDN/VRDO) is used. These are long-term munis with frequent rate resets, so are considered to have zero/low durations. These may be found in active muni funds, especially those with "strategic" label, and also in muni m-mkt funds. I also didn't find any muni funds focusing exclusively on these.
Many muni funds use inverse-floaters that are derivatives that move opposite to muni rates. But I don't think you meant those.
Thanks, Yogi. It would be nice to just get MUNI credit exposure without the interest rate exposure. I am assuming there are not any inverse floater Muni funds. I could do 50:50 - inverse floater: regular MUNI funds.
PVI (Invesco VRDO Tax-Free ETF) is the only floating rate MUNI fund (ETF) I could find and its performance is not worth bothering with.
Fund families are always slicing and dicing the market in a rush to bring new products to the market. There are plenty of floating rate corporate bond funds. I guess state and local Govts have not issued sufficient VRDN/VRDO bonds for any fund family to offer that dedicated product.
It is a bad year for Munis. I sold what I could without taking large gains in VWIUX ( Down 4% YTD) and kept overall duration low with VWSUX ( down 1%) and VMLUX ( Down 2%).
I bought NVHAX, figuring the good economy would keep the default rate in lower rated Munis low, and the low duration would cut interest rate risk, but NVHAX is still down over 3%
Only one of my bond funds that is close to zero for the year is RCTIX
@larryB. +1. Gotta do some serious thinking and choosing. Not much of my stuff is free and clear, outside of a tax-sheltered firewall. The lion's share is in T-IRA.
Many core bond funds are down 4-5%. Short duration bonds loss less. Nevertheless, the 2.5 month loss is much less than those of stock fund loss in a single day. We put some $ into I bond since last year. Unfortunately, it is limited to $10K per person, plus $5k from your tax refund (assuming you get a refund that year).
Part of the curve is inverted. The 5 year Treasury is yielding more than the 10 year. Just noticed this evening. Probably been evident for a while.
I don’t know of any sure fire remedies for investors. I’m pretty much staying the course. But did trim fixed income exposure from 30 to 25% within past month. Of course, many of my alternative & allocation funds also hold fixed income - so the real % is higher. I’m eager to see if D&C can turn the losses in DODIX around before year end. This is not a fund that’s accustomed to negative returns. Let’s not forget some of these funds pay interest quarterly and that will lessen some of the hit.
CVSIX is off 1.63% YTD. That’s probably the “best” performer of any of my fixed invome funds this year.
My most interesting “bond” fund is GLDB. Off 3% YTD. Chart resembles a pogo-stick as it’s very erratic. New fund. Only $3 M AUM. They appear to hold longer dated corporates / investment grade bonds and somehow back them with gold bullion. The idea is that if the dollar slides in value the bonds will hold their value better. The effect seems to be that on any given day you get about 2/3 the movement in gold’s price and about 1/3 the movement in 10-15 year corporate bonds. It kicks out a little interest every month. Today the fund was up 1% pretty much in line with gold mining stocks. My hold on this fund is small - only about 2-3% of portfolio. BTW: I don’t count this one as fixed income - too weird. It is part of my 10% spec position which is designed to hedge against steep equity losses.
Comments
Many muni funds use inverse-floaters that are derivatives that move opposite to muni rates. But I don't think you meant those.
PVI (Invesco VRDO Tax-Free ETF) is the only floating rate MUNI fund (ETF) I could find and its performance is not worth bothering with.
I bought NVHAX, figuring the good economy would keep the default rate in lower rated Munis low, and the low duration would cut interest rate risk, but NVHAX is still down over 3%
Only one of my bond funds that is close to zero for the year is RCTIX
I don’t know of any sure fire remedies for investors. I’m pretty much staying the course. But did trim fixed income exposure from 30 to 25% within past month. Of course, many of my alternative & allocation funds also hold fixed income - so the real % is higher. I’m eager to see if D&C can turn the losses in DODIX around before year end. This is not a fund that’s accustomed to negative returns. Let’s not forget some of these funds pay interest quarterly and that will lessen some of the hit.
CVSIX is off 1.63% YTD. That’s probably the “best” performer of any of my fixed invome funds this year.
My most interesting “bond” fund is GLDB. Off 3% YTD. Chart resembles a pogo-stick as it’s very erratic. New fund. Only $3 M AUM. They appear to hold longer dated corporates / investment grade bonds and somehow back them with gold bullion. The idea is that if the dollar slides in value the bonds will hold their value better. The effect seems to be that on any given day you get about 2/3 the movement in gold’s price and about 1/3 the movement in 10-15 year corporate bonds. It kicks out a little interest every month. Today the fund was up 1% pretty much in line with gold mining stocks. My hold on this fund is small - only about 2-3% of portfolio. BTW: I don’t count this one as fixed income - too weird. It is part of my 10% spec position which is designed to hedge against steep equity losses.