@yogibb, I have made the switch already since January this year to increase allocation to intermediate term bonds since. First started on treasury and then corporate bonds using both active and passive managed funds/ETFs. Though I have limited choices in my 401(k) plan. Also invested in a multi sector fund, PIMIX, and ST HY bond, OSTIX based on previously experience with these managers. My bank loan/floating rate bond exposure are limited to PRWCX, but I am watching closely as Giruox makes his moves quickly.
I continue to maintain a decent exposure to cash equivalents as long as the yield curve is inverted. Given this year’s inflation running near 5%, these cash equivalent is barely able to keep up AFTER factoring out inflation. Nevertheless, there are still better than the past near zero yield with money market. So rotating to the intermediate term bonds is necessary for the bond price appreciation as you noted that Fed’s rate hike is near the end.
During the March 2020 drawdown, BL/FL funds fell like HY corporate funds, averaging over 10%, and they took close to 6 months to recover. Treasury’s, in contrast, barely dropped at all and end ed the year up several percents as the FED cut the rate to 0.25%.
A mid-year review from Schwab’s Kathy Jones is enclosed for your enjoyment.
https://schwab.com/learn/story/mid-year-outlook-fixed-income
