Some random thoughts on bond funds which in many cases are beating stocks YTD. The big winner so far has been emerging market debt. Some funds there are already coming off two consecutive years of double digit gains. Yet we seldom read much on that category. That is a good thing. Many of the better bond traders are heavy there. The greatest bond bull run I ever witnessed was the emerging market bull run from late 98 through the early 2000s.
While everyone is enamored with the CrossingBridge bond funds - RSIVX, CBLDX, and NRCDX - and rightfully so, how about some love for CBRDX. Its November performance caught my eye and it has continued to outperform. My fear is they fold this small and concentrated fund into one of their larger ones.
As much as I abhor junk bonds they have been more than resilient. Like MNHYX there and learned long ago not to let my opinions impact my positioning.
The MBS funds continue to sparkle especially my favorite SEMMX/PX as well as BDKNX/AX. Interesting though that some of the bond funds tied to the lowest of low in MBS, the legacy non agencies from yesteryear such as EIXIX, IOFIX and a few others aren’t shining at all.
The CLO funds are hanging in there but underperforming. Would not expect a repeat of the past two years performance in funds such as HOSIX or SCFZX nor the CLO ETFs. It was a good run for the bank loan funds but they too are underperforming. The cat bonds while also hanging in there, at least for CBYYX and EMPIX, doubtful they will see anything close to their double digit returns of 2023 and 2024,
The Treasury secretary has on numerous occasions mentioned his desire to focus on the 10 year Treasury bond. Almost so much you would think he would welcome a brief recession to get it even lower. But you would think junk bonds would have to break before that. The administration also seems intent on lowering oil. So a lot going well for bonds YTD. The action in treasuries and emerging markets explains much of the renaissance in PIMIX YTD, Will the recent run in bonds continue or will inflation be the big bugadoo. Your guess is as good as mine. Just go with the flow.
Comments
I was in a CLO for about a week before realizing I didn't like looking at all those asset names that looked like something cooked up for a detective novel about grifters.
I'll skip the mortgages too.
I'm still thinking about trimming two of VRIG, PULS, and FLOT and adding FLTR.
As for the flow, I'll still be mostly short or floating after (if) I bump up MNHYX, FFRHX, and add THOPX.
In the meantime, I'm watching the latest episode of tariff theater, among other blivits landing on the front page of the business section.
CBRDX is very close to RSIIX.
One month CBRDX=0.97% vs 0.91%
2 months: CBRDX+1.92 vs 1.96
CSFZX lost its mojo. One month only at 0.35%. HOSIX=0.8.
I have been watching SEMMX BDKNX for months. SEMMX had great performance, but in the last 4 months, it lost 0.6 + 0.4 from peak to trough. Too volatile for me
PIMIX has done nicley YTD, but in early Jan lost close to 1%.
I'm just looking for the hanging fruit at 7-9% per year with low SD.
EGRIX has done well lately, the problem is LT sudden SD.