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
Outflows from Bond Funds Increase to 30.3 bln in August
On a contrarian note, assuming interest rates do not skyrocket from here (skyrocketing being the common wisdom, which may be wrong given the weak economy) some of the bond funds seem like great buys here. For example PDI, the etf version of PIMIX, which is selling at almost a 9% discount to value and yielding almost 8%.
Share Price NAV Premium/Discount Current $27.56 $30.21 -8.77% 52 Wk Avg $29.32 $29.88 -1.83% 52 Wk High $32.71 $32.37 2.49% 52 Wk Low $26.78 $26.33 -11.42%
Distribution Rate 7.71% Distribution Amount $0.1770 Distribution Frequency Monthly
I really don't see rates "skyrocketing"... why would the Fed throw away everything they've worked for at this point? I see a very gradual increasing slope, as they try their best to get things more or less back to "normal" without bringing down the whole thing all over again.
Reply to @Old_Joe: Agree - and psychology being what it is ... I suppose the 10-year will get over 3% fairly soon. For one like yourself (who I read as very cautious on equities) that would likely represent a reasonable return. (That's assuming good quality corporates, munis, etc. rise by a similar amount.)
Have to laugh at the "bond panic". What were these people thinking a year ago? All I heard from some than was the great "capital appreciation" longer bonds provided, despite record low yields!
For some perspective, DODIX has lost a "whopping" 1.75% YTD. Compare that to one bad day in the equity markets when the typical growth fund looses more. Hell, was in a gold fund that dropped 10-12% in a single day recently!
Reply to @Joe: dear Joe, PDI is not an ETF, it is also highly leveraged and hedges, in part, its interest rate exposure -- so it's not PIMIX in a different coat (even though many positions overlap, no doubt). i am not saying that it is not a good purchase, but it requires more careful due diligence. best, FA
there is a strong market perception -- i would even call it anticipation -- that the rates would reach 3% and will stabilize there for a while. our strategists speculate that the 10 yr will close a bit below that level at year-end. if you believe these assumptions, that the main carnage in fixed income investments has passed for now..
Comments
Share Price NAV Premium/Discount
Current $27.56 $30.21 -8.77%
52 Wk Avg $29.32 $29.88 -1.83%
52 Wk High $32.71 $32.37 2.49%
52 Wk Low $26.78 $26.33 -11.42%
Distribution Rate 7.71%
Distribution Amount $0.1770
Distribution Frequency Monthly
Have to laugh at the "bond panic". What were these people thinking a year ago? All I heard from some than was the great "capital appreciation" longer bonds provided, despite record low yields!
For some perspective, DODIX has lost a "whopping" 1.75% YTD. Compare that to one bad day in the equity markets when the typical growth fund looses more. Hell, was in a gold fund that dropped 10-12% in a single day recently!
Thanks for the thoughts OJ.