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Is 2023 the time to wade back into bond funds? Thoughts?
@MikeM: I reduced REMIX, but still have a decent stake. Because it has a large allocation to global equities, I think it may do OK, maybe not shorting equities during this upswing. The PM claims he runs an all-weather portfolio.
@MIkeM said, “Maybe they are using this platform to drive up price on their picks.”
I believe that is called “pump and dump”. Remember Jeff Vinik who managed Fidelity Magellan, promoted his stocks on Louis Rukeysers he was selling the same stocks as @hank suggested. A year later Fidelity has to paid a fine pointing to this incident, but Fidelity does not admitted guilt. Jeff Vinik left Fidelity afterward. So Barron’s roundtable discussion also expose viewers to the same hazard. Hopefully these experts are holding themselves to higher standard.
By the way, I moved back to high quality bonds incrementally since the beginning of this year; all intermediate term bonds and one actively managed bond fund. Long duration bonds have large daily swings so will wait until the second half of this year. Still learning to buy individual bond ladder using Fidelity Bond Tool as CDs and T bills are maturing.
Based on Ms. Sonal Desai input I am looking into an emerging market bond fund EADOX. Is anyone else considering them?
I've been tracking, but do not own, AGEPX. It's offered as a frontier-market bond fund. Morningstar pegs its yield at 8.75%. I thought that was higher than you could find anywhere else, but that Eaton Vance fund is a tiny bit higher. For what it's worth, the EV fund gets just a neutral ranking, while AGEPX is awarded a bronze decoration at Morningstar. But then again, Morningstar's proprietary system seems indecipherable. And one of those two is granted 5 stars, while the other holds a 4-star rating. Check the monthly pay-outs, if you hasve not done it. One reason I'm not yet in AGEPX is because I'm getting monthly divs that are as good or better in my domestic junk bond fund: TUHYX. I'm still behind the curve in terms of my losses in that fund, but the YTD move is quite positive, so far. So, I'm riding the wave.
What are your thoughts here. I know we have some really knowledgeable bond people here at MFO and I' like to hear everyone's opinion on the subject and if you are buying.
I've been out of specific bond funds for about a year and a half (except for RPHYX). I'm considering getting back in now with the hope the worst is over or close. What are other's thoughts? I'm specifically looking at floating rate at this point, piggybacking onto statements I've seen from David Giroux and others in Barrons. If I'm looking for an early trend, the last quarter of 2022 was steadily increasing for this sector. I'm considering using SAMBX.
I know the safer route is CD's and treasuries at 4-5%, but I'm hoping with a little added risk, high single digit returns may be obtainable.
What are the thoughts? Pros and cons?
David Sherman is very good in the tyle of ST/LD HY bonds. CBLDX and RSIIX are very good next steps after RPHIX/RPHYX, IMHO.
When I have a little more time I was going to compare the prices of all their "picks" on January 6 ( Friday, date of interview price listed in article) with price at open on January 9th and then price on Monday the RT was published.
In the past I think I remember being irked that when Barron's calculated their columnists "returns" for their picks, they used the price on Friday of the column, although no mortal can buy the stock until Monday.
As public information it is not a good idea to use these articles directly, although frequently volume surges after a stock is mentioned. However, every once in a while something works like TSLA since the article came out
The further out on the duration curve you go the worse you will do if interest rates spike back up. Many people have alluded to the "Second spike" in the 60's and 70's, after the Fed had controlled inflation one time.
The "Market" seems to think interest rate hikes are over. Three year treasuries are paying less than 12 month bills ( 4.29 vs 4.73)
LT bonds will do well only if there is a "soft landing " or if there is a typical recession/depression without inflation, ie no stagflation.
I think the risk of stagflation is not nothing, as war and famine and extreme weather events will keep costs higher than they might have been.
I am hedging my bets and buying longer term bonds and funds and ETfs in small percentages ( 3-8%). As they pay less than short term bonds, you have to assume that either interest rates will be sig lower in a year, and you will get a nice increase in price of LT funds.
High inflation has been the talk of the town for a while, but Janet Yellen said low inflation is likely to return as a long-term challenge for the economy.
“We’re just coming through an unusual and difficult period,” said the Treasury secretary. Yep. Not so quick, though... Paul Krugman is concerned investors have put inflation risk in the rear-view mirror too soon, and that “markets may be getting ahead of themselves.” Also cautious: JPMorgan’s Marko Kolanovic, who sees the risk of a recession “postponed rather than diminished” and said investors should fade 2023’s equity rally. And a “tinderbox-timebomb” is how the CIO of Universa, the hedge fund advised by Nassim Taleb, described the global economy. It has too much debt and is poised to wreak havoc on markets, rivaling the Great Depression.
Seems to me, because of service sector inflation stickiness, the inflation monster will not so easily go back into hibernation at a 2% rate. Yellen is certainly qualified, but have her judgments been timely? Ummmmm.....
Think we just observed a bear market rally in last several weeks. In my opinion, bonds may have a better chance to make a decent gain this year now that most of the rate hike is behind us.
With many workers who retired or are retiring since the pandemic, there are more job openings than workers that contributes to higher wages or service cost. 2% inflation does not look realistic for this year.
Comments
By the way, I moved back to high quality bonds incrementally since the beginning of this year; all intermediate term bonds and one actively managed bond fund. Long duration bonds have large daily swings so will wait until the second half of this year. Still learning to buy individual bond ladder using Fidelity Bond Tool as CDs and T bills are maturing.
Morningstar, for one, says, ”Like guarantees of future returns, this page doesn’t exist.”
https://www.nasdaq.com/market-activity/funds-and-etfs/cprex
Maybe do better here:
https://www.franklintempleton.com/investments/options/mutual-funds/products/92083/I/clarion-partners-real-estate-income-fund-inc/CPREX#fund-objective
"Access to PRIVATE Real Estate..."
One can buy it anytime through some brokers/advisors but redemptions are limited to 5% of AUM quarterly.
https://www.franklintempleton.com/investments/options/mutual-funds/products/92083/I/clarion-partners-real-estate-income-fund-inc/CPREX#documents
https://www.franklintempleton.com/tools-and-resources/lit-preview/92083/I/clarion-partners-real-estate-income-fund-inc#prospectus
https://www.cpreif.com/
“but redemptions are limited to 5% of AUM quarterly.”
When I have a little more time I was going to compare the prices of all their "picks" on January 6 ( Friday, date of interview price listed in article) with price at open on January 9th and then price on Monday the RT was published.
In the past I think I remember being irked that when Barron's calculated their columnists "returns" for their picks, they used the price on Friday of the column, although no mortal can buy the stock until Monday.
As public information it is not a good idea to use these articles directly, although frequently volume surges after a stock is mentioned. However, every once in a while something works like TSLA since the article came out
The "Market" seems to think interest rate hikes are over. Three year treasuries are paying less than 12 month bills ( 4.29 vs 4.73)
LT bonds will do well only if there is a "soft landing " or if there is a typical recession/depression without inflation, ie no stagflation.
I think the risk of stagflation is not nothing, as war and famine and extreme weather events will keep costs higher than they might have been.
I am hedging my bets and buying longer term bonds and funds and ETfs in small percentages ( 3-8%). As they pay less than short term bonds, you have to assume that either interest rates will be sig lower in a year, and you will get a nice increase in price of LT funds.
High inflation has been the talk of the town for a while, but Janet Yellen said low inflation is likely to return as a long-term challenge for the economy.
“We’re just coming through an unusual and difficult period,” said the Treasury secretary. Yep.
Not so quick, though... Paul Krugman is concerned investors have put inflation risk in the rear-view mirror too soon, and that “markets may be getting ahead of themselves.”
Also cautious: JPMorgan’s Marko Kolanovic, who sees the risk of a recession “postponed rather than diminished” and said investors should fade 2023’s equity rally.
And a “tinderbox-timebomb” is how the CIO of Universa, the hedge fund advised by Nassim Taleb, described the global economy. It has too much debt and is poised to wreak havoc on markets, rivaling the Great Depression.
With many workers who retired or are retiring since the pandemic, there are more job openings than workers that contributes to higher wages or service cost. 2% inflation does not look realistic for this year.