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>>>Would really love to hear @Junkster’s take on your question. He’s the expert on HY.<<
Not really as except for a short period last summer haven’t had any meaningful position in junk for several years. I do like CSOAX in that space but it is more of a hybrid junk fund also holding bank loans. I have held that one a few times this year and still hold a position. But bank loans now are massively overbought with a few in that category not having a down day since late May. The epitome of trend persistency. Edit: I have orders in today to lighten up in that category.
One interesting stat on junk bonds that would keep me bullish is since 1980 after a down year (such as 2022) the next year (2023) is always positive and in all instances but one the gains were double digit. Of course in all those previous down years spreads had widened considerably. That was not the case last year. I also would attack junk bonds with an OEF and never an ETF.
Hi @Junkster You noted about overbought bank loans. Peeking about, relative to the RSI 14 day theory, with a RSI under 30 being oversold and over 70 being overbought; this is a rare view chart. The chart is for the etf MINT, Pimco Enhanced Short Maturity Active managed. The chart is set at 3 years and one can see the period of no love and then the rise when the FED started doing the rate rise. YTD is 3.25%, with a SEC yield of 5.44%. A very uncommon chart in my experience. Current RSI above 93 and holding. Yow !!!
Do bond mutual funds price their shares daily based on the last price when the market for the portfolio constituents closes (2PM for bonds and 1 PM for equities and option) or based on the price at a different time? Why do not bond mutual funds take orders all the way until 2PM, especially if they do not hold any equities by mandate?
Sorry it looks like I confused you with my PST. Bond market closes at 5PM Eastern.
I edited my previous post to make it read better.
If the bond mutual funds price at 4PM Eastern, price discovery can be messy, especially on a heavily traded CUSIP or on a heavy volume day. I am surprise they do not wait for the bond market closing price at 5PM EST.
It would seem that with MM, CDs, and T-bills getting all the inflows and monopolizing the discussion boards that there has to be a contrarian play out there. Like bond funds. There are many bond funds that are on track for their best year since their inception. There are floating rate funds on track for double digit annual gains. There are bond funds out there that have had but a couple down days in the past several months. There are bond funds out there in various bond categories with a heavy concentration in commercial real estate that have the tightest rising channels. There is newer bond fund out there that is simply tearing it up with its double digit yield and almost zero volatility (but unfortunately with limited brokerage availability) My point is there have been opportunities out there beyond the obvious cash. I still use Morningstar’s free Fund Quickrank tool and go from there. I am sure there are other and better tools out there. It is just a matter of doing the necessary research yourself and not relying on others to do the research for you.
Edit: And no, I am not suggesting there is anything wrong with capitalizing on the highest yields in over a decade and a half in MM, CDs, and TBills.
If I had any loose cash I’d buy some longer dated bonds. 4.34% on a 10-year ain’t chump-change. Rates drop and snatch some cap gain. It’s amazing people put so much stock in what Larry Summers says!
I also get the sense watching things that the equity markets are poised to rally. Must be a lot of traders laying back in the lead up to Labor Day. Maybe it will take a significant drop in longer term rates to spark a rally. Perhaps another 5% or so on top of the current gains by year’s end.
Guess I’m shouting into the wind, as most all the “experts” are calling for down markets the rest of the year..
Never in my life have I invested in CDs or treasuries. This year is so far looking pretty good and as usual, I'm all in bond OEFs.
Yup - I’m not into owning the actual bond - though might not be a bad idea. But if I had some uncommitted cash, I’d play around (I didn’t say buy & hold) with some of the funds that go longer. But I like to gamble.
One may be missing something by not buying Treasuries (vs online savings, m-mkt funds/accounts, CDs). To say that "I never do ****" shows rigidity or inflexibility that isn't good in investing. Why not learn and try when something works better?
Else, don't post everywhere that you never bought Treasuries. The world doesn't care.
YBB, I never bought these because I can make more money trading low-volatility bond OEFs with more flexibility. It's that simple. There is nothing rigid about it. MM may pay a bit less, maybe 0.2-0.4% annually but MM works better for me. Suppose I'm in MM and want to buy a bond fund today, I can do it all today. If I had treasuries I would have to wait one day to settle, that one day could be an extra 0.2%. Rigid is someone who owns a fund that lags the category or worse, goes down while he/she can make money in other funds. Rigid is someone who spends a lot of energy on 0.2-03% difference annually while he can make several % in bond funds with very low volatility.
Put a little into some allocation funds not too long ago. Otherwise, all short term.
Always been in the higher for longer camp once inflation got going. People seem to think it will melt away like snow in April.
I think none of the guvs wants to be the next Arthur Burns.
+1. I am in that camp too and we may find out more on Powell’s resolve later this week at Jackson Hole. If it is higher for longer and with more rate hikes it would benefit those camped out in MM, CDs, and T-bills. It would also benefit those who have been playing the floating rate story in Bondland. And floating rates isn’t exclusively the bank loan category. Many of the better performing floating rate bond funds are also in mbs and cmbs. If we are wrong and higher for longer doesn’t play out we better be ready to rotate.
Just bought two 12-months CDs from two large national banks with a quite satisfactory yield of 5.30%. I am not concerned about eking out a few extra basis points here or there in the future.
If I were to add a bond fund to my portfolio at this time, I would probably consider CBLDX, a low duration high yield OEF with an excellent risk/reward profile and an SEC yield of 8.80%.
Just bought two 12-months CDs from two large national banks with a quite satisfactory yield of 5.30%. I am not concerned about eking out a few extra basis points here or there in the future.
If I were to add a bond fund to my portfolio at this time, I would probably consider CBLDX, a low duration high yield OEF with an excellent risk/reward profile and an SEC yield of 8.80%.
Good luck,
Fred
Fred, you don't have to answer this question if you don't want to, but when you discuss your CD purchases, are those 4 figure, small 5 figure, large 5 figure, or 6 figure purchases?
Comments
Not really as except for a short period last summer haven’t had any meaningful position in junk for several years. I do like CSOAX in that space but it is more of a hybrid junk fund also holding bank loans. I have held that one a few times this year and still hold a position. But bank loans now are massively overbought with a few in that category not having a down day since late May. The epitome of trend persistency. Edit: I have orders in today to lighten up in that category.
One interesting stat on junk bonds that would keep me bullish is since 1980 after a down year (such as 2022) the next year (2023) is always positive and in all instances but one the gains were double digit. Of course in all those previous down years spreads had widened considerably. That was not the case last year. I also would attack junk bonds with an OEF and never an ETF.
Thanks for the reply @Junkster.
Yeah, other than a bit in a short-intermediate term H/Y muni fund, I haven’t messed with junk in years.
You noted about overbought bank loans. Peeking about, relative to the RSI 14 day theory, with a RSI under 30 being oversold and over 70 being overbought; this is a rare view chart. The chart is for the etf MINT, Pimco Enhanced Short Maturity Active managed.
The chart is set at 3 years and one can see the period of no love and then the rise when the FED started doing the rate rise. YTD is 3.25%, with a SEC yield of 5.44%. A very uncommon chart in my experience. Current RSI above 93 and holding. Yow !!!
Remain curious,
Catch
https://www.blackrock.com/us/financial-professionals/products/331752/?referrer=tickerSearch
Can this be a good substitute for PIMIX, a fund with massive AUM?
Edit: those are PST.
Bond market closes at 2pm Eastern.
Stock market closes at 4pm Eastern.
Mutual funds price at 4pm Eastern.
I edited my previous post to make it read better.
If the bond mutual funds price at 4PM Eastern, price discovery can be messy, especially on a heavily traded CUSIP or on a heavy volume day. I am surprise they do not wait for the bond market closing price at 5PM EST.
Edit: And no, I am not suggesting there is anything wrong with capitalizing on the highest yields in over a decade and a half in MM, CDs, and TBills.
If I had any loose cash I’d buy some longer dated bonds. 4.34% on a 10-year ain’t chump-change. Rates drop and snatch some cap gain. It’s amazing people put so much stock in what Larry Summers says!
I also get the sense watching things that the equity markets are poised to rally. Must be a lot of traders laying back in the lead up to Labor Day. Maybe it will take a significant drop in longer term rates to spark a rally. Perhaps another 5% or so on top of the current gains by year’s end.
Guess I’m shouting into the wind, as most all the “experts” are calling for down markets the rest of the year..
Always been in the higher for longer camp once inflation got going. People seem to think it will melt away like snow in April.
I think none of the guvs wants to be the next Arthur Burns.
Else, don't post everywhere that you never bought Treasuries. The world doesn't care.
Rigid is someone who owns a fund that lags the category or worse, goes down while he/she can make money in other funds. Rigid is someone who spends a lot of energy on 0.2-03% difference annually while he can make several % in bond funds with very low volatility.
If I were to add a bond fund to my portfolio at this time, I would probably consider CBLDX, a low duration high yield OEF with an excellent risk/reward profile and an SEC yield of 8.80%.
Good luck,
Fred
Fred