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Bond Funds Ready To Use Stock Holdings As Liquidity In Market Rout
Interesting that Peabody at Eaton Vance (EVBAX) and Eagan at Loomis (NEZYX) work blocks apart and are on the same page as it relates to using equities in their multi-sector bond funds.
The possibility of "unwinding large stock positions (18-22% of portfolios) to take advantage of any turbulence in the bond market" is a tactic that I had not previously contemplated.
Peabody's remark that stocks could drop to 5% is particularly revealing.
As was mentioned previously, I view them more as having strategic income or income & growth fund profiles.
I have chosen to become less active on the board through the summer as I feel the market will be making a pullback sometime soon … perhaps, ten percent, or more. Note: I have recently felt this way before ... and, well, it just did not happen as I thought except for this past September and October.
Since, my current asset allocation of about 20% cash, 20% income, 50% equity and 10% other leaves me heavy in cash and light in income from my normal allocation ranges I am neutral in equity at 50% with a low range of 40% and a high range of 60%. With this, I am not doing much except watching the markets.
I think it is interesting that Bank of America has come forward and expects a decline in the markets and recommends investors increase their cash allocation and even perhaps buy some gold. You can read more about this in the link below.
I own two income funds, within my income sleeve, that are currently holding a good percentage in stocks for fixed income funds. They are NEFZX and LBNDX. The other three funds in this sleeve currently have low durations (LALDX, THIFX & TSIAX which also holds some stocks). Also, I hold a good number of conserative allocation funds, within my hybrid income sleeve, which kick off a good yield and also holds a fair amount of stock holdings. They are AZNAX, CAPAX, FKINX, ISFAX, PASAX and PGBAX.
So, I guess … I’ll let these fund mangers deal with this anticipated coming market storm and perhaps add to my gold fund SGGDX.
I’ll be back on the board, more often, when I feel it is time to ramp up my allocation to stocks and open a new equity spiff.
Comments
The possibility of "unwinding large stock positions (18-22% of portfolios) to take advantage of any turbulence in the bond market" is a tactic that I had not previously contemplated.
Peabody's remark that stocks could drop to 5% is particularly revealing.
As was mentioned previously, I view them more as having strategic income or income & growth fund profiles.
Not "rout" now. ... "Rout" if and when Fed raises rates (according to the article).
I don't know if it's a rout now. But 10-year is approaching 2.3%.
Nobody saw this coming.
Since, my current asset allocation of about 20% cash, 20% income, 50% equity and 10% other leaves me heavy in cash and light in income from my normal allocation ranges I am neutral in equity at 50% with a low range of 40% and a high range of 60%. With this, I am not doing much except watching the markets.
I think it is interesting that Bank of America has come forward and expects a decline in the markets and recommends investors increase their cash allocation and even perhaps buy some gold. You can read more about this in the link below.
http://www.marketwatch.com/story/bank-of-america-is-forecasting-a-scary-summer-for-the-stock-market-2015-05-18?siteid=yhoof2
I own two income funds, within my income sleeve, that are currently holding a good percentage in stocks for fixed income funds. They are NEFZX and LBNDX. The other three funds in this sleeve currently have low durations (LALDX, THIFX & TSIAX which also holds some stocks). Also, I hold a good number of conserative allocation funds, within my hybrid income sleeve, which kick off a good yield and also holds a fair amount of stock holdings. They are AZNAX, CAPAX, FKINX, ISFAX, PASAX and PGBAX.
So, I guess … I’ll let these fund mangers deal with this anticipated coming market storm and perhaps add to my gold fund SGGDX.
I’ll be back on the board, more often, when I feel it is time to ramp up my allocation to stocks and open a new equity spiff.
Enjoy your summer ...
Old_Skeet