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VBMFX and VFIIX - Since 1987 - Two smooth operators
Have no idea how smooth it will be.....but have a very good idea that it won't be as profitable...........as interest rates have fallen for 34 years, making bonds a good investment.
Have no idea what rates will do, but they certainly aren't going to fall for the next 34 years!
Dan Fuss who was managing bonds during the 70's and 80's has mentioned the importance of laddering bonds. Not sure if this is best accomplished in a bond fund or by buying individual bonds.
@bee- Not sure how you would do laddering via funds- usually that approach is done with individual bonds, if I'm not mistaken.
And that was certainly a good tactic during the 70's and 80's, because there was a pretty good relationship between bond income and inflation. Now, though, the inflation ladder (real inflation, like at the supermarket, not some imaginary government construct) is pretty steep, but the corresponding bond income ladder is missing a whole lot of rungs, and the few that are left look pretty shaky too.
@Old_Joe"What I've heard said by thems that know" (get ready for a dodgy reply)...
One approach might be a 'fund of funds' that hold is a series of bullet bond etfs. These bullet bond etfs would expire at their maturity date and a new "wrung" (bullet bond etf) is added. I suppose one could do this individually and not pay an additional layer of management fees.
Hi bee- yes, I'm aware that it's possible to at least emulate a bond ladder using such funds, but I've not really read a whole lot with respect to their results over time.
Comments
Have no idea what rates will do, but they certainly aren't going to fall for the next 34 years!
Fireside chat with Dan Fuss:
Dan Fuss with Jim Sarni
And that was certainly a good tactic during the 70's and 80's, because there was a pretty good relationship between bond income and inflation. Now, though, the inflation ladder (real inflation, like at the supermarket, not some imaginary government construct) is pretty steep, but the corresponding bond income ladder is missing a whole lot of rungs, and the few that are left look pretty shaky too.
One approach might be a 'fund of funds' that hold is a series of bullet bond etfs. These bullet bond etfs would expire at their maturity date and a new "wrung" (bullet bond etf) is added. I suppose one could do this individually and not pay an additional layer of management fees.
Here a link to Guggenheim BulletShares 2016 Corporate Bond etf BSCG
guggenheiminvestments.com/products/etf/bscg