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It is a bad move to take a good bond index fund if it contains some "junk" (BB or lower) bonds in it?
I have Fidelity FSICX, it has junk bonds, although fairly good returns. Morningstar gives it four stars. It's a multi-sector bond fund and includes some treasury.
It is a bad move to take a good bond index fund if it contains some "junk" (BB or lower) bonds in it?
I have Fidelity FSICX, it has junk bonds, although fairly good returns. Morningstar gives it four stars. It's a multi-sector bond fund and includes some treasury.
A number of people in the forum including me own it.
It is a bad move to take a good bond index fund if it contains some "junk" (BB or lower) bonds in it?
I have Fidelity FSICX, it has junk bonds, although fairly good returns. Morningstar gives it four stars. It's a multi-sector bond fund and includes some treasury.
I like that fund. I don't own it, but I own a more aggressive multisector fund--Loomis Sayles Bond. However, you do have to understand what you're buying. It did lose 11% in 2008 when the stock market crashed. Sure, that was much better than stocks, but it was much worse than your typical bond index fund. It has better long term returns than a typical bond index fund or one that sticks only to investment grade bonds. The good years for FSICX will be better, but the bad years will be worse.
Also, I don't think FSICX has to invest anything in junk bonds if it doesn't think they're a good deal, although in practical terms, it's almost always going to have significant exposure to junk bonds.
So it really depends on how long you plan on holding the fund or how soon you'll need the money. If you have a long holding period and/or will only be taking out small amounts in the near future, you're probably fine.
On the other hand, if you need all or most of the money within a year or two, then you probably want to dial down to something more conservative. Just be aware the more conservative bond funds have issues with risk, too. As interest rates creep up, they hurt the value of existing bonds in bond funds--so there is no perfect place to hide.
it is a lot more conservative than it appeared in 2008 . it got caught holding paper that was supposedly safe . that same paper caused my money market to fail so it was a one time thing that has no bearing on the funds risk goals
It is a bad move to take a good bond index fund if it contains some "junk" (BB or lower) bonds in it?
I have Fidelity FSICX, it has junk bonds, although fairly good returns. Morningstar gives it four stars. It's a multi-sector bond fund and includes some treasury.
it likely is not a good time for owning gov't bonds in any great amount .they are the most rate sensitive and they dominate bond index's so i prefer funds like fiscx that can go where the greater danger isn't
I am okay with taking on some risk. In fact, I think all investing has an element of risk.
If I wanted to play it much safer, I'd just put my money in a bank savings account.
It's not that you only have 2 choices, lower graded bonds or a bank account which pays nothing. There is plenty of in between. With that said as long as you have a timeline to support it I'd opt for the better returns of this fund over more conservative bond funds every time.
You'll get a lot of different opinions on this question. I personally don't care for junk bonds. Yes, there are times when they do better than good-quality debt, and times when they do worse. Over the very long term (decades) junk tends to do just a little bit better than good-quality debt, but only if you don't need to sell during a recession. You can go to the Morningstar website and look at long-term returns yourself.
I think it's better to manage risk using your allocation of stocks and bonds. And if you want to do tactical allocation changes throughout the business cycle, the reward for being correct is higher with stocks than with low-rated debt.
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