Anyone doesn't buy bond/bond funds because you don't understand them?

[mathjak107]

looking at some returns .

fidelity high yield up for the 1 year 4.09%

fidelity total bond 1 year minus 1.31

fidelity floating rate 1 year up 4.32%

fidelity corporate bond 1 year minus 1.25%

fidelity new market income (emerging market bonds 1 year minus 7.42%

fidelity capital and income 1 year up 4.35%

TLT LONG TERM TREASURIES 1 YEAR minus 4.89


so you can see bond fund type really matters and they each fit the big picture better at times than other times .

this year the bond side of wellesley is crushing it year to date . it is barely positive for a fund with 40% equities . .

[mysticaltyger]

Originally Posted by mathjak107

looking at some returns .

fidelity high yield up for the 1 year 4.09%

fidelity total bond 1 year minus 1.31

fidelity floating rate 1 year up 4.32%

fidelity corporate bond 1 year minus 1.25%

fidelity new market income (emerging market bonds 1 year minus 7.42%

fidelity capital and income 1 year up 4.35%

TLT LONG TERM TREASURIES 1 YEAR minus 4.89


so you can see bond fund type really matters and they each fit the big picture better at times than other times .

this year the bond side of wellesley is crushing it year to date . it is barely positive for a fund with 40% equities . .

So what? It's normal for investment grade bonds to have a bad year from time to time. That's just the nature of a balanced portfolio.

[DaveinMtAiry]

I had admitted limited knowledge of bonds in another thread but not as limited as some of the posters here. Is someone really comparing the risk of bonds with the risk of the stock market? Dear Lord.

[mathjak107]

Originally Posted by mysticaltyger

So what? It's normal for investment grade bonds to have a bad year from time to time. That's just the nature of a balanced portfolio.

we have never had anything but a bull market in bonds over the last 45 years . we hit a speed bump every now and then but nothing that carried over or can be called a bear market for bonds .

it can be very different now and has been . very different fed policy than prior . BND- vanguard total bond returned 1.62% the last 3 years as an example . .ffrhx floating rate almost 5% ...

so i truly believe having flexibility in your choices in bond funds is very important today . a strong economy with rising rates calls for one style , an economy falling in to recession is quite another . some models fly fighter cover all the time with powerful long term treasuries .

while you can sit in a balanced fund for convience , you will likely do much better by being able to change equity and bonds funds as the big picture changes .

the more conservative you are the more crucial bond fund selection can become .

the insight income model which is only 24% equities has had a rough year and has been negative for most of the year , so has wellesly income . on the other hand the 60/40 growth and income model has been up all year and the growth model is seeing double digit gains . so there are times being more conservative in certain assets can be the riskier bet because they never develop that cushion for anything to go wrong .

so in conservative models bond fund selection is going to be very very important unlike the past it seems . wellesly income is down to about 36% equities and 22% of the bonds are in long term bonds 20-30 years . so they are very defensive . that is great if that is your view but not a good fit if that is not your sentiment or goal .