Written by David Fabian, February 14th, 2018
The inherent fear of rising rates is something that income investors have dealt with through every major market cycle. Many have stubbornly adhered to the notion that the Fed’s monetary decisions and other fiscal shenanigans in the U.S. will ultimately cause a severe disruption in the bond market. Additionally, there has always been this chronic concern that inflationary pressures lurk just around the corner and will ultimately put pressure on bond prices. Read more
Written by David Fabian, August 19th, 2017
The summer is rapidly closing and a new season will shortly be upon us. The seasonality of the markets this time of year has always been a tricky proposition as well. With that in mind, I’m going to outline my current thoughts on some of the big picture charts. Read more
Written by David Fabian, July 12th, 2017
The world of bond funds is generally split along two distinct lines: active and passive. You either own the benchmark or you place your bets with the fund manager who is proactively trying to beat it. Both strategies offer numerous benefits and risks depending on your investment objectives.
With a passive index, you know exactly what you own and that you are going to get every tick of associated price movement from the portfolio. There are strict rules on what securities can be admitted and when they are rebalanced. These funds also offer the lowest costs in terms of direct investment expenses.
Read the complete article at NASDAQ.com
Written by David Fabian, January 06th, 2017
A reader recently sent me a question asking why you would own a bond fund when interest rates are on the move higher. This type of sentiment is more than likely on the minds of many investors as they prepare for 2017 and evaluate adjustments to their asset allocation.
The short answer is that every diversified portfolio should have bond exposure to balance out the risk of other asset classes – i.e. stocks and commodities. Bonds have historically provided a shock absorber for the equity side of the portfolio and have not shown any signs of relinquishing that trait. Simply letting go of all your bond exposure will unnecessarily tilt your risks and returns towards a single outcome. Read more
Written by David Fabian, December 11th, 2016
Income investors are currently facing an uptick of concern over bond holdings that is reminiscent of the 2013 taper tantrum. While it was no more than a few years ago, many are quick to forget the terror that resulted from a sharp rise in Treasury yields and concomitant fall in bond prices. I can also starkly remember just how wrong 99% of economists were on predicting the future direction of interest rates in 2014 and beyond. Read more