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.
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Written by David Fabian, December 01st, 2016
Investors like to stick with what they know and that is often demonstrated in the use of a single fund company for all their wealth. I see it quite frequently when I review portfolios for prospective clients. “I’m a Vanguard guy.” “I love Fidelity funds.” “All my money is at American Funds or PIMCO or T. Rowe Price.” Read more
Written by David Fabian, November 22nd, 2016
Most investors purchase bond funds with a degree of interest rate sensitivity. This is by design as they want to experience the off-setting effects of falling interest rates in exchange for capital appreciation of the underlying bond portfolio. It’s a built-in risk mechanism that has been a successful diversification component when paired with stocks and other assets higher up the volatility scale.
Yet, after decades of falling rates, the long-term return expectations of many bond funds have fallen dramatically. There is also growing concern that even a modest rise in Treasury yields will create a significant shift in the risk appetites of bond investors. With so much anxiety surrounding the recent jump in interest rates, now may be a prudent time to explore the menu of bond ETFs with an embedded hedging component.
Written by David Fabian, September 23rd, 2016
The rise of low-cost, index-based options in the mutual fund and ETF space has created a truly amazing environment for investors. Companies like Vanguard, BlackRock, and Charles Schwab have created ways for investors to access diversified pools of stocks and bonds for very little (to almost zero) cost. This translates into more money that stays in your accounts and compounds over time. Read more
Written by David Fabian, September 01st, 2016
If there is one major theme that pervades the financial markets this year, it’s the shift from stocks to bonds. You can romanticize about the momentum in gold stocks. You can peek over at emerging market strength, but nothing compares to the pervasive re-allocation of global assets. Read more