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Monday, May 3, 2010

Bond Market Review

I was checking on Schwab's beginning of the year bond market outlook to see how they were doing. They said (my interpretation):
1. TIPs better value than Treasuries (TIP = 2.88%)
2. MBS = limited upside (MBB = 2.21%)
3. Investment Grade Corporates add value (LQD = 3.59%)
4. Muni bonds are still attractive (MUB = 2.50%)
5. Junk has run its course (JNK = 6.16%)
6. Weak dollar driving International bonds (FAX = 6.37%).

For reference purposes AGG (basically total bond market = 2.69%).

In parentheses are corresponding ETF returns through month-end April from Morningstar (exception is FAX, a closed end fund). I sort of check this kind of thing for fun. Short-term results are almost meaningless in the investment markets. It does, however, point out some misses. If you got out of high yield, you are not a happy camper.

Also, looking at other funds, the payout for taking on the risk of investing out at the longer part of the curve has been marginal year-to-date.

I may or may not own these funds. This is for informational purposes only.


  1. The experts are not always expert in their selections and predictions. Is this another case where owning a little bit of everything rather than trying to market time would yield the optimal portfolio?

  2. I couldn't have said it better myself!