did anyone acrually read the article besides me
^ I told you to add cliffnotes.
^trust me you will enjoy it, more drama than jersey shore
Yes, that’s huge. Generally the difference between the 10th percentile core bond fund and the 90th is about 70 bps. When it comes to fixed income funds it’s all about fees. That’s why the largest funds get even larger. They can lower their expense ratio and don’t have to take as much risk to outperform the Agg. Smaller funds - say a core bond fund that has $5B in it - may have to charge 40 bps more than Total Return. They have to make that up just to start on an even playing field.
Edit: Total Return is in the 1st percentile over the last month outperforming the Agg by 38 bps. That’s a huge month.
Intereresting, now I understand why so many funds just go out the credit spectrum to try to outperform. Fixed income funds always seem so off benchmark to me.
^It’s tricky, especially when you have strategic income and multi-sector bond funds posing as core bond funds. They extremely different and, while they certainly have their place in a portfolio, should not be used as a core holding.
Good examples of core bond funds are JPMorgan Core Bond (WOBDX) and Baird Aggregate Bond (BAGSX).
Hmmm, what makes something a multi-sector bond fund? I mean, where do you draw the line? Pimco Total Return is basically all swaps…is that core? One fund that’s done well (according to my wife’s FA, don’t ask) is Guggenheim Total Return Bond (GIBAX.lw), but I took a look and it’s all over the place with a bunch of ABS.
This is probably why I stick to equities, cash and private stuff.
Speaking of Gross, he declared today that the equity market has reached a point of low return.
That’s bond-speak for a top, I assume.
I’m not a fan of fixed income ETFs for a number of reasons, but I don’t feel like the value of a bond is subjective. The value seems very much quantifiable to me?
But a bond ETF doesn’t have a maturity date , which feels weird to me. I prefer to pick the maturity date and analyze the call probabilities rather than being in some weird perpetual deal. Unless it defaults an individual bond pulls to par, and you get out at some known date in the future, for a known amount, no matter what happens with interest rates.
Also if you look at the individual holdings in some of these ETFs right now, a lot of the high yielding stuff is due to call/mature soon, so you buy into a falling yield situation.
But they are good for diversification, and for people who don’t have the skills to pick/manage individual bonds (it’s complicated stuff).
I read the article. Good read.
respekt