why does this bond fund exist?

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OakPhilliesFan
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why does this bond fund exist?

Post by OakPhilliesFan » Mon Feb 11, 2019 8:36 pm

I recently encountered the claim that Thornburg Limited Term Income Instl (THIIX) is a good bond fund to balance out volatility in a bond portfolio. I did a little research, and I can't find a single way in which it's better than other funds. Expenses are 0.53%, 30-day SEC yield is 1.86% (well under money market), average effective duration is not particularly short (2.95), and it lost about 10% in the 2008 crisis, just like other corporate bond funds.

Leaving out most of the context of how this came up, I'm just trying to figure out -- why would anyone hold this bond fund? Is there anything unusual about it (in a good way)? Money market funds earn more right now and are lower risk. Meanwhile, there are many better bond funds with comparable holdings.

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Smorgasbord
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Re: why does this bond fund exist?

Post by Smorgasbord » Tue Feb 12, 2019 8:11 am

OakPhilliesFan wrote:
Mon Feb 11, 2019 8:36 pm
Leaving out most of the context of how this came up, I'm just trying to figure out -- why would anyone hold this bond fund? Is there anything unusual about it (in a good way)? Money market funds earn more right now and are lower risk. Meanwhile, there are many better bond funds with comparable holdings.
Probably A) it was sold to them and the investor doesn't know any better, or B) it was the only fund of that kind offered in their 401(k). On the flip side, it is still much better than the Rydex S&P 500 Fund.
https://www.aier.org/article/rydex-sp-5 ... fund-world

z3r0c00l
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Re: why does this bond fund exist?

Post by z3r0c00l » Tue Feb 12, 2019 10:26 am

I think the answer you seek requires a different question. Why does Thornburg Investment Management exist?

The answer is simply that there is money to be made from offering legal, but ultimately overpriced, sub-par products to unsophisticated investors and/or those forced into investments by their 401K. There is a vast ecosystem of these companies, as well as hedge funds, insurance companies selling annuities, etc. etc. These kinds of products are sold by brick and mortar banks and financial advisers who keep a commission. They are all engaged in the business of convincing people that they need to pay more for investing so that "experts" can lead the way. Most of us here would agree that they are wrong.

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