Bond Performance in Rising Rate Environment - TRP Study

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Bond Performance in Rising Rate Environment - TRP Study

Postby pkcrafter » Fri Jun 28, 2013 9:21 am

When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Re: Bond Performance in Rising Rate Environment - TRP Study

Postby ps56k » Fri Jun 28, 2013 1:13 pm

yeah... received the email article info from - TRowe & Schwab, etc -

SO - even if we are keeping our current bond funds, like VBMFX with a duration of 5.5yrs
what other "shorter term" Vanguard funds
would be good to add for that 3-5 yr duration crossover point as per the articles ?

Something like VBISX Short Term Bond Index ?

Here is the full TRowe article - TRowe Study webpage


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Re: Bond Performance in Rising Rate Environment - TRP Study

Postby nisiprius » Fri Jun 28, 2013 2:04 pm

1) I like the Schwab article a lot better than the T. Rowe Price article, which veers off into suggestions of "Higher-Yielding Sectors" aka riskier sectors without much discussion of why you would want to take more risk in on the bond side rather than either a) accepting lower return, or b) just increasing your stock allocation.

2) I love confirmation bias as much as the next guy, but we must, of course, recognize that all mutual fund companies have a direct interest in convincing investors not to sell their mutual funds. Their interests may be somewhat aligned with investors' interest--but not perfectly. What you will not find in any of these pieces from brokerages or advisors is a thoughtful analysis of bond funds compared with (directly purchased, non-brokered) bank CDs. I personally am staying the course in Total Bond, believing that I can just wait out the volatility, but the time has come to say that it looks like, when the dust settles that will probably turn out to have been suboptimal. But hardly ruinous. More like, I could have gotten similar results without having to "wait out the volatility." (Just like Kevin M and others were saying).
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Re: Bond Performance in Rising Rate Environment - TRP Study

Postby ofcmetz » Fri Jun 28, 2013 2:25 pm

Both were good articles and do confirm what we talk about here. I wonder how many will know this info when they open their second quarter statements and see that their safe investments have fallen in value?
Never underestimate the power of the force of low cost index funds.

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