Hello Bob, I have studied your portfolios designed for fixed income returns and have a question. I noticed that DLTNX, which is in all three portfolios, has a duration of 6.31 years. If we get to the point where the feds start to reduce interest rates, does it make sense to hold longer duration bond funds like this because they will increase in value? I realize the reverse is true from your reminder about duration in each portfolio description. Thanks!
The short answer is 'Yes'. DLTNX is mostly in mortgage bonds which have some unique characteristics, but you do want longer duration if you think longer-term rates are likely to decrease.
As the 10 yr rises long term bond fund navs bleed. A daily occurrence. What will determine bottom here and should one cash out of lt fund at this point and sit in cash which is earnng 5%+ vs 3%+.
I think longer-term rates are now reaching a level where they are starting to look attractive so I would not be inclined to sell them now. Rather, I am looking for an opportunity to add them back to the portfolio. That being said, I agree with your last statement which is ... there is absolutely nothing wrong or difficult in just sitting in cash (like VMFXX) and earning a 5.4% compound yield with daily liquidity while we wait.
Hey Bob,
It looks like MX is at another low for the year. Do you see this as a buying opportunity?
Hi Nicholas,
It has been a pretty unpleasant experience for me so hard to say 'yes' ... but I, unfortunately, do still own MX shares.
good luck! bob
Hello Bob, I have studied your portfolios designed for fixed income returns and have a question. I noticed that DLTNX, which is in all three portfolios, has a duration of 6.31 years. If we get to the point where the feds start to reduce interest rates, does it make sense to hold longer duration bond funds like this because they will increase in value? I realize the reverse is true from your reminder about duration in each portfolio description. Thanks!
Hi Parker,
The short answer is 'Yes'. DLTNX is mostly in mortgage bonds which have some unique characteristics, but you do want longer duration if you think longer-term rates are likely to decrease.
thanks, bob
New closing high today in UST 10yr yield taking out the Oct 2022 high
https://substack.com/@bobbrinker/note/c-30254988?utm_source=notes-share-action&r=3lypx
As the 10 yr rises long term bond fund navs bleed. A daily occurrence. What will determine bottom here and should one cash out of lt fund at this point and sit in cash which is earnng 5%+ vs 3%+.
Hi Ferris,
Predicting long term interest rates is notoriously difficult -- but I do think we are nearing the end of this rise in rates.
We sold our long term bond fund in May --> https://www.brinkeradvisor.com/p/model-portfolio-update
I think longer-term rates are now reaching a level where they are starting to look attractive so I would not be inclined to sell them now. Rather, I am looking for an opportunity to add them back to the portfolio. That being said, I agree with your last statement which is ... there is absolutely nothing wrong or difficult in just sitting in cash (like VMFXX) and earning a 5.4% compound yield with daily liquidity while we wait.
good luck! bob