Should You Ditch Your Core Bond Fund?…2013 Bond Fund Flows, Market Outlook…and More!December 26th, 2012 by David Waring
BlackRock: Why you may want to ditch your core bond fund - If interest rates rise, core bond funds will be some of the worst hit. With this in mind it may be time to switch out of core bond funds and into funds that have more flexibility to manage both interest rate and credit risk.
CNBC: Why we could see a significant change in bond fund flows in 2013 - Bond returns will turn negative, and investors will grow more confidence in stocks after theStandard & Poor’s 500 passes its historic high of 1,565.
Morningstar: Their 2013 credit market outlook - Financials outperform in 2012 and are expected to lead during the first quarter. The Fed is flooding the markets with even more liquidity. The eurozone recession spreads to core countries from the peripheral. Market implied inflation soars.
Learn Bonds: Learning about yield to worst with look at Sandridge Energy’s Bonds - a person not very familiar with technical terms of the bond market might easily get confused about how much these bonds actually yield.
Bloomberg: Corporate Bond ratings are being cut at fastest rate since 2009 - Standard & Poor’s and Moody’s Investors Service are cutting corporate debt ratings at the fastest pace since 2009 as a global economic slowdown and record borrowing erode credit quality.
ETF Trends: Short Duration ETFs would benefit from money fund reform – The multi-trillion dollar money market fund business is facing renewed efforts on regulatory reform, putting investors on edge. Nevertheless, what may be a bane for the money markets could be a boon for short-duration bond exchange traded funds.
ETF Trends: Bond mutual fund assets under management have doubled since 2007 – Since 2007, bond mutual funds saw their assets swell by $1.7 billion, or 101%, while stock mutual funds have lost $715 billion, or 11%, of their assets under management.
FA Mag: PIMCO’s Mexico call was spot on - Government peso notes gained 2.8 percent this year after adjusting for price swings, the most since 2005, according to data compiled by Bloomberg and Bank of America Corp.
Bloomberg: Tobacco bonds are up 32% this year – High-yield municipal bonds backed by payments from tobacco companies under a 1998 settlement have earned 32 percent tax-free this year, beating all classes of state and local debt, according to Barclays Plc data.
The Oblivious Investor: What metric should bond fund investors focus on? - If you want to know how a bond fund did over a given period, look at annual return figures. If you want an estimate as to how a fund will do going forward, use the fund’s yield.
WSJ: Obama appoints PIMCO’s El-Erian to head Economic Development Council - President Barack Obama is appointing the chief executive of bond giant Pimco as chairman of a presidential council created to help spur private-public partnerships and global economic development.
Business Insider: Jeff Gundlach’s short yen long Japanese equities trade is killing it. – The yen has been getting crushed against the dollar all month. And the Nikkei? That’s the hottest stock market in the world.
Bespoke Investment Group: Default risk on the world’s banks and other financial firms continues to fall. - default risk for the financials has been falling for most of the year, and our CDS index is now at its lowest level since April 2011. Even with Fiscal Cliff worries on the table, the credit markets suggest that investors are as comfortable with the financials as they’ve been in quite a long time.
Gross: Weak holiday sales reports. No wonder. Real wages and interest income have been declining for years.
— PIMCO (@PIMCO) December 26, 2012