mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Aug 3, 2023 10:30:45 GMT
Are heightened concerns warranted about short term bond funds given the Fitch downgrade? For an income investor sustained higher rates mean better div returns but presumably NAV volatility will continue for the near term. With the higher dividend, if one adheres to the rule of bonds and holds such funds long enough, your principal will be recovered.
Many analysts believe the downgrade is ridiculous. UBS proclaims "Stick with Treasurys". Warren Buffett shrugged off Fitch’s U.S. downgrade, noting it doesn’t change what Berkshire Hathaway, is doing at the moment. “Berkshire bought $10 billion in U.S. Treasurys last Monday. We bought $10 billion in Treasurys this Monday. And the only question for next Monday is whether we will buy in $10 billion in 3-month or 6-month” T-bills,” Buffett said.
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Post by Chahta on Aug 3, 2023 15:22:41 GMT
Why invest in ST vanilla bond funds? Buy the real thing (T-bills and MM funds). My old fav was BSV. It pays a paltry 2%. Now if you are talking ST HY, like RSIIX or CBLDX, then that is a different ball game.
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Post by steelpony10 on Aug 3, 2023 19:46:08 GMT
mikes425 , Buffet’s probably correct, he’s Buffet. I always laugh when someone complains about government deficits then gives then the money to keep spending by investing in treasuries. When the governments rating drops you then lose values somewhere else in your portfolio and may be worse off. It just a bump in the road. I remember the 60 billion dollar deficit in the early 60’s, big whoop. I’m with you as an income investor cash keeps flowing and most of ours is free money by now. It’s all fun entertainment as investors keep looking for a solution once again for a problem without an answer. If you buy and hold it goes away eventually and is replaced by something else which…….
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Post by Chahta on Aug 3, 2023 21:27:03 GMT
mikes425 , .......... I always laugh when someone complains about government deficits then gives then the money to keep spending by investing in treasuries........ It's 2 different things. The first is mismanagement of YOUR hard-earned dollars. The second is doing what is most advantageous for yourself. They are not mutually exclusive. If not for deficits then maybe growth is good then you go down that road. |
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Post by retiredat48 on Aug 4, 2023 13:10:18 GMT
Are heightened concerns warranted about short term bond funds given the Fitch downgrade? For an income investor sustained higher rates mean better div returns but presumably NAV volatility will continue for the near term. With the higher dividend, if one adheres to the rule of bonds and holds such funds long enough, your principal will be recovered. IMO no impact of Fitch downgrade and short term rates. BTW the reaction already occurred. Virtually no change in short term rates. Can't fathom a gvt default short term...or much long term(When you control the printing presses). . We also have an up-ticking economy...so why any concern short term? And yes, the bond rule of thumb applies; hold long enough you get all principal returned. A ST Bond fund manager who never sells anything will have zero to negligible cap gains/losses. R48 |
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