ATCMickey
New Contributor
- Reaction score
- 0
If anyone could provide any insight it would be greatly appreciated...Sorry for the lengthy post 
With Trader Fred's call for a move to the F fund, I started trying to educate myself about a fund I have almost never used (the F fund). I had always thought of the F fund as being a good place to go if stocks are heading down. I figured people pulled their money out of stocks and went for a safer haven in bonds. Looking back at the 2000-2002 downturn, it seemed to hold true....
from the TSP web site
But then I started thinking...the 2000-2002 pullback was all about tech stocks going south. I don't remember many questions about the bond market being sound, solvent, or otherwise. But these days, some bonds are being called into question as a result of their being tied to mortgage instruments. So I tried to find out how our F fund is invested. The TSP website indicated it's tied to the Lehman US Aggregate Bond Index. From the Lehman website, that index is invested as follows (as of 4/1/2007):
Fixed Rate 34%
Treasury 23 1/2%
Corporate 18.6%
Gov't Related 14.1%
CMBS 4.9%
Hybrid ARMS 3.8%
ABS 1.1%
Also as of 4/1/2007, the quality index is as follows:
Aaa 79.8%
Aa 5.1%
A 8%
Baa 7.1%
I was reassured that the ties to Hybrid ARMS was only 3.8% and the general overall quality of the bonds it holds seems relatively high. But....
So finally on to the question I took so long to get to
Is the F fund the safer haven today that it seemed to have been in the past or do we have any reason for concern that it might be hurt by the mortgage/subprime/market crunch we seem to be encountering?
Thanks in advance for any education anyone might be able to provide,
ATCMickey
With Trader Fred's call for a move to the F fund, I started trying to educate myself about a fund I have almost never used (the F fund). I had always thought of the F fund as being a good place to go if stocks are heading down. I figured people pulled their money out of stocks and went for a safer haven in bonds. Looking back at the 2000-2002 downturn, it seemed to hold true....
from the TSP web site
But then I started thinking...the 2000-2002 pullback was all about tech stocks going south. I don't remember many questions about the bond market being sound, solvent, or otherwise. But these days, some bonds are being called into question as a result of their being tied to mortgage instruments. So I tried to find out how our F fund is invested. The TSP website indicated it's tied to the Lehman US Aggregate Bond Index. From the Lehman website, that index is invested as follows (as of 4/1/2007):
Fixed Rate 34%
Treasury 23 1/2%
Corporate 18.6%
Gov't Related 14.1%
CMBS 4.9%
Hybrid ARMS 3.8%
ABS 1.1%
Also as of 4/1/2007, the quality index is as follows:
Aaa 79.8%
Aa 5.1%
A 8%
Baa 7.1%
I was reassured that the ties to Hybrid ARMS was only 3.8% and the general overall quality of the bonds it holds seems relatively high. But....
So finally on to the question I took so long to get to
Is the F fund the safer haven today that it seemed to have been in the past or do we have any reason for concern that it might be hurt by the mortgage/subprime/market crunch we seem to be encountering?
Thanks in advance for any education anyone might be able to provide,
ATCMickey
