Seeking Comments on a Bond Fund

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EmoDx

Member
Please take a look at this Bond Fund allocation and give me your first impression. It is yielding about %6 right now.

[TABLE="class: fundtable sectortable module"]
[TR="class: extended-header-top"]
[TH="colspan: 6"]Sector Breakdown as of 12/15/2011

[/TH]
[/TR]
[TR="class: extended-header-bottom"]
[TH="class: sector"]Sector[/TH]
[TH="class: value right"]% or Fund
[/TH]
[TH="class: sector-col2"]Sector[/TH]
[TH="class: value right"]% of Fund[/TH]
[TH="class: sector-graph-col"]
[/TH]
[/TR]
[TR]
[TD="class: col1, colspan: 2"]
Treasuries
34.36%
[/TD]
[TD="class: sector-col2 col2, colspan: 2"]
CMBS
2.10%
[/TD]
[TD="class: sector-chart"]
[FONT=&quot] [/FONT]​


[/TD]
[/TR]
[TR]
[TD="class: col1, colspan: 2"]
MBS PASSTH...
30.64%
[/TD]
[TD="class: sector-col2 col2, colspan: 2"]

Supranatio...

1.42%

[/TD]
[/TR]
[TR]
[TD="class: col1, colspan: 2"]
Industrial
11.19%
[/TD]
[TD="class: sector-col2 col2, colspan: 2"]
LOCAL AUTH...
1.30%
[/TD]
[/TR]
[TR]
[TD="class: col1, colspan: 2"]
Agencies
7.29%
[/TD]
[TD="class: sector-col2 col2, colspan: 2"]
Sovereign
1.10%
[/TD]
[/TR]
[TR]
[TD="class: col1, colspan: 2"]
Financial ...
6.12%
[/TD]
[TD="class: sector-col2 col2, colspan: 2"]
Other/Unde...
2.05%
[/TD]
[/TR]
[TR]
[TD="class: col1, colspan: 2"]
Utility
2.44%
[/TD]
[TD="colspan: 2"] [/TD]
[/TR]
[/TABLE]

Super Nationals are banks such as the IMF, ECB, etc... Financials are large and mid cap US and multinationals. Local authorities include munis and international munis. All comments are appreciated. :cool:

- Emo
 
Emo,

Probably more important than the sector would be the duration of the bonds. I would stay away from anything longer than 3 to 5 years. And, personally, I think the Fed will start defending the dollar soon. Expect interest rates to increase. The only thing holding them down is our current economic status (political) and Europes economic status (political). The political situation in both the US and Europe can change quickly.

To me this is a yuk. But then again, so is the 'F Fund' - and I own it:nuts:
 
EmoDx said:
This was a snapshot of AGG.
Click to expand...

Too funny, happy I was an honest chap!!!

That 'F Fund' is ready for a dump. My guess is that the public sector will be in food lines - and will be bailed out by the private sector after a bit of slimming...
 
Key features of the F Fund:

The F Fund offers the opportunity to earn rates of return that exceed
those of money market funds over the long term (particularly during
periods of declining interest rates), with relatively low risk.•
The objective of the F Fund is to match the performance of the Barclays
Capital U.S. Aggregate Bond Index, a broad index representing the U.S.
bond market.
• The risk of nonpayment of interest or principal (credit risk) is relatively
low because the fund includes only investment-grade securities and is
broadly diversified. However, the F Fund has market risk (the risk that
the value of the underlying securities will decline) and prepayment risk
(the risk that the security will be repaid before it matures).
• Earnings consist of interest income on the securities and gains (or
losses) in the value of securities.

Soooo..... The U.S. bond market apparently holds about 4% of it's bonds on securities based outside of the U.S.. This assumption does not include any mortgage pass through bonds of properties outside of the U.S.. Mortgage based security pass through's are about 31%. Financials are about 6%. So, about 41% of the F Fund resides in securities that many would consider questionable.

Know what you own and own what you know.

- E
 
Boghie said:
Emo,

Probably more important than the sector would be the duration of the bonds. I would stay away from anything longer than 3 to 5 years. And, personally, I think the Fed will start defending the dollar soon. Expect interest rates to increase. The only thing holding them down is our current economic status (political) and Europes economic status (political). The political situation in both the US and Europe can change quickly.

To me this is a yuk. But then again, so is the 'F Fund' - and I own it:nuts:
Click to expand...
From the AGG Prospectus:

Weighted Average Maturity 6.33 yr

-E
 
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