The Motley Fool Discussion Boards
Investing/Strategies / Bonds & Fixed Income Investments
|Subject: Re: morningstar fixed income fund managers of ye||Date: 12/20/2012 3:06 PM|
|Author: globalist2013||Number: 34565 of 35560|
I read the article to find the "safest" one maybe SCPZX? Not sure I would invest in any of them if I was looking for security.
"Safest" or "most secure" is in the eye of the beholder. As the linked chart http://finance.yahoo.com/echarts?s=nefrx#symbol=nefrx;range=... suggests (in which the five bond funds are plotted against a common, broad-market, equity index), all of them were steadier in their upward path than the SP500, raising the perennial question, "Do you want to eat well, or sleep well?"
It is simplicity itself to download historical data for all six and then calculate Standard Deviations and then --using STD as an imperfect and flawed estimate of 'risk'-- to calculate the risk-adjusted returns for each. My guess --and this is just a guess at this point-- is that the five bond funds were far less "speculative" than the broad-market equity index and achieved far better risk-adjusted returns, which is as good a definition as any of "safer" or "more secure".
So, yeah, the five did well, just as has nearly any bond fund (or bond investor) has done well over the last 30 years. Whether that performance will persist is a whole 'nother matter. But any bond investor's performance numbers for this year will be in the range of 10.5%-11.5% if they knew what they were doing. And therein lies the rub. Most fixed-income investor don't have a clue. They can't do their own investing effectively, nor can they pick --ahead of time-- the fund managers that might do well for them. So they end up with the results that the Dalbar 20-year studies of investor behavior and results so clearly document, i.e., a roughly 85% under-performance of their benchmarks.
Congrats to the managers that Morningstar highlights. But their performance was merely trend line for what any competent individual bond investor will report for this year.
|Copyright 1996-2015 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|