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Author: knobcreek Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35400  
Subject: Asset Allocation & Bond Mutual Funds Date: 2/3/2011 3:41 PM
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I know I'm supposed to have fixed income assets in my portfolio, but it never seems to me to be the right time to buy them. When rates are low, like right now, I'm afraid of losing value as rates increase. I currently have a small allocation of fixed income in Amer Century Zero Coupn 2015 Fund, Janus Short Term Bond Fund and Pimco Total Return Fund (about 8% of my overall portfolio) and another 5% in other fixed income instruments. I'm of the opinion that we will see higher rates in the near future so I feel like rolling out of these funds since I'm afraid they will lose value in that climate.

From an asset allocation standpoint does it make sense do sit with these funds, or does it make more sense to move out of them and into a sector I think will be strong in the next few years (like industials, materials and transports)? I guess the question is whether it is better to put up with poor performance for the sake of diversification in this environment or invest in dividend paying equities until interest rates rise, then buy back into these funds?

Another way to look at it, if you didn't own these funds now, would you put fresh money in them today, or wait til rates go up?
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