UnThreaded | Threaded | Whole Thread (32) | Ignore Thread Prev | Next
Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76398  
Subject: Re: Thoughts on Bond Funds Date: 8/7/2011 9:37 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
I have read a lot about the problems of bond funds in a rising interest rate environment since they never actually mature.

If you are worried about the 'never mature' part, you might want to look into target date bond funds/ETFs. They are designed to buy bonds that are due in a specific time frame and hold them to maturity, then pay out the proceeds. Here's a link to an article that explains these funds, and some of their pitfalls - the author seems to think that there are more pitfalls than benefits, but he does concede that there might be benefits for some people.

They are relatively new, so there isn't a lot of history to see how they will perform.

But if you don't use bond funds for the fixed income portion of a portfolio, what do you do?

You might also want to look into funds/ETFs that hold preferred stocks. Although not completely 'fixed income', preferreds do provide a known dividend, like a bond does.

AJ
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (32) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement