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Financial Planning / Foolish 401(k)s


Subject:  Re: Bond Funds Date:  9/16/2013  3:02 PM
Author:  joelcorley Number:  25141 of 26254


You wrote, Pimco in particular - my dad has shares and now is wondering if he should sell in an effort to stop even more losses. He has a 10 year timeframe until he requires any of it.

I know nothing of bond funds except googling Pimco and seeing the 'negative' articles.

Pimco is well respected in the bond community. Their founder is Bill Gross. Pimco has nearly $2T under management across all of its bond funds.

With that said, bond rates have been rising since May and most government and investment grade bond values have been on the decline since. There is little Pimco can do about that. Bond values tend to follow interest rates inversely and since Pimco funds tend to be well diversified, they will tend to follow this rule.

The questions you have to ask yourself is, Will interest rates rise from here? When? And how fast?

My answer is, Probably yes. But I don't know for how much longer or how fast.

I think now is probably not the time to be buying bonds. But I'd be leery of dropping all of my exposure. With 10 years to go, I'd make sure I still have plenty of exposure in equities.

- Joel
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