12-16-2019, 08:36 PM
(12-05-2019, 08:44 PM)fenders53 Wrote: I'm not informed enough about bond funds, but I know I need to get some of my portfolio into a fund for a hedge I'll need some month or year soon. I do have plenty of bonds, buts it's ALL in the short to very short maturity. Yields have die of course for anything short. I was going to do this late 2018, but was afraid the FED would run rates up higher and wreck me overnight. I sure guess wrong on that one. Now bonds have had a nice run so it's going to be a slow dollar cost average in for sure. Anyway I am thinking about TLT which is 20yr treasuries.
Not sure I'd be looking at bonds on the downslope of a 35-year bull market, when bond prices peaked quite a while ago. This year's 75 basis point rate cuts dropped yields by a third, and the Fed is now signaling a pause. With the stock market at all-time-highs, near full employment, and homebuilder indices hitting levels not seen in 20 years, the Fed cutting yields back to Great Recession levels looks pretty unlikely.
Even a small move back towards normal bond yields would destroy bond prices. Funds aren't individual bonds. You aren't guaranteed a return of capital.
I find it hard enough to tolerate token annual dividend increases in the range of 2%, as that doesn't really keep up with inflation. It's easier to stomach with high-yielders like T, which I treat as income farms. Not sure I'd want to give the government a 20-year loan at that rate, as boomers continue to age into the expensive phase of government programs.