Tag Archives: interest rates

What Bad Advice Did You Give In 2014?

Market unpredictability was evident in 2014, especially inwrongsign the fixed income market

“Prediction is very difficult, especially about the future.” –- Niels Bohr.

What the fixed-income markets were going to do in 2014 seemed to be a foregone conclusion – rates would rise without the Federal bond-buying program and rate-sensitive securities would have a tough go of it.  That would especially include longer term treasuries. Barclays Long Term US Treasury TR Index subsequently rose 25.07% in 2014.

What does this mean?  There is no such thing as a sure thing when it comes to investing, and is why Buy/Hold Plus has a diversified approach across all asset classes all of the time.

Click here for a more detailed Morningstar 2014 Bond Fund Report on these and other issues:

  • Bond Rally Pushing Down Yields
  • Bill Gross Leaving PIMCO
  • Junk Bonds Hurt by Falling Energy Prices
  • Escalation Between Russia and Ukraine
  • Muni Rebound Despite Detroit and Puerto Rico Troubles

 

Help Clients Understand the Impact of Rising Rates on Retirement Income

Nest-Egg imageFear of rates rising and causing a large price depreciation in fixed income funds continues to be a very concerning topic.  Our previous article ‘Rising Rates: How are you prepared?’ addressed some of the diversification techniques and how greatly varying the correlation can be between different fixed income asset classes.  This recent flyer from Franklin Templeton, ‘Interest Rates and Your Fixed Income Investments’ pdf-icon , addressed an additional component: the role income plays in a fund’s total return.

A fixed income fund generates return in two main ways: price appreciation and income from the underlying holdings.  Just because the underlying holdings depreciate, does not mean the fund will necessarily have a negative total return after factoring in the income generated.  The flyer does a great job of visually displaying this concept in a year by year analysis of Barclays U.S. Aggregate Index’s total return broken up by price appreciation/depreciation and income.  Furthermore, it looks at the total return for Government, Municipal, and Corporate Bonds over the last 20 years  (ending December 31, 2012) and shows this same breakdown – over 90% of the total return is income derived!

Franklin Templeton’s Hasenstab Sees Buying Opportunity in Bonds, Currencies

currency imageBy Min Zeng

Bond fund manager Michael Hasenstab said battered emerging-market bonds and currencies present a buying opportunity after a frenzied selloff in May and June.

Mr. Hasenstab, manager of the $70.1 billion Templeton Global Bond Fund (TPINX) at Franklin Templeton Investments, said concerns that a pull back by the Federal Reserve of monetary stimulus will undermine the growth of emerging-market nations are overblown. Continue reading

Rising Interest Rates: How Are You Prepared?

rising-interest-ratesNo one knows when rates are going to rise, only that it is going to happen at some point in the future. Instead of asking when they will, the better question is: “What happens when rates do go up?”

Focus is shifting more and more towards this question, so education on what affects rates and what can be done to combat their eventual increase is of much importance.

Joseph P. Okaly, the Assistant Portfolio Manager at Buy/Hold Plus, addresses this question, so follow on below to read an article overview or click to read the full Rising Interest Rates: How are you prepared? article.

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