Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

Best Bond Funds to Buy Now

By

What are the best bond funds to buy now? This is a simple question that is often unnecessarily complicated by investors. The best bond funds to buy now are the same bond funds you should have bought yesterday and the same bond funds you should buy tomorrow. But isn't past performance a poor predictor of future results? Indeed it is, but the best bond funds are not those that earned the highest return in any given year. The best bond funds are the cheapest bond funds. Cost is one of the most reliable predictors of mutual fund performance. Who offers the cheapest bond funds? For my … [Read more...]

Your Best One-Two Punch

By

For my money the best balanced fund combination is a 50/50 mix of Vanguard Wellesley and Wellington. For clients I prefer a mix of Young Research's retirement compounder stocks and individual bonds and bond funds. The key difference from the Wellesley and Wellington mix is our stocks provide an eclectic group of international holdings and the bonds have a shorter maturity. But as you can see with my chart it's the balanced approach that gives you the confidence to stay in the fight. … [Read more...]

Vanguard GNMA Up 40.6%

By

You’ve been rewarded for sticking with Vanguard GNMA. Over the last 52-weeks it has returned 5 percent and through the first half of this year it is up 4.5 percent. A lot of investors sold their GNMA last year when the Fed began its taper talk. And at the beginning of this year the so called experts said bonds were dead—making it even harder for you to hang in there. I’m glad you did. Aren’t you? Still all the chatter is about stocks. This week the Dow and S&P 500 both had record closings. Tech is way overbought and bonds are being left for dead, again. But the prudent investor would … [Read more...]

A 50% Loss

By

Most investors have forgotten what 2008 felt like. The numbers were not pretty, especially for those who took a 50% loss. Dick Young explains in his March 2014 Intelligence Report. It's impossible to have it all ways. In order to craft an investment portfolio that can act as an all-weather armadillo, you must be willing to forgo potentially substantial upside rewards to balance against the horror of a downside wipeout. If you are retired or saving for retirement in the not-too-distant future, you can easily get a knot in your stomach when you look at the basic math of downside portfolio … [Read more...]

The 10 Largest Bond Funds: Part II

By

Yesterday I wrote to you about how the 10 largest bond funds are increasing risk by loading up on junk bonds. The only fund company of the group not doing this is Vanguard. No surprise there. Vanguard always seems to do the right thing for investors. But there’s another narrative inside this grouping of behemoths that I want to share with you today. Who is the biggest holder of junk and who will pay the price when markets turn? DoubleLine Total Return bond fund has loaded its portfolio with 28% of its assets junk rated. You may recall this beauty of a quote from its manager. He said that … [Read more...]

Setting Your Course for 2014

By

What I’m about to share with you is something I’d like you to share with or teach to your spouse. In 2008 some of the smartest guys in the room sat and watched as their mutual funds lost close to 50%. Meanwhile boring old Vanguard GNMA made money. That’s all the proof I need to make sure my well balanced portfolio owns Vanguard GNMA. It would be nice to be able to buy just one balanced mutual fund and be done with it. But there are none out there today that fit the bill. Don’t get me wrong, I love the world class Vanguard Wellesley fund. There is no better low cost balanced fund. But without … [Read more...]

Counterbalancing for the Crushing Market Declines

By

A counterbalanced portfolio is your key to investment success. For an example of how counterbalancing works I’ll point you to the Vanguard Wellesley fund. For my taste, a “one size fits all” fund simply does not exist today. But this one comes pretty close. Take a look at the years where stocks were destroyed. When you’re in retirement or close to it, you can’t afford to take the big hits. Counterbalancing—the 60% bonds and 40% stocks in Wellesley—helps to ease the pain. E.J. Smith works with new investors that have $2 million or more to invest. He can be reached … [Read more...]

Add to Vanguard GNMA

By

Over the last three years GNMA bonds have paid investors an average of 150 basis points over treasuries. That’s a terrific excess return for full faith and credit securities. In a market full of junk, it’s comforting to have the risk reduction characteristics of full faith and credit securities. And the volatility, compared to treasuries, has been more predictable. Hang with your Vanguard GNMA and if you have a five year window add to it. But don’t treat it like an alternative to cash because it’s not. It’s an investment. … [Read more...]

Bond Funds’ Biggest Losers

By

Closed-end bonds funds have taken a huge hit recently. Leverage can be a killer when rates go up. As Tom Lauricella at The Wall Street Journal reports: Worries about Federal Reserve policy have hit a favorite destination for mom-and-pop investors: closed-end bond funds. These mutual funds have suffered outsize losses during a rough month for bond funds overall. The average high-yield closed-end bond fund is down 10.7% in the past month through Thursday, according to Morningstar Inc. That compares with a 3.4% decline for its open-end counterpart. The same features that help closed-end … [Read more...]