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Why are bond funds doing so badly?

richpulubi · 12 · 3886

richpulubi

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on: May 09, 2014, 09:55 AM
Talk to any financial adviser, they'll tell you that if you want a relatively safe investment, buy bond funds.  The local economy is doing kinda well, and so are equities and real estate, but in general, bond funds are doing so poorly!  Many have ytd that are negative!

What's going on?  Why are bond funds doing poorly???? Would it actually be a good time to buy bond funds?  Or just continue buying equity funds?


ferrariEverest

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Reply #1 on: May 09, 2014, 11:42 AM
It's about the correlation with interest rates and the macroeconomic picture.

Siguro wala bumibili sa kanila, kaya yan ang pinu-push nilang ibenta. They want people to hold the bag. Huling humawak ang kawawa.


richpulubi

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Reply #2 on: May 10, 2014, 11:25 AM
From what I've read, when interest rates go up, bond funds go down.  Interest rates are still the same, but the funds still went down!  Siguro nagpoposition na ang mga investors for a rate hike?


wilch23

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Reply #3 on: May 10, 2014, 11:40 AM
They are anticipating interest rate increase so they want to unload kaya they want you to buy naman. Hehe

Think about it, bond funds go up when interest rate go up and vice versa. Ergo downside of fund is unlimited while upside is smaller.


richpulubi

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Reply #4 on: May 10, 2014, 03:01 PM
Kung magtataas sila ng rates, di ba bababa rin ang stocks?


GoodSteward

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Reply #5 on: May 10, 2014, 11:02 PM


Think about it, bond funds go up when interest rate go up and vice versa.

Really? I dont think so.... The reason why for the past 3-4 yeras (excluding last year) bond funds have been generating good returns is because interest rate consistently declined. Since last year, interest rates arent going any lower and the pressure is leaning towards going up, thats why bond funds are declining, if not flat.

Just a note here,  we are talking about bond funds, not bonds.
« Last Edit: May 10, 2014, 11:06 PM by GoodSteward »


buteteng.mangyan

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Reply #6 on: Jun 25, 2014, 07:49 PM
Hello mga PMT repapips! Meron pa kayang pag-asa na tumaas ang mga bond funds at maging positive before end of 2014?  What's your market outlook on this bond matter?  Or maybe next year siya babawi?  Kindly share your thoughts and opinions. :thankyou:


mxherr5

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Reply #7 on: Jun 26, 2014, 06:23 AM
Are your bond funds still in the red?
Mine was too, at the start(except for 2 bond funds
I had prior which benefited from the almost double
digit returns bond funds experienced recently) but
I kept on just cost averaging down and my bond funds
are in the black(just barely though).

I plan on just cost averaging down to keep my cost
per share/unit down.
« Last Edit: Jun 26, 2014, 06:55 AM by mxherr5 »


DonT

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Reply #8 on: Jun 26, 2014, 08:11 AM
I think first things first...its all relative. Bond Funds should be compared to Bond Funds. You cannot compare the yield of the Bond funds to Stocks since they are different.

Its like me asking why acceleration on a Honda City is slower than a Honda Accord.

With regards to the negative returns, it must be the time period. It depends on the entry date. But looking at a longer period, it should be positive.

But of course, most of you already know these facts by now.


LiveLoveInvest

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Reply #9 on: Jun 26, 2014, 11:20 AM
I think first things first...its all relative. Bond Funds should be compared to Bond Funds. You cannot compare the yield of the Bond funds to Stocks since they are different.

Its like me asking why acceleration on a Honda City is slower than a Honda Accord.

With regards to the negative returns, it must be the time period. It depends on the entry date. But looking at a longer period, it should be positive.

But of course, most of you already know these facts by now.
took the words out of my mouth!  :applause:


richpulubi

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Reply #10 on: Jun 26, 2014, 04:11 PM
I've sold all my bond funds since the start of the year.  i've posted somewhere earlier(the time of Yolanda) that even the head of BDO asset management in a meeting held in Shangrila hotel advised to sell all peso bond funds, even if you just broke even.

I'm happy I did, cuz I still made money.  But I don't know whether it's already a good time to buy bond funds again...since equity funds are really overbought now.

I just don't understand how a bond fund behaves.  But the so called financial advisers consider bond funds as safe investments relative to equities.  The problem is, we shouldn't invest in anything that we do not understand!
« Last Edit: Jun 26, 2014, 04:17 PM by richpulubi »


DonT

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Reply #11 on: Jun 26, 2014, 05:10 PM
Yes, do not invest in anything you do not understand....

So that you don't feel sad pag down ang investments. I've learned this the hard way.


 


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