That would get the advantage of stocks over high
quality bonds down to ~ 1 - 2 % / year.
Not exact matches
The NAV (net asset value) of a
bond fund will move up or
down based on a number of factors such as changes in interest rates, credit
quality, and currency values (for international
bonds) for the different
bond holdings in the fund.
In the credit markets, both investment - grade and high - yield corporate
bonds had negative returns for the first time in eight quarters, with
down - in -
quality subsectors in each unconventionally outperforming higher
quality ones.
We sold into it, doing a massive up - in - credit trade that left the portfolio higher
quality than it was prior to 9/11, and giving us room for the upset that would happen as Worldcom went
down, and the corporate
bond markets doing a double dip in late July and early October.
Although high -
quality bonds can provide a safety net, investors must be aware that
bond prices go up and
down — though not with the same volatility as stocks.
Yes, some high -
quality corporate and mortgage
bond rates will be pulled
down with it, but so will discount rates for liabilities.
Time and time again if the stock market suffers there is consitentantly a «flight to
quality» in the
bond market where
bond prices rice and inversaly mortgage rates go
down.
Bond prices go up and
down depending on interest rate changes and fluctuations in credit
quality.
High -
quality bonds tend to go up in value and accrue more interest, similarly to cash — which has no yield — but does appreciate dramatically, when everything else goes
down.
Paying
down a mortgage offers a guaranteed return — one that will likely outperform high -
quality bonds.
Why not sell
down the positions a little and buy some high
quality short - to - intermediate - term
bonds?
It breaks the fixed income portfolio
down into three core components: The core (high -
quality, lower - volatility investments like government
bonds that provide some diversification to stocks); core complements (absolute return
bonds designed to hedge against inflation); and extended sectors (high - yield
bonds that can provide some extra income, albeit with added volatility).
The «flight to
quality» by investors seeking a safe haven for their funds drove Treasury
bond rates
down to historic lows, sending CMBS rates shooting up by as much as 100 basis points over Treasury
bonds.