It doesn't matter if you have the best bond fund for a while, but if you don't have the best bond fund in 2015 and beyond, you probably don't want to have any bond funds at all. These revenue-generating funds have been considered reliable security investments for many years and they have also proven to be stable and perform well.
These funds are also known as income funds. Their goal is to generate higher interest income as a reliable security investment. When you invest in them, you have a small portion of a lot of fixed-income bonds called "bonds." We will keep it simple here to take home the most important things you need to know: in 2015 and beyond, even the best bond funds will not be safe investments.
As early as 1981, interest rates reached an all-time high and then fell for many years, hitting a record low recently. Fixed income generated by income fund ports is becoming more attractive than current interest rates. The result: the fund owner's dividend income and rising stock prices are very good. You don't need to have the best bond funds. The high tide caused all ships to rise.
For many years, average earnings funds have outperformed ordinary equity funds...and are different from equity funds...they have not caused huge losses to investors every few years. It's no wonder that millions of investors have become loyal fans of these funds and still see them as good security investments. Why pay attention to having only the best bond funds in 2015, 2016 and beyond?
Look at today's interest rates. If you can get 1% interest income from a one-year CD or 3% dividend income from a premium income fund, then you are lucky. In 1981, you earn 15% of your income from CDs and income funds. Today, in order for bond funds to earn more than 3% of dividend income, you must choose the quality of the garbage or have long-term funds; ordinary conservative investors do not want to have garbage [low quality] funds, because they are certainly not safe investments. Note: Due to the risk associated with time factors, the interest rate on fixed long-term debt is higher.
You have seen how income funds live when interest rates fall, but I have not told you that the best bond funds when interest rates fall are long-term funds. After all, their portfolio holds higher interest rate debt securities that have been fixed and locked for 20 years or more. Now, you ask, what happens if interest rates rise?
When the interest rate rises, you are looking at the other side of the coin. Even the best bond funds will lose money, but long-term funds may be slaughtered. This is not just special; it is the way the financial world works. When interest rates peaked in 1981, long-term funds were close to a 50% loss. In other words, even the best bond funds are not really safe investments.
In 2015, investors were mainly worried about "interest rate risk". When interest rates rise, income fund investors will lose money. Don't pay too much attention to quality [but avoid garbage]. Very concerned about the average maturity [long-term and short-term] of the fund's portfolio. Avoid long-term funding. The 2015 Best Bond Fund is called the Interim Fund and its portfolio holds securities that are due for 5 to 10 years. Look for people with an average maturity of about 7 years. Although these are not truly safe investments, their interest rate risk is much lower than long-term funding.
The best bond funds also have low costs and fees; and there is no sales charge called "loading." Most people should hold income funds to provide their total portfolio balance. Use the best bond funds in 2015 and beyond to keep your overall risk at an acceptable level.
Orignal From: 2015 and beyond: owning the best bond fund
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