bond funds and asset allocation

Well, that's interesting. But in spite of being "senior" BKLN is a bit more volatile than fidelity's bank loan mutual fund over last couple of years. It gets more yield though... will be interesting to see how actively managed SRLN compares as it only has been trading the last day or so. Looks good at least for the time wise old Ben B retires and the hawkish barbarians raise interest rates.

Congratulations Ron, bkln and srln have been great bond refuges in the slaughter of the last week or so. The new actively managed srln is losing a bit less (not much at all).

I wish there was some asset class that would not just give yield and hold value, but elevate upwards if stocks get pummeled. Bonds, gold, etc don't seem dependable for that, and shorts/options are a minus-sum-game.

volatile than fidelity's bank loan mutual fund over last couple of years. It gets more yield though... will be interesting to see how actively managed SRLN compares as it only has been trading the last day or so. Looks good at least for the time wise old Ben B retires and the hawkish barbarians raise interest rates.

As floating-rate funds, they should not move directly with interest rates - as interest rates move, the investments change their interest rates, too.

However, as lower-credit-quality securities, expect these to be more highly correlated with the stock market and the strength of the economy in general -- they can get pummelled if defaults start to rise. I.e., more like junk bonds than treasury bonds.

Somewhere between these things is another fund which may be worth looking at, the iShares Floating Rate Note ETF (FLOT), which holds investment-grade floating rate notes. The current duration, as expected, is about 0.13 (floating rate notes have very short duration - the measure of interest-rate sensitivity), and an average credit quality of A. Don't be surprise, of course, that the yield is less than 1%.

So you want upside with no downside. Join the club!

I used to be an advocate of floating mutual ffrhx and was warned here of it's downside. It then fell 25% in the 2008/9 crash. Not a huge concern to a momentum watcher who can jump out early... however somebody claimed these funds can't liquidate shares at the true prices in big runs, and I think went on to say it's easier for etfs. I did get burned recently with etfs in junky muni's... didn't watch them too closely since since the news seemed OK, but I guess Puerto Rico is the big muni junk kahuna and is in deepening trouble.

OK, I see FLRN giving a tad better returns. GSY is an ultrashort with even less volatility and of course lower yield. But in these areas it may be hard to justify the small return, after you have paid for buy and sell commissions as well as yearly expenses. Maybe just stick in cash, unless it exposes you to exceeding the insurance coverage?

BTW, I notice in the dip of fall 2011, these funds fell even worse than floating rate ones IF you figured how long it would take for their yield to make up for capital loss. Over 2 years worth for the "safe" ones, and under 2 for the floating rates.

Not exactly, but I want a counterbalance. I guess generic bond TLT has mostly offered that, but we are all scared of Dr. Pimco warning of Armageddon there.