Can? someone give opinion on FHIGX

If you think the interest rate on municipal bonds may go up during the period you plan to hold the fund you need to consider that FHIGX has a duration of 8 years. That means that for every 1% increase in the interest rate the price of your fund shares will drop 8%.

Where did you find the duration for this fund?

I subscribe to an independent newsletter, Fidelity Monitor. He rates FHIGX as "hold", i.e. don't buy.

The only two municipal bond funds rated buy are FLTMX and FSTFX; the first is intermediate term and the second is short term.

Frank

In newsletterspeak "hold" usually means "sell."

Among other places,

Type"FHIGX duration" into Google and you will get a number of hits.

Also at,

Thanks for the input. Any ideas on something else I should look into for the cash I have on hand right now. It's not doing anything right now. Talking 800K+

Thanks

Bill wrote:

Whoa. That is a whole lot bigger question than can be answered on Usenet.

The fact that you got there from a simple question about a single mutual fund tells me that you don't have much in the way of a financial plan in place. If you did, you won't be asking, at least in those terms.

I suggest you find yourself a fee-only financial planner to help figure out where you are financially and where you need to be. Start by reading Personal Finance for Dummies

so you'll have some common language.

-- Doug

In my humble opinion no one on a newsgroup can make an intelligent suggestion because there is no way they can know enough about your personal financial situation to do so.

signifigance of duration for a bond or bond fund. If that is the case you should not be doing your own planning or making your own investment decisions. Douglas's suggestion to find a fee only financial planner is appropriate but, based on my experience, comes with a very large caveat.

The financial planning industry is totally unregulated. There is no standard of competence comparable to the CPA licensing exam for accountants. In addition, financial planning, and, in particular, investment advice, are much more subjective than accounting. There are many theories on investing ranging from modern portfolio theory to value investing to throwing darts at the Wall Street Journal to trying to emulate Warren Buffet.

In my case I have made two careful (I think) thorough (I think) efforts to find a good financial planner and have found two turkeys. I have an MBA and my wife is a CPA so we are not completely ignorant yet we failed both times. If you decide to find a planner the best place to start is with other high net worth individuals that you know. If you find someone whose judgement you respect and who has a planner that they recommend you are more likely to be satisfied with the service you get. There are four fee schemes in the financial planning industry. Listed from worst to best, from your point of view, they are:

fee based commission fee only hourly

A fee based planner derives his income from a fixed fee that he charges you plus the commissions he earns on the products (funds, annuities, etc.) that he sells you. A commission base planner derives all of his income from commision on the products he sells you. Do NOT use a planner that derives any income from commissions since his vested interest is served by selling you products that pay the highest commission, not products that are most appropriate for you.

I endorse Douglas's suggestion that you do some reading. If you don't understand the basics it will be difficult to converse intelligently with a planner and impossible to tell if you are getting bad advice. For example, interest rates are currently at the lowest levels in decades so they have no where to go but up. If you understand that when interest rates go up the price of bonds and bond funds go down you should be very concerned if your planner recommends buying bonds or bond funds now. If your planner suggests something that you do not understand or that does not make sense ask a lot of questions before you proceed.

That's my two cents worth for whatever it's worth.

Here's an idea from 3 seconds of thought. Folks here will HATE it, but worthwhile to expand your horizons once in a while, at least as a thought experiment. Staying within the fidelity bondfund family, try something a bit wilder but less sensitive to interest rate hikes, such as a basket of:

Their value is graphed against the 10 year interest rate, which shows them at their worst when this spiked down. Normally their share prices are relatively stable, aside from recovery "up" periods like now. The key thing not shown is they tend to just firehose interest money at you; enough to make up for most share price instability. One overseas (a recent Greek inspired sag at least shows you are diversified), and another domestic junk (thus insensitve to hikes which are small in comparison), and the last having floating rates that quickly adapt to higher rates.

Let me start by concurring with the recommendation that the original poster seek professional advice. Investing $800K is a BIG deal.

I suspect the original poster is retired and therefore an income oriented investor looking for something that will pay him enough to live on. Times are tough for investors like that because rates are so low. So many are looking at bond funds they wouldn't ordinarily consider, just because they have a good yield.

This is a really bad idea. The share price of most bond funds is not fixed. Typically, when interest rates go up, the share price goes down. So it is possible to LOSE PRINCIPAL. The greater the bond fund's "duration," the more sensitive the share price will be to interest rate changes. If the original poster cannot accept the risk of LOSING PRINCIPAL he has no business investing in FHIGX, or any other bond fund. He needs to be in Treasuries or CDs or some other safe vehicle and learn to live with the paltry rate of return.

We also don't know what the original poster's tax situation is. Munis can be good for income oriented investors with a high marginal rate. But if this guy's marginal rate is low (or he doesn't know what a marginal rate is) he doesn't belong in munis.

ASSUMING the original poster is an income oriented retiree, and further assuming he has a high marginal rate, munis are an option, But he has to be careful to protect himself against losing principal when rates go back up. (And they will, sooner or later.)

He can do this two ways. First, he can divide the money into four or five funds with durations varying from short to long. He'll have to live with some risk to his principal as the share prices fluctuate, however. But if he keeps his average duration low, the value of principal won't change all that much month to month.

Second, he could buy actual bonds instead of bond funds and set up a "ladder." With $800K he has enough dough to build a diversified bond portfolio, but he'll ned a pro do manage it for him. That kind of advice is going to cost. He pay either a percentage of assets, or he'll pay via bid/ask spreads when he trades the bonds. But if he finds a good bond guy he can probably expect three to four percent with not much risk to his nest egg.

1st-If this post is not appropriate because of a couple of statements of mine, please delete-I won't get offended.

Thanks to all for your replies. Sometimes I need a lot of prodding.

Yes, I do know the correlation of bonds & interest rates, having had bonds before, but looking at the fund I DID miss the duration on it.

I'm 61, wife 56, & I'm one of the baby boomers mentioned in a post thread below. I feel fortunate enough for grand parents who came through the great depression, gave their knowledge to my parents, (my dad was also a B24 pilot over Germany-ah really gave him some things to think about-absolutely helped shape his life afterwards), and they in turn gave me their knowledge. Dad & I never had a hard time talking finance. So my wife and I have a few years to go.

That's the problem, not being able to talk to dad, I need prodding again, from someone other than me. (Ha) I'm an ex-e-trader. Not day-trader, just was with E-trade for a long-long time, until the man came out an said that Etrade did not have a problem with their mortgages, it would not affect the company. I left for Fidelity. We had built up the figure mentioned while at etrade.

I feel really good in that I have lost no money. Not during the dot.com bust, or the housing bust last year or so. I was just to skeptical on both occasions that I was in all cash before each. Maybe I didn't make as much as some, but I have not lost anything either. Took a few years after the dot.com before I did anything major again.

So here I am again, except this time I've got it worse than before about doing anything, because of where (my opinion) I think this country is heading because a lot of people at the top seem like they don't want to do what's right for this country or it's people. I'm probably wrong, hope so.

This is a great board that I've been reading that has a lot of wisdom, just can't seem yet to take that money sitting in the mm's, as you know which is doing absolutely nothing, and do something else with it right now. I know there are safe things out there, geez, I just sit here though, doing nothing. Bad, I know.

Thanks--felt really good just writing that out.

Staying even across 10 years isn't really even. White collar inflation is much higher than blue collar inflation due to more % dependence on local premium services vs imports of basics from China. And this business of sudden total liquidations has risks of bad timing. While it might not have the risk profile you want, look at a fidelity graph of 10 year total returns of fnmix that I mentioned... fairly steady path to more than tripling in 10 years besides 6% current interest (and IIRC similarly good record earlier). Just an example.

My experience is that repeating activities/investments that worked well over the recent 10 years is a pretty good contrarian indicator.

It seems to me that you are paralyzed because you don't have a plan. I'll repeat my advice: do some reading about financial planning, particularly asset allocation, and find someone to help you build and execute an allocation that makes sense for you.

As Bill says, there are a lot of salesman out there posing as planners. You don't want them. You want someone paid to serve you, not paid to push products. A fee-only Certified Financial Planner is at least a first pass at sorting out the salesmen.

-- Doug

Again, I am not pushing this bond fund, but just making an example to broaden views. Typical bond fund prospects have rarely been worse unless you expect armegeddon and S&P indexing has been shown as a non security blanket. But lesser known options like emerging bonds (among others) have been working for me for decades.

FNMIX was a spectacular performer thru all 17 years of it's existence (12.32% yearly return) and shows no signs of changing. Look at it's performance graph throughout the period, and 15 years ago is the same as today - a miraculous march upward uncorrelated to vagaries of typical bond yields or stock returns (except for brief sharp dips and recoveries in 3 world crises, as I disclosed on my posted link). Something may well sour it's future in the new decade, but like any investment you simply watch and bail out if its pattern fundamentally unravels.

It's not based on some transient manager or tactics; you can buy the same thing as a sleepwalking index etf like EMB. Its overachievement is based on is the prejudice of the developed world which undervalues the economies of striving, work-ethic countries and overvalues aging, entitlement-minded economies. So not only do the undeveloped countries have to firehose interest to you in FNMIX, but the lagging recognition of their strength also means their interest rate differential shrinks and you reap cap gains as well. Maybe you have to be a traveler to feel the reality of things like this.