Fixed income is taking some wild swings in price lately, for example in a few days wiping out equivalent of a year or two worth of future interest. I wonder what the prudent investor is supposed to do - grit your teeth and assume it is a cycle that will correct itself? I realize treasuries have been called a bubble by some, but am thinking of other fixed income.
Here is last months tactical asset allocation policy of the respected
Northern Trust Bank
(default tactics along bottom, current tweaks in green bar). Although
they had throttled back from almost 40% to closer to 30%, I wonder if
this months chart will shrink fixed income even more.
Some have been avoiding the danger by going to high yield, which seems
to be hanging on. But corporates and TIPS and emerging market bonds
have had significant swoons. It is my impression that bank loan funds
and convertibles have been doing better (I don't document specific
numbers because sometimes the results don't show up here).
- posted 9 years ago