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I have a 401k where about 75% consists of stock based mutual funds. I want to use the remaining 25% to help protect what I've earned, especially in case the stock market goes down significantly. To do so, would I be correct in moving some money into bonds, like PIMCO Total Return?

  • Where is the remaining 25% currently allocated. – RonJohn Jan 16 '18 at 18:45
  • Bonds (and bond funds) are just less "risky" than (don't move as much as) equities, but still tend to move in the same direction. So bonds will not necessarily "protect" the other 25% in a market crash - they just won't drop as much. Is that what you're looking for, or do you want something that will gain in bear markets? – D Stanley Jan 16 '18 at 20:16
  • Related question: Long Term Cash-Equivalent ETFs for “cash” allocation. – Chris W. Rea Jan 16 '18 at 21:21
  • @RonJon - currently in PIMCO total return – Craig Jan 17 '18 at 2:56
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    @Craig: There are bear-market funds that are designed to rise when the market falls. They can be used to hedge risk but can be somewhat hair-raising for a long-term portfolio, as they tend to fall when the market rises, and in general the market tends to rise. – BrenBarn Jan 17 '18 at 7:41
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Bonds are typically less volatile than equities (rising slower, crashing less and rebounding quicker). However, the value of PTTRX has dropped 9% in the past 5 years, while only yielding about 2.6%.

A good answer would really depend on what your 401(k) offers, and it's expenses.

  • Is there a more popular bond fund then PTTRX? – Craig Jan 17 '18 at 9:11

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