Questions tagged [bond-funds]

The tag has no usage guidance.

Filter by
Sorted by
Tagged with
19
votes
1answer
3k views

Why does the Morningstar overview of VMMXX say 81% cash?

I was reading about Vanguard's Prime Money Market Fund, VMMXX, whose investments are characterized thusly by Investopedia: The holdings include U.S. Treasury bills (T-bills) with a 24.1% portfolio ...
9
votes
1answer
586 views

What happens to the bond ETF when the underlying bond matures

When a bond matures, what happens to the corresponding bond ETF? It still keeps on going as if nothing has happened. How does this work? I guess there is some kind of rolling over happening here, but ...
8
votes
2answers
405 views

How should I be investing in bonds as part of a diversified portfolio?

I often hear that I should diversify my investment portfolio with X% stocks and Y% bonds, ostensibly to mitigate the risk. My question is what exactly this guidance means in terms of HOW to invest ...
7
votes
5answers
2k views

Are social/responsible stock funds pointless? [duplicate]

The ESG funds are becoming more and more popular. (ESG = Environmental, Social and Governance). But I am wondering if it makes sense for stock funds? If you buy a stock fund, the only consequence is ...
6
votes
3answers
333 views

How do I calculate the current risk involved with US Bond Index Funds?

For months I have been trying to wrap my head around the concept of risk involved with the US Bond Index Funds in my portfolio. My initial conclusion is that the risk of long-term damage to my ...
6
votes
1answer
223 views

Does buying bonds individually offer an advantage over bond funds/ETFs in a low interest rate environment because bonds can be held to maturity?

I have heard this argument several times. Today's low-interest rate environment makes it risky to own bond funds/ETF. Investors will be seriously injured when interest rates start rising ...
6
votes
3answers
304 views

What's the difference between buying bonds and buying bond funds for the long-term?

I know that if I buy a bond and hold to maturity, I will get the value plus the coupon. If rates go up, the resale value of my bond will go down, and vice versa. However, what happens if I buy into ...
6
votes
2answers
160 views

How do bond funds have a higher return that the sum of their bond parts?

In looking at bond funds recently, I've seen many that have a return of about 7% annualized over 5 years. However, their holdings are bonds that return 2-5% annualized. How is it possible that the ...
5
votes
4answers
372 views

Should I scale down my 401k?

Today I met with my 401k provider at work. They tend to push certain plans and a schedule that is as follows: Aggressive Fund (100% stocks, 0% bonds) Moderate Fund (50% stocks, 50% bonds) ...
5
votes
1answer
3k views

What are the effects of interest rate changes on long-term bond ETFs?

I realize this question has been asked a bunch of different ways over the years, but I was hoping to get specific opinions on how a Fed interest rate increases will affect long term bond ETFs (i.e.- ...
4
votes
3answers
3k views

Does a bond etf drop by the amount of the dividend just like an equity etf

Usually a stock or an equity etf drops by the amount of the dividend on the ex dividend date. Does the same rule apply to a bond fund or bond etf? When a bond etf pays the quarterly dividend because ...
4
votes
2answers
337 views

How does one make money with a bond fund?

I have looked at the "What is a bond fund?" question and this wasn't addressed. Which of these are applicable (and is there anything tricky to understand about it in this case)? You can sell your ...
4
votes
1answer
6k views

Where can I find historic performance data on Barclays Aggregate Canadian Bond Index?

I'm looking at the Vanguard Canadian Aggregate Bond Index ETF (VAB), and it says it replicates the "Barclays Capital Global Aggregate Canadian Float Adjusted Bond Index". Unfortunately VAB is less ...
4
votes
2answers
835 views

What is the risk to a high-yield corporate bond fund versus an investment-grade corporate bond fund?

The yield for HYG, a high-yield (i.e. junk) corporate bond ETF, is currently 5.72% versus 3.56% for LQD, an investment-grade corporate bond ETF. Of course, higher yield generally means higher risk. ...
3
votes
2answers
233 views

Criteria for selecting Bond ETFs

My investments are split between 4 ETFs (US, International, REIT, and bonds). Until recently, bonds were a relatively small part of the portfolio so I didn't put much thought into it and selected a ...
3
votes
1answer
456 views

Pros and cons of bond ETF versus traditional bond mutual fund?

Bond ETFs are easily available on stock exchanges today. Bond mutual funds have been around for a long time. I am not sure which to buy to build an income stream as a fixed-income investor. What are ...
3
votes
1answer
251 views

Are capital gains tax-free in a Vanguard tax-free fund?

I own shares of the Vanguard New York Long-Term Tax-Exempt Fund (Admiral Shares)(VNYUX). I'm wondering exactly what is tax-free about it. The link says that the "interest income" is tax-free (...
3
votes
2answers
235 views

How is investing in a bond fund different than investing in a stock?

You don't have the option to "hold it till maturity", so you are invariably exposed to interest rate risk, and as a consequence, you will probably gain or lose on your principal in the end. Isn't it ...
3
votes
1answer
105 views

Comparing bank to bond ETF

Let's say I have a bank savings account giving this interest: Rate: 1.736% APY: 1.75% (rate accounting for compounding interest) And there's a bond ETF SCHZ with these rates: TTM: Distribution ...
2
votes
1answer
322 views

How is a mutual fund and ETF priced?

Is a mutual fund and ETF priced the same way? regardsless of what it contains and if it pays didivends? Is it basically the price of all the assets? or is the demand in the market(as with a stock) ...
2
votes
1answer
811 views

Municipal Bond Fund tax risks?

I am looking at Tax-Exempt Municipal Bond Fund as a hassle free investment option. This is the first time I'm looking to invest outside of a retirement account, and having read up on the process of ...
2
votes
1answer
575 views

No maturity, for bonds in ETFs or bond ETFs?

1. User Chris W. Rea answered: When interest rates rise, the market value of 20-year bonds will drop, and drop more than shorter-term bonds would. Your principal is not protected in the short term. ...
2
votes
2answers
4k views

What do the terms par value, purchase price, call price, call date, and coupon rate mean in the context of bonds?

I am having a hard time understanding municipal bonds. What is the par value vs. purchase price? What is the call date? What is the call price? The coupon rate is just the interest paid out to you ...
2
votes
1answer
112 views

Is it wise to invest in bond fund when interest rates are low?

I have 1/3 on my savings in a bond fund. I live in Canada where interest rates are very low. I know that the interest rates can't stay low forever, and I know from basic finance class that bond ...
2
votes
2answers
57 views

Bond Mutual Fund Dividend Dropped Dramatically in Dec Why?

I have owned a medium term bond mutual fund at a large mutual fund company for years without making any new deposits or withdraws and I just reinvest the dividends. Each month it consistently pays a ...
2
votes
1answer
159 views

Understanding bond funds returns

I'm trying to get a sense for what to (very roughly) expect in terms of bond funds return on investment as compared to a guaranteed investment, like CDs. Here is an example fund and its reported "...
2
votes
3answers
158 views

Difference between bond fund and bond index fund

What is the difference between a bond fund and a bond index fund? For example, FIJEX is labeled as a normal bond fund with a gross expense ratio of 0.51% and SWSBX is a bond index fund with a much ...
1
vote
2answers
210 views

Why aren't bond mutual funds seeing huge selloffs now? [closed]

Bonds 101 is that when interest rates go up, bond prices go down. Interest rates are generally expected to be rising over the foreseeable future (although it might take a while), which means that ...
1
vote
1answer
133 views

When are bond ETF dividends taxed?

From what I've read, the dividends of bond ETFs (like HYG or JNK) are taxed at the ordinary income tax rate (up to 39.6%). Is this tax withheld before the dividend is paid out to the investor? Or is ...
1
vote
2answers
94 views

Where to learn about Trusts and alike?

Sadly I have already gone down the Computer Science route for a degree, however I would like to learn more about Trusts, Funds, Equities etc... for a future career or for personal investments. I have ...
1
vote
2answers
72 views

Effect on Bond asset allocation if Equity markets crash?

Let's say "Tom" allocated a large amount of capital in some fund's (it's TIAA-CREF, actually) bond assets. In our fictional scenario 2 things are going to happen in the next year: The equity markets ...
1
vote
2answers
1k views

Does dollar cost averaging into a bond fund mitigate rising interest rate risk?

Everyone says not to buy bonds now because interest rates will rise. I'm wondering how dollar cost averaging (and reinvesting returns) helps reduce the risk. I'm not sure how bond funds work in ...
1
vote
1answer
83 views

Are Bond funds a good idea [closed]

How should one mitigate losses of last week? I am concerned but tend to move to quickly
1
vote
1answer
55 views

Characterising risks of an corporate/goverment bond ETF's

I have been looking at different conservative investment strategies such as 50/50 "interest fund", "global stock fund" and "the permanent portfolio". As an alternative, I was looking for corporate ...
1
vote
1answer
73 views

Are all AAA ratings (from various credit rating agencies) equivalent?

I am peeking into holdings of various ultra-short term debt mutual funds (average maturity of bonds should be less than 1 year) and am coming up with AAA ratings of at least three different agencies: ...
1
vote
0answers
95 views

HYG vs JNK Capital Gains

How has HYG gone years without paying a capital gains dividend, whereas JNK has paid several? I know avoiding capital gains dividends is good because it reduces the need to pay capital gains taxes, ...
0
votes
2answers
85 views

how to estimate bond ETF price once interest rate changes?

I'm looking at an example bond ETF which track bonds that expire on 2027 which means its for almost 10 years to its intermediate-term bond tracking. I understand that if interest rate would go up, ...
0
votes
1answer
73 views

What duration bonds are held by the ETF XBB

I am looking at the bond etf XBB. This ETF mostly holds Canada govt bonds. What I don't understand is what is the duration of these bonds held by the fund?
0
votes
1answer
109 views

Why does the Fidelity Canadian Bond Fund have such a high beta? How is it measured?

I am looking at some Canadian bond funds (recommendations welcome) for my RRSP. Relatively safe, and with a dividend yield ~ 3% is good enough. While looking at Fidelity bond funds, I came across this ...
0
votes
1answer
33 views

'When the rising rate cycle gives way to a decline in borrowing costs, bond funds will …'?

[Source:] Bonds fall in value when rates rise, and this will be reflected in the unit price of bond funds. When the rising rate cycle gives way to a decline in borrowing costs, bond funds will rise in ...
0
votes
1answer
71 views

Always invest in a bond ETF with at least inflation protection?

I abbreviate: inflation-protected bonds = IPB (I choose this term because I don't want to limit this question to US TIPS); yield to maturity = YTM. Whenever deciding to invest in a bond ETF, should ...
0
votes
1answer
41 views

Active Bond Funds - Interest Rate Swaps

I am a long time investor in an active Australian Bond fund (set & forget type of thing) but lately I have been doing a lot of research and I have realised that bond managers use a lot of ...