 Quote:
Originally Posted by LOL!
But I'll give you an interesting case to me. I have CFICX in my 401(k) so no tax consequences for me and no front-end load for me. It's an intermediate-term bond fund with a ranking of number 1 in 1998, 1999, 2001, and 2003. However, it was ranked 95 in 2000 and 92 in 2002. See this link. It basically looks like an awesome bond fund to have even with it's extremely high turnover rate. Somehow has made only 3% in the last year while vanguard inter-term bond index has made more than 8%. See this link.
The problem is that the bad years hurt you much more than the good years help you. Your particular return will depend heavily on when you buy as well, so you could have a bad year when the fund has a good year. |
I'm not sure that you are drawing the right conclusions from this example. I notice that CFICX has a pretty short duration at the current time for an intemediate bond fund, 3.1 yr versus 6.1 yr for VBIIX. So when rates went down you'd expect VBIIX to outperform. When rates go up the situation will probably reverse. It's very difficult to choose time periods to successfully compare funds that use different strategies to get results.
This case does bring up an interesting point. If you were invested in VBIIX last year and believe that a good strategy now is to shorten durations then you'd put your money in CFICX. Personally I think real rates are going to have to go higher and so does Bill Gross who has 56% of HABDX in cash.
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