ER Eddie
Thinks s/he gets paid by the post
- Joined
- Mar 16, 2013
- Messages
- 1,788
I currently have an AA of 65/35, with the 35% in low-cost, index bond funds (mostly intermediate term or total bond index), with Vanguard and Fidelity. The CPA who does my taxes suggested that I look into managed bond funds. He said that they can provide better returns than index bond funds, assuming you get a good manager and a fund with a track record.
He wasn't trying to sell me anything. He explained that bond funds are different, because they're distorted by the way the US government both prints the bonds and buys the bonds. A good manager understands those distortions and can use them to effect. He admitted that he was not an expert in the area, but he had read a fair amount suggesting that managed bond funds might be a good idea. I have a significant amount of money in bond funds, and I do feel as if it's just sitting there collecting dust, keeping up with inflation but not doing much else besides being a source of diversification and security against a crash (which I admit is no small thing).
So, any thoughts about managed bond funds? Pros and cons? Things to watch out for?
Suggested funds? I know that I'll be trading a low-cost fund for one with a higher management fee, and that'll be the big difference. I also know that this group is typically DIY, anti-management. But it's also my go-to source for financial advice.
Thanks in advance for any insight.
He wasn't trying to sell me anything. He explained that bond funds are different, because they're distorted by the way the US government both prints the bonds and buys the bonds. A good manager understands those distortions and can use them to effect. He admitted that he was not an expert in the area, but he had read a fair amount suggesting that managed bond funds might be a good idea. I have a significant amount of money in bond funds, and I do feel as if it's just sitting there collecting dust, keeping up with inflation but not doing much else besides being a source of diversification and security against a crash (which I admit is no small thing).
So, any thoughts about managed bond funds? Pros and cons? Things to watch out for?
Suggested funds? I know that I'll be trading a low-cost fund for one with a higher management fee, and that'll be the big difference. I also know that this group is typically DIY, anti-management. But it's also my go-to source for financial advice.
Thanks in advance for any insight.
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