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    Reducing Risk With Bond ETFs By Paying Attention To Duration

    Wed, 02/08/2012 - 11:01 EDT - Seeking Alpha
    • AGG
    • BIL
    • BIV
    • BLV
    • BND
    • BSV
    • BWX
    • CFT
    • CIU
    • CSJ
    • EMB
    • GVI
    • HYG
    • IEF
    • IEI
    • IPE
    • JNK
    • LQD
    • MBB
    • MUB
    • Niklashausen
    • PCY
    • PHB
    • PZA
    • SHM
    • SHV
    • SHY
    • SPY
    • TFI
    • TIP
    • TLT
    • WIP

    By Niklashausen:Year to date stocks have been hot, bonds not. On a total return basis (as of 2/3/12 ) SPY is up 7.17 and TLT down -3.85. Should bondholders be nervous? For months now, pundits have been warning that interest rates can't go much lower, that inflation will eventually kick in, leading the bond bubble to burst, and that all those investors who piled into bond ETFs since 2008 will get burned. What to do? Some investors are already trading in their bonds for dividend growth stocks. Yet it may be too early to bail out of bonds. The Fed has pledged to hold interest rates down for another year or two, and with some careful portfolio management, investors might be able to find more yield while lowering their interest-rate risk by paying attention to the duration of their bond holdings. Duration is a measure of the sensitivity of bond pricesComplete Story »

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    Related

    • GOLDMAN: Credit Markets Shouldn't Fear Rising Rates

    • Adding Relative Strength To Your Bond ETF Portfolio

      By Niklashausen:Stocks are hot, bonds not. But not all bond ETFs are doing badly, and some are performing better than others.

    • Vanguard Closes High-Yield Fund To New Investors

      By The Financial Lexicon:On Thursday, Vanguard announced that its High-Yield Corporate Fund was closing to most new investors. Unless you are a part of Vanguard's Asset Management Services or Vanguard's Flagship Services, you will not be able to open a new position in the fund. The closure affects both Investor and Admiral Shares. At this time, existing investors are still allowed to add to their current holdings in the fund.

    • Market Turmoil Boosts Long-Term Government Bond ETFs

      Michael Johnston submits:Crumbling global equity markets have been the story of recent weeks, as investors around the world endure increased levels of volatility related to Europe’s deteriorating fiscal situation and concerns over government debt levels. Furthermore, tame inflation and a stronger dollar has tempered demand for inflation-protected securities as well as most precious metals.

    • Doubts Bolster Treasury Bond ETFs

      By Gary Gordon: Wasn’t it just a week ago when the 10-year treasury yield pushed 2.3%? Wasn’t it just a few days back when bond vigilantes piled into ETFs like ProShares UltraShort 20+ Year Treasury (TBT)?

    • Inverse Treasury ETFs In Focus On Renewed Bond Bubble Talk

      By Tom Lydon: Worries over the economy and global debt levels have caused investors to rush to safe havens such as U.S. Treasury bonds amid the volatility in stocks. Yields on the 10-year Treasury note recently dipped below 2% even though Standard & Poor’s downgraded its triple-A rating on U.S. government bonds. Bond yields and prices move in opposite directions.

    • 5 Basic Materials High-Yield Dividend Growth Stocks In Uptrend

      By Arie Goren:The basic materials sector has been the worst performer so far in 2012, the total return, year to date (11/30/2012) was only 2.1%, while the appreciation of the Russell 3000 index in the same period was 12.83%. Nevertheless, it is still possible to find promising candidates among the stocks in this sector.Stock Sectors' Total Returns, Year to Date, are shown in the chart below: (click to enlarge) Source: finviz.com

    • Stock ETFs Tumble On Greek Debt Fears

      By John Spence: European stock exchange traded funds were set for an ugly open in the U.S. on Monday as single-country indexes in the region were suffering declines of 3%. Worries over Greece’s financial condition and the Eurozone debt crisis rippled through global markets. France’s CAC 40 plunged 5% while Germany’s DAX fell 3.3%. ETFs tracking European stocks were falling to start the week after Friday’s rout.

    • AdvisorShares’ GTAA Takes Off, Peritus High Yield ETF to Launch Before Dec. 3

      Shishir Nigam submits: AdvisorShares launched the Cambria Global Tactial ETF (GTAA) just early last week and has already seen it gain strong traction amongst investors with the fund accumulating more than $17 million in assets in 1 week. Trading volume in GTAA also exceeded 100,000 shares on Nov 1st.

    • WisdomTree Planning Three Active Foreign Bond ETFs

      ETF Database submits: The current interest rate environment has not been kind to bond investors who have been struggling to find opportunities for current yield ever since the financial crisis began in 2008. Currently, 10 Year Treasury bonds pay just 2.46%, while investment grade corporates are paying, on average, just 4.3%–not much to write home about. Meanwhile, many international markets have garnered attention, thanks to rising interest rates and relatively attractive balance sheets.

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