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Bob Carlson's Favorite Funds for Retirees
09/23/2019 5:00 am EST
Focused on conservative growth and income strategies, Bob Carlson is a leading specialist on retirement investing; here, the editor of Retirement Watch highlights some current favorite bond fund holdings.
U.S. government bonds, especially long-term bonds, have been a big winner in recent months. We own them through Wasatch Hoisington U.S. Treasury (WHOSX), which had a return of 6.81% during the last four weeks and is up 20.25% for the year to date.
When the Fed began tightening the money supply in 2015, Van Hoisington and Lacey Hunt, managers of the fund, said the economy was too weak and it wouldn’t be long before rates were heading back to their lows.
The fund’s managers buy only treasury bonds but can buy bonds of any duration. Long-term bonds are the most volatile; they have the most significant changes in value when rates change.
Because Hoisington and Hunt believed higher rates weren’t sustainable, they kept the fund invested in long-term treasury bonds. We’re now reaping the benefit of their prescient economic analysis. It is too bad the Fed’s economists don’t pay more heed to the duo’s quarterly shareholder letters.
Another fund that’s doing well is DoubleLine Emerging Markets Fixed Income (DBLEX). We returned emerging market bonds to the portfolios in late 2018 after several years of declines gave them solid margins of safety.
BLEX has several positive features. It doesn’t try to follow an index. It owns only bonds, countries and sectors the managers want to own. The fund doesn’t buy low quality positions just because they’re in an index.
Unlike many other emerging market bond funds, DBLEX puts safety of principal ahead of earning a high yield. Also, the fund owns bonds denominated in U.S. dollars. U.S. investors aren’t taking currency risk.
Top countries in the fund recently were Brazil, India, Mexico, Chile and Colombia. Top industries were banking, oil & gas, utilities, telecommunications and transportation. The fund’s recent yield was 5.15%.
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