Posted by Fundmentals on November 06, 2009 at 10:08:43:
Just personal observation from my tracking, not a recommendation for what you should necessarily do. I do incremental adjustments not all-in and all-out trades. These are based on volatility-adjusted returns, not absolute returns. All bond funds have cycles.
Floating rate bank loan funds have completely lost momentum and trending down. I started selling last week and sold more this week. Underweighted at this point.
Emerging market bonds headed down earlier but stabilized a bit but are no longer overperforming like they have done recently. Sold significantly last week as it was my overweighted category and holding rest for now at fully weighted.
Short term investment grade including Treasuries are holding up very well and are kept slightly overweighted in the portfolio.
GNMAs have come up very strongly. Increasing allocation to it from my previously underweight position.
TIPS are also showing strength. Increasing my allocation from previously underweight position.
Intermediate investment grade including Treasuries are losing momentum and are no longer justifying the risk. Sold a bit last week, holding for now. Underweighted now.
High-yield debt is a mixed picture. Longer effective duration and lowest quality funds have lost a bit of momentum but have stabilized. Smaller duration and better than the junkiest funds are returning better for the risk but still a hold here at a fully weighted allocation.
Munis are losing momentum slowly. Have been selling a bit at a time from being overweighted (in my taxable portfolio). Still fully weighted at the moment.