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3/15/2013 11:43 AM
Historically, when compared with comparable maturity Treasury bonds, municipal bond yields have been lower due to their federal tax exemption. Over the very long term, this yield “discount” has averaged about 25-30 percent. An interesting change, though, has occurred from about the start of the financial crisis to today.
Municipal yields have generally been about the same or higher than Treasury yields even before adjusting for tax exemption. The chart.... 2/27/2013 2:26 PM
With interest rates on intermediate- and long-term bonds ticking up a good bit over the beginning of the year, many investors are refocusing on the potential risk within bond portfolios. (As one data point iShares 20+ Treasury ETF is down about 1.8 percent year-to-date.) For many bond portfolios, that risk can come from either interest rate risk or credit risk. Here I’ll focus on interest rate risk.
The potential interest rate risk in a bond or bond fund portfolio is largely determ....
2/14/2013 9:20 AM
You might think finding accurate bond fund yield information would be simple. From my experience, you’d be wrong. It’s incredibly difficult to sort through the myriad of yield measures published by the fund companies themselves or third parties like Morningstar, or even dictated by regulatory bodies like the SEC.
The Gold Standard: Yield-to-Maturity
A good rule of thumb is to ignore any yield measure other than yield-to-maturity (and possibly yield-....
2/6/2013 3:57 PM
I was forwarded an article by Jane Bryant Quinn from 2011 arguing that individual bonds are generally a bad deal. She aptly notes that many bond ladders are inappropriately sold to investors by stock brokers, which I agree with, but many of her conclusions as to why bond ladders are bad are based on faulty assumptions. I’ll selectively cover her com.... 1/29/2013 4:50 PMI won’t pretend that it’s easy to sort through the mountain of available information arguing for or against bond funds relative to individual bonds. From my experience, I would say you should be skeptical of any article claiming that either of the two approaches is always the correct answer regardless of circumstances. In my opinion, a thorough analysis of the two choices yields a much more nuanced answer.
1/23/2013 3:21 PM
Now that we have a bit of certainty around taxation (in 2013 at least…hopefully…right?) I wanted to explore some of the high level implications.
Ordinary income and capital gains
The newly instituted 39.6 percent marginal federal tax rate and the Medicare surtax of 3.8 percent means the burden of short-term capital gains and ordinary income has .... 1/15/2013 4:09 PM
This post is obviously a bit anecdotal, but I’ve been thinking about three prominent predictions from the past few years and analyzing those predictions relative to what the market was forecasting and what academic research had to say. The three predictions were:
- Interest rates would increase so, you should stick to short-term bonds (if investing in bonds at all).
- The municipal market would experience significant trouble in 2011.
- ....
8/29/2012 9:53 AM3/7/2012 10:02 AM
It’s hard to think of an area of the world’s capital markets that is more misunderstood and confusing than the fixed income markets. I wanted to clear up some of the fallacies I frequently hear when I talk to investors about fixed income.
“I expect rates to go up, so I’m just going to keep everything in short-term fixed income.”
If I’ve heard this once over the past couple of years, I’ve heard it a thousand ti.... 4/14/2011 11:36 AM
In this video, I discuss the differences among the terms coupon, yield and expected return.
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 | Jared Kizer
Director of
Investment Strategy
BAM Advisor Services
(see bio)
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