Any one care to guess how Japan's Nikkei finishing down 3.2% today is going to effect our I Fund tomorrow?
Allocations as of COB Dec 28 : 100% S. | Retirement Date:Dec 2025
Past Returns: 2020 31.85%,2019 27.97%,2018 -3.36%,2017 13.10%, 2016 -1.79%, 5Yr Avg 12.61%
THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
Tracker = Check my position
I guess it'll be a 2-day performance in both the international markets and the dollar wrapped up into one I Fund result Tuesday afternoon. The I fund is far from dull.
Bad news is Nikkei tanked, but from what I read, it was based mainly on a rebound in strength in the yen. The good news is that Europe was up fairly well. The worst news is that, like Frixxx, I now have a stake in the I-fund (10%). Our collective luck will probably bring calamity upon it.
I'm still having a hard time figuring out the I-Fund and hope you guys can help me out here? How does the yield going up on the T-bill impact the price of the dollar? If the price of the dollar goes down then the I fund should go up right? Thanks
It's more of the dollar pulling the cart rather than the other way around. There is a correlation between the two (dollar / bonds) but like the dollar / stocks correlation, it isn't an exact science.
I don't think there is a direct correlation between the dollar and bonds, although like stocks and the dollar there are periods when one is more of a catalyst for the other. Sometimes they move together, sometimes inversely. It depends.
The dollar and yields move with economic data, and depending on the situation, where we are in the business cycle, etc., the reactions can vary.
Now the dollar and the I-fund have a very strong direct inverse correlation. If the EAFE index is up 0.5% on the day, and the dollar is down 0.5% on the day, the I-fund is likely to be up around 1%. If the EAFE index is up 0.5% on the day, and the dollar is up 0.5% on the day, the I-fund is likely to be flat on the day.
So your question, "If the price of the dollar goes down then the I fund should go up right?" ... is half right. They don't necessarily move in opposite directions, but they do inversely impact each other like the examples above.
Tom
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I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.
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Another question that I have is can I use "ishares MSCI EAFE Index (EFA)" to use as a tool to track the "EAFE" component for the I fund? If I go to the Yahoo Financials site and type in "EFA" it brings up the index and is very quick and simple to use. Any thoughts from the members of this board?
And once again I do appreciate all comments that you have shared with me and do learn allot on this site
The EFA is about as good as we have to track the I-fund during the day. It won't always match the I-fund because of fair value and some timing issues.
At the end of the day, you can go to:
Additional Terms of Use - Legal - MSCI
(click on the "agree" at the bottom of the page to see that data)
That will show how the EAFE did in local currency and dollars. The I-fund "should" be close to the dollar figure. But again, not always because of fair value adjustments.
Tom
Market Commentary | My Blog | TSP Talk Plus | |
I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.
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