"F" Fund Basics

[Partyartie]

I understand that the F Fund is invested in Barclays U.S. Debt Index Fund, which tracks the Lehman Bros. US Aggregate Index. Since this is an index fund, it is not actively managed. Am I correct in assuming that given these facts, the bonds held are not adjusted with respect to maturities? For example, in times of rising rates, bonds with longer maturities are not replaced with shorter maturities. Thanks...:)

[nnuut]

I think your question is a little to hard for the "F" fund gurus!:D

[Desperado]

I understand that the F Fund is invested in Barclays U.S. Debt Index Fund, which tracks the Lehman Bros. US Aggregate Index. Since this is an index fund, it is not actively managed. Am I correct in assuming that given these facts, the bonds held are not adjusted with respect to maturities? For example, in times of rising rates, bonds with longer maturities are not replaced with shorter maturities. Thanks...:)

That's correct.

[Wolverine]

Alrighty then....Just spinnin the brain cells here and wondering, which may not be good. LOL

What market indicators does one look at for the F fund in order to get somekind of indication of where it may go?

Thanks for any info.

[350zCommTech]

Alrighty then....Just spinnin the brain cells here and wondering, which may not be good. LOL

What market indicators does one look at for the F fund in order to get somekind of indication of where it may go?

Thanks for any info.

$TNX is a good one for the 10yr yield, but I look at all of them. www.cnnmoney.com has a bonds page that gets updated every 5 minutes. Look under market data.

[Wolverine]

$TNX is a good one for the 10yr yield, but I look at all of them. www.cnnmoney.com (http://www.cnnmoney.com) has a bonds page that gets updated every 5 minutes. Look under market data.

Thanks 350z.......The 5 minute updates are interesting. So this leads me to another question tied into all this. LOL

Lets see if I can ask this without confusing myself and you.

Y'all look at the OSM to see what they are doing and it seems to give an indication of what the I Fund will do here the next day. Can one do the same thing with the F Fund by looking lets say at these 5 minute updates?

The F Fund went down a bit today. All those 5 minute updates are still in the red as of now, which corresponds to what happened today. How would you gather info from just those in order to maybe wanting to do an IFT into the F Fund for the next day?

What I am getting at here is, can you somewhat do the same thing with these 5 minute updates as you can with looking at the OSM for the I Fund?

Would something tell me before noon possibly with these updates that could lead me in a decision of seeing the F Fund go up or down for the next day?

Hope I didn't confuse you here. LOL

[FUTURESTRADER]

10 yr march futures price

http://charts.barchart.com/chart.asp?sym=ZNH7&data=A&date=080905&den=MEDLO&divd=Y&evnt=ADV&grid=Y&jav=ADV&size=D&sky=Y&sly=N&vol=Y&late=Y&ch1=011&arga=&argb=&argc=&ov1=021&argd=3&arge=4&argf=13&ch2=042&argg=&argh=&argi=&ov2=&argj=&argk=&argl=&code=BSTKIC&org=stk

[nnuut]

Good article on Bonds and the Housing Market!!

Can't the Fed help clean up the housing mess?

And why do bond prices go down when interest rates go up?

http://www.msnbc.msn.com/id/17541526/

[rokid]

And why do bond prices go down when interest rates go up?



Is it due to teeter totter syndrome?:cheesy:

[nnuut]

I think so?:cheesy:

[tsptalk]

It's almost as confusing as when the yen goes from 118 to 116 and they say it is up.

[James48843]

Good article on Bonds and the Housing Market!!

Can't the Fed help clean up the housing mess?


http://www.msnbc.msn.com/id/17541526/

Nope. The damage is already done when it comes to the sub-prime fiasco. The damage was locked in when the loans were made. There is nothing anyone can do at this point to un-do what will become, over the next year, a cascade of failures related to so many mortgages turning into foreclosures.

Free money- interest only home loans. Not a no thing at all. Once before, there was a large number of variations in the way people financed home loans...

This is eerily reminicint of 1929....

Take a look at the comparisons on this website:
http://www.illuminati-news.com/great-depression.htm

[James48843]

So the question becomes, in times like these, and what is directly ahead,

Is the "F" fund a good place to put your nest egg?

[Bullitt]

I don't know if it worked or not, (most likely not) but who'd have thought the fed would blow over a trillion US dollars on toilet paper when this was posted on March 15, 2007. What nightmare will we be looking back on 3 years from now?


Good article on Bonds and the Housing Market!!

Can't the Fed help clean up the housing mess?

http://www.msnbc.msn.com/id/17541526/

[Bullitt]

Re: F Fund for a deflation trade.

Okay, those looking to play with F as a longer term hold towards a 'deflating' economy, be weary. Reason being, the average bond duration for Aggregate Bond Index is only around 6.2 years. The low end durations (<10 years) have been manipulated by the Fed's artificially low interest rate and really don't have any upside left. (Basically, the Fed buys the short end to keep rates low.) The high end bonds (30 year treasury) have been flying off the handle because that is where the buying interest has been amongst institutions. Usually a 30 year is yielding at least high 4% (or 5%), whereas today it yields 3.69!

We shall see whether the rejection on Friday was a reversal of the deflation trade or 'profit taking' :rolleyes: at resistance.

I'm personally out of treasuries for the deflation trade as I closed out positions last Wednesday. I do, however, have some exposure as part of a diversified LT indexed portfolio.

[Steel_Magnolia]

Bullitt, thank you for your thoughts on F Fund. I'm still about 45% in F and wishing I'd had your prescience on when to exit.

Maggie

[Afishegg]

I'm thinking about parking some into F fund tommorow, what are your thoughts on that. I'm wondering if this is a bad idea? I hear there is a bond bubble, but I mean seriously, with the stocks tanking people should still be driving bonds up right? :confused:

[KevinD]

I'm thinking about parking some into F fund tommorow, what are your thoughts on that. I'm wondering if this is a bad idea? I hear there is a bond bubble, but I mean seriously, with the stocks tanking people should still be driving bonds up right? :confused:

http://www.tsptalk.com/mb/showpost.php?p=282953&postcount=15

http://bigcharts.marketwatch.com/charts/big.chart?symb=agg&ma=1&maval=20&uf=8&lf=4&lf2=131072&lf3=0&type=4&size=4&sid=&style=320&time=6&freq=1&comp=NO%5FSYMBOL%5FCHOSEN&nosettings=1&rand=&mocktick=1

[Afishegg]

ok?....help me understand what that chart says. It's way up so it's gonna come down soon?....(i'm reeaal slow):nuts:

[KevinD]

That last big red candle ain't lookin too good. This thing's had a nice run. How much longer do you think it's gonna last?

There are people looking at the 1010 level in the SPX. Theres a good chance that there will be some buyers there and that money might come out of bonds.

Show-me posted this link in his account talk thread.

http://finance.yahoo.com/news/Investors-flee-Treasurys-on-apf-2668935257.html?x=0&sec=topStories&pos=6&asset=&ccode


You might want to check my position on the tracker before you listen to anything I have to say.

Make your own decisions and live with the consequences.

[Afishegg]

...

[Afishegg]

You might want to check my position on the tracker before you listen to anything I have to say.



:nuts:

[JTH]

We still have a ways to go before we can put a nail in the F-Fund coffin. Volume on the sell-off leads me to believe it was just your standard "profit taking."

9907

[alevin]

Re: F Fund for a deflation trade.

Okay, those looking to play with F as a longer term hold towards a 'deflating' economy, be weary. Reason being, the average bond duration for Aggregate Bond Index is only around 6.2 years. The low end durations (<10 years) have been manipulated by the Fed's artificially low interest rate and really don't have any upside left. (Basically, the Fed buys the short end to keep rates low.) The high end bonds (30 year treasury) have been flying off the handle because that is where the buying interest has been amongst institutions. Usually a 30 year is yielding at least high 4% (or 5%), whereas today it yields 3.69!

We shall see whether the rejection on Friday was a reversal of the deflation trade or 'profit taking' :rolleyes: at resistance.

I'm personally out of treasuries for the deflation trade as I closed out positions last Wednesday. I do, however, have some exposure as part of a diversified LT indexed portfolio.

Bullitt, thanks for speaking to the average duration in AGG. I hadn't seen that before. I understand the associated duration risk better than I ever did before. So can you speak to the fact that there were 12-18% gains in F in the mid80s? What duration would that bond portfolio have been? does AGG average duration ever change? did the Fed drive down the yield in the 80s after Volker spiked yields to bring down inflation in the late 70s?

[JTH]

“When one asset becomes pricey, investors start looking for alternatives,” (http://business.financialpost.com/2010/08/30/dividend-yields-give-equities-leg-up-over-bonds/)

Mr. Lapointe said the average historical ratio for dividend yields is just 42.5% of the 10-year bond. And since 1973, there have only been 50 occasions when the ratio was more than one standard deviation above the historical average of 42%.

[Monty]

http://us.ishares.com/product_info/fund/overview/AGG.htm

has lots of things you may want to know about AGG.

[crws]

http://us.ishares.com/product_info/fund/overview/AGG.htm

has lots of things you may want to know about AGG.

thanks-

Maturity as of 8/26/2010
View all holdings
0-1 Years 35.60%
1-5 Years 33.67%
5-10 Years 17.37%
10-15 Years 1.85%
15-20 Years 1.00%
20-25 Years 2.48%
25 Years and Over 8.63%
Average 5.83 years