Re: In Defense of the F Fund
Great analysis, and well done.
Still, not much better than the G fund and includes too much risk for the benefit it provides as a safe haven (for me ).
Re: In Defense of the F Fund
SkyPilot,
Thanks. And, I certainly can't disagree with your assessment, i.e. "it includes too much risk for the benefit it provides as a safe haven (for me )."
Re: In Defense of the F Fund
One thing about bonds though, trends seem to be more stable and last longer than stocks. Timing the G/F thing might work if one were patient.
http://www.tsptalk.com/images/bonds_lt.gif
source www.decisionpoint.com
Re: In Defense of the F Fund
IMHO the F-fund is a solid investment, especially so during recessions. In times of economic downturns, the yearly yield for the F-fund has exceeded 10%, while the equities were solidly negative (according to my simple fund tracking spreadsheet, anyway).
Re: In Defense of the F Fund
For a long term investor the F Fund provides two big benefits:
1. It typically non-correlates with equities (C, S, and I). In other words when stocks are down, bonds are often up, e.g. 2000-2002. Consequently, bonds are good for portfolio diversification. I agree with your well taken point.
2. It reduces portfolio volatility. Reducing volatility helps you "stay the course" during bear markets and not sell low and buy high. In addition, reduced volatility increases your compound (annualized) return and allows it to approach your average return. Note: the compound return will always be less than the average return. :cool:
Re: In Defense of the F Fund
Morningstar contends that the F Fund (LB U.S. aggregate index) is a good investment for long-term investors.
http://news.morningstar.com/articlen...aspx?id=196040
Although I agree, it sure is painful holding it right now!:laugh:
Re: In Defense of the F Fund
First 5-year support did not hold but long-term support on the 30-year has... so far.
http://www.tsptalk.com/images/bonds061507.gif