For NYU MBA Money Managers, Bond ETFs Top Stocks
This article was written by Stockpickr member Ira Krakow.
With the start of the spring semester in January, the New York University Stern School of Business MBA student-run Michael Price Student Investment Fund welcomed a new set of portfolio managers .
They have taken a long and hard look at the fund's four portfolios -- fixed income , growth , value , and small cap -- not only to cope with, but to take advantage of, the current market volatility .
Long considered the stepchild of the investing world, fixed income has recently been the best place to invest. As of the end of January, the fixed income portfolio achieved a year-to-date (YTD) total return of 2.22%, easily beating its benchmarks , the Vanguard Total Bond Index Fund (VBMFX), which returned 1.7% (during the same period), and the iShares Lehman Aggregate Bond Fund (AGG), which returned 1.68% -- not to mention just about all of the fund's equity portfolios, which have seen losses from 2.5% to 11.48%."Last semester, with inflationary pressures and a weaker dollar, the portfolio implemented a macro-driven, top-down strategy," says co-portfolio manager Joel Pena. "We increased our position in the Templeton Global Bond Fund (TPINX), which invests in South Korean, Mexican, and Brazilian debt , among others, to protect against the falling U.S. dollar. We also boosted our position in the iShares Lehman TIPS Bond Fund (TIP), to profit from domestic inflation." Wise move: YTD, the Lehman TIPS Bond Fund has returned over 4% and Templeton Global Bond Fund has returned over 6%. While the managers usually stick to their disciplined strategy, they did take action where market conditions dictated it. "We sold PIMCO Mortgage-Backed Securities A Shares (PMRAX) because of the volatility in the mortgage market", says Pena. What's next? "Going forward, we're looking at adding the Templeton Emerging Market Income Fund (TEI)", adds Joel. "We expect the yield curve to steepen slightly." Factors Pena and the fixed income team are considering: "We're looking at past performance, especially in volatile periods, and consistency of management."
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