This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bond Funds Take Hit by Rise in Yields

Treasury yields are on the rise. Short-term yields that slipped into negative territory in December and hovered near zero for most of January have begun to inch up.

The move higher is more pronounced farther out on the yield curve. On Jan. 30, 12-month T-bill yields were up 13 basis points to 0.47% from year-end. Over the same period, the 10-year generic U.S. government yield rose nearly 63 basis points to 2.84%, while the 30-year yield gained almost 93 basis points to 3.60%.

The Federal Reserve would like to keep interest rates low to encourage borrowing by consumers and businesses to resuscitate economic growth. However, unprecedented government deficits as far as the eye can see, coupled with the expectation of record borrowing levels to pay for the upcoming stimulus package, can't be ignored. To fund this borrowing, higher rates are starting to be demanded.

Bond prices move in the opposite direction to their yields. The recent pull-back from the massive flight to quality of U.S. government debt has sent prices lower and yields up. Two of the best-performing fixed-income mutual funds in January bet on higher interest rates.

The top-performing open-end, fixed-income fund in January is the ProFunds Rising Rates Opportunity ProFund (RRPIX), which gained 20.13% during the month. The fund is 125% leveraged to the inverse price movements of recently issued long bonds.

Similarly, the Rydex Series -- Inverse Government Long Bond Strategy Fund (RYJUX) is designed to increase in value as bond prices fall. This resulted in a January advance of 14.31%.

The other eight funds listed below focus on various geographic segments of the municipal bond market. Unfortunately, every single one of the muni funds charges investors either a front or back load, tagging investors either coming or going.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $132.54 0.00%
FB $80.54 0.00%
GOOG $540.11 0.00%
TSLA $247.73 0.00%
YHOO $43.48 0.00%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs