Do you remember sitting in the back seat of a car without much suspension and racing up a dirt road hill way too fast and then shooting over the top and down? That’s the falling-stomach-feeling and the surge of relief I felt when I checked the news a minute ago and found the US Fed is not going to slow down its Quantitative Easing program just yet.
Is the Quantitative Easing Program Good?
Does that mean I support the massive program the US government has been using to manipulate interest rates and the economy for the past few years?
No.
I don’t actually know if what they are doing is a good thing, a bad thing, or a thing that is actually not affecting the economy the way in which they expect.
What Can Bond Funds Expect from this (Lack of an) Announcement?
All I know is that I have been hemming and hawing about whether to move assets out of a mid-to-somewhat-long-term bond fund we own or not. It’s the only fixed income choice we have in a work pension plan other than a money market fund.
If the Feds had decided to stop Easing in a big, quick way, I’m sure the Bond Fund would have plummeted. It’s already doing pretty badly this year just based on the rumour of changes to Q.E.
I had almost decided to move a portion of our investments to the Money Market fund but I hadn’t sent in the request. Then I realized the big announcement was today and it was too late.
So now I have another few months to decide what to do. My Long Term approach says to stay in the Bond Fund. But I think I’ll see if there’s another way to meet that same asset allocation goal by changing some investments in our personal RRSPs. (I doubt it, but I should still look into it.)
What are You Doing With Your Bond Funds?
I’m always open to suggestions, though. If you have your fixed income investments in a bond fund or funds, what do you plan to do? Hold tight and hope it re-bounds fairly quickly after a few years of pain? Sell now and keep it in cash? Do you have a totally different strategy in mind?
Please share your views with a comment.
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