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Hedge Funds Can’t Get Enough of Detroit…Junk Bond Fever Building…Gross Bullish on TIPS…and more!

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Business Insider: – Hedge funds are buying up Detroit bonds so fast there’s a waiting list. – When Detroit filed for bankruptcy two weeks ago, Wall Street asked the obvious question — how can we make money off this? That didn’t take long to answer.

Bloomberg: – Junk bond fever building as high grade trails. – Investors are pumping money into junk bonds globally at the fastest pace ever while tempering their enthusiasm for higher-rated debt, demonstrating a preference for yield over stability.

ETF Trends: – Bill Gross bullish on TIPS, ETFs as Fed aims for higher inflation. – Treasury inflation protected securities, along with related exchange traded funds, languish as inflationary pressures remain muted, but bond guru Bill Gross has kept his bullish outlook.

Learn Bonds: – Some thoughts on timing your corporate bond purchases. – Timing your corporate bond purchases correctly is crucial if you want to avoid getting hit by the Fed rate hike cycle.

FT Adviser: – EM corporate debt long overdue attention. – The recent sell-off has created an attractive opportunity for investors to increase or initiate exposure to this growing asset class.

WSJ: – Retirees face high stock prices and low bond yields. – Conventional wisdom usually advises older investors and retirees to balance a portfolio of bonds, stocks and annuities to squeeze the most from their savings during the third stage of life.

MarketWatch: – Detroit bankruptcy makes munis a bargain. – Money has been marching steadily out of municipal bond funds for about two months now, but with the recent news of Detroit’s bankruptcy claim, a lot of individual investors may be wondering whether they should join the parade.

Pendulum:  – The disaster scenario for Treasury bonds. – The 10-year Treasury yield has been trading in the 2.45% – 2.75% range for the last month. If it breaks to the upside, the yield may very quickly reach 3.50% – 4.00%. An increase in yield represents a drop in price. This would be a big move and a disaster scenario for bonds, with repercussions across the fixed income universe.

Forbes: – Is “age in bonds” dead? – Spending cash and bonds first means that we are raising our stock allocation in our remaining portfolio by default. This turns out to be the secret sauce behind the “bucket” approach to retirement income popularized by Ray Lucia, as well as the stock + annuity driven approaches beloved by insurance companies (which it turns out you don’t really need, unless you are extraordinarily long-lived). Where does this leave “age in bonds?” Deader than disco.

Barron’s: – Beware generalizations about Detroit bankruptcy. – Barron’s talks to Tom Dalpiaz, municipal portfolio manager with Advisors Asset Management, which counts about $360 million in muni assets under management, about the implications of Detroit’s bankruptcy.

Bloomberg: – PIMCO bets on Australian bonds after worst run since 1984. – Australian bonds are attractive after their worst run of losses since 1994 because the central bank will need to lower interest rates as mining investment drops, Pacific Investment Management Co. said.

HeraldNet: – If you own muni bonds pay attention to Detroit’s woes. – Although a municipality filing for bankruptcy protection is rare, you still ought to be paying attention to what happens to bondholders in the case of Detroit.

Indexuniverse: – Fidelity adds bond funds to pipeline. – Fidelity, the financial advisor with just one ETF currently listed, filed regulatory paperwork to bring three actively managed bond funds to market, the latest move from a firm looking to expand its footprint in the $1,540 trillion U.S. ETF market.

WSJ: – What now for bond funds. – Yield-starved investors are again piling into high-yield bond mutual funds and exchange-traded funds. That could be a mistake.

CNN Money: – Hottest trade on Wall Street: Detroit bonds. – Detroit’s bonds have become the hottest trade on Wall Street, since the Motor City filed for the largest municipal bankruptcy two week ago.

ETF Trends: – Fixed-Income ETF strategies for the baby boomer generation. – As interest rates begin to move from their historical low, income-oriented exchange traded fund investors will have to shift their strategy accommodate the negative effects of rising rates.

ETF Trends: – Actively managed junk bond ETF proves durable as rates rise. – As a group, actively managed exchange traded funds are still a small sliver of the overall ETF universe. However, one area where active management has been successful is in the fixed income space.

Chicago Tribune: – Use funds to invest in bonds. – Many investors buy individual bonds rather than putting their money into bond funds. For now, those investors are crowing about the steady income they’re earning. They’ll continue to get those payouts, they say, regardless of what foolishness erupts in the bond market. And as long as they hold their bonds to maturity, they’ll get their entire principal back — except in the unlikely event that a bond issuer defaults.

https://twitter.com/PIMCO/status/361871694912172032

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https://twitter.com/Fixedology/status/361919037309059073

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