High-yield bonds add tremendous value at times, so it makes sense to at least consider investing in them.

They’ve had terrific returns in recent years. In 2016, they outpaced both stocks and higher quality bonds.

They can also be useful in a rising interest-rate environment, since their higher yields could help offset a decline in bond prices.

In the second half of 2016, when the 10-year Treasury yield rose from 1.49% to 2.45%, higher quality bonds lost money while high yields gained over 6.5%.

You need to use high-yield bonds carefully, however, because these funds are risky. These are lower credit quality (“junk”) bonds, so they have a higher risk of default, and defaults tend to increase when interest rates rise.

High-yield bonds also can be quite volatile compared to other bonds. They are typically more correlated to stock markets, and that can make it hard for investors to hold these bonds long term. During the 2008 credit crisis, some high yield bonds lost 25-30%.

Ideally, you’d own high-yield bonds when they’re doing well and you’d avoid these bonds when they’re out of favor. This may seem unrealistic, and yet it’s what our fixed income approach is designed to do.

When to own (and when not to own) high-yield bonds

Continue reading “Should You Reach for Higher Yields?” »

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Is this a good time to own dividend ETFs?

What about growth funds?

FundX Chief Investment Officer Jason Browne answered these questions and more on the MoneyLife Show with Chuck Jaffe.

Jason explained what we look for in a fund:

“From our perspective, it’s all about can we understand how much risk a fund is taking, and is a fund doing well compared to other funds with similar risk? If the answer is yes, we’ll buy in.”

He also talked about when to buy an S&P 500 fund, and why he believes investors are probably better off in an emerging market fund than in a frontier market fund.

FundX CIO Jason Browne’s take on five funds and ETFs

PowerShares High Yield Dividend Achievers (PEY) 

“PEY is an ETF that we have held in our portfolios until just about a month ago. It had done really well, and we owned it for over a year. It’s a perfectly good fund, but it has fallen out of favor and we’ve sold it.

We have nothing against the fund itself, but there are a lot of other funds with similar risk that are now doing better.”

Vanguard Mega Cap Growth ETF (MGK)

Continue reading “FundX CIO Jason Browne’s Take on Five Funds and ETFs” »

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How to Capitalize on Emerging Market Trends

May 2, 2017

Emerging markets have been one of the best performing areas in 2017, up 12.5% for the first quarter. Could this be the start of a new trend? Historically, market trends shift between foreign and domestic markets, including emerging markets, as FundX Chief Investment Officer Jason Browne explained on CNBC’s Squawk Box on April 19, 2017. […]

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3 Reasons To Steer Clear Of Individual Bonds — And Focus On Bond Funds Instead

March 22, 2017

What can you do to prepare yourself for higher rates? “My broker says that if interest rates rise, I’d be better off owning individual bonds than bond funds because I can hold a bond to maturity,” an investor said recently. We believe that investors are far better off with bond funds than individual bonds, particularly if […]

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How Funds Can Make a Difference

March 16, 2017

How you invest your money can be a vote for the values you want to support—from fairness and equality to safety and sustainability. But how does it actually work? How do your mutual funds try to make difference in the world? There are three strategies that mutual funds have been using for years: 1. Divestment: Avoid objectionable […]

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A Better Plan for Rising Interest Rates

March 7, 2017

Have you ever wished that you had a better plan for rising interest rates? You know that interest rates will rise eventually and that this could really affect the bond market. And you also know that many people—even experts—have been predicting higher rates for years now, and those predictions haven’t really panned out. Even the Federal Reserve doesn’t […]

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4 Myths of Momentum Investing

February 16, 2017

Stocks and mutual funds experience momentum—meaning that recent performance tends to persist. A stock or a fund that is doing well lately tends to continue to well in the coming months or even years. Momentum investing strategies, like our own Upgrading approach, attempt to take advantage of this by investing in funds that have strong […]

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The Best Performing Momentum Strategy

February 11, 2017

Did you see Mark Hulbert’s recent Marketwatch article about momentum investing, How to bet on stock market momentum? It’s focused on momentum investing strategies, like our Upgrading approach. Not all momentum strategies have a good track record, Hulbert noted. But NoLoad FundX’s strategy was an exception: “The best-performing momentum strategy over the long term, among the […]

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