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Old 06-14-2002, 05:39 AM
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Default cant make big bucks in bonds? - wrong



i got to thinkin today that the us dollar is goin to see further declines but i could change my mind depending on economic numbers today. i probably wont though because im expecting the numbers to show moderate economic growth at best. i started lookin around for bond funds that whos primary currency risk was the euro. in the process found examples of at least two bond funds that are doin well this year:


Aberdeen Asia-Pacific Income Fund (FAX / AMEX)


MARKET PRICE NAV

YTD: 30.99% 13.94%


this fund yields 8.81%.


it has about a 59% exposure to the austrailian dollar. of course part of the reason the per share price has gone up 31% is the decline in the USA dollar. do you think it pays to know your currency risk?


Aberdeen Commonwealth Income Fund (FCO / NYSE)


MARKET PRICE NAV

YTD: 17.03% 7.78%


ok not 30% but 17% year to date appreciation per share aint to shabby in my book. compare that to the s&p 500. the yield is slightly north of 7%. not a bad total return at all. heres some stats on the currency exposure for this fund.


United Kindom - 29.5%

Canada - 21.2%

Australia - 23.2%

USA - 11.7%


both are closed end bond funds and are traded on the exchanges. do your homework before buyin anthing.
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Old 06-14-2002, 06:10 AM
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Default new zealand - 11.7% --- USA - 8.1% *NM*




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Old 06-14-2002, 03:38 PM
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Default Re: cant make big bucks in bonds? - wrong



How long will Canada or Australia, two supposed dollar dependent countries, keep appreciating? I think the slow drop of the dollar isn't going to last much longer. Its become en vogue to bash on the dollar and talk about its overvaluation, but my goodness do you really want to invest in countries that have virtually zero productivity growth and unemployment near 10%? How about a country that has had deflation for 2 years and whose weakening recovery has come solely because of their weak currency? When people come to grips with these factors, the outflow will stop and in a year just might reverse.


As for making money on bond funds, you must be kidding. Making money on currency exchange, not the value of the bonds, doesn't exactly cut it. Bond funds are going to underperform over some time I think, after all I don't see how they could match their recent past unless 30 year rates go to 3.5%...and in that case you might have to worry about the viability of the US government.
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