Bond funds for a bond bear market

8 min Read Published: 31 Oct 2016

If you read my recent weekly newsletter you will be aware of the importance of bond duration. I ended my commentary by saying that when/if the bond market unravels further then the 80-20 Investor algorithm will inevitably highlight those funds worth looking at.

I also pointed out that bond funds with long durations will get hammered if the bond market sell-off intensifies. The answer would be to look to hold bond funds with shorter durations. However, this is easier said than done as I've yet to come across duration data available either publicly or via a paid subscription. The reason is because the fund managers don't always release this data.

Over the weekend I pondered this problem posed in my newsletter and was compelled to come up with a research solution to uncover those funds with short duration (or indeed long duration).

How to solve a problem like bond duration

Given that October has been a month where duration has been a key driver of bond returns one idea would be to simply rank all bond funds by their level of return for the month of October.

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