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Friday, March 09, 2012
Fuss to investors: Avoid these fixed-income ETFs
Dan Fuss, portfolio manager of the $20 billion Loomis Sayles Bond Fund (LSBRX), says market-cap-weighted ETFs make sense — just not when it comes to fixed income.Investing in an equity index, such as the S&P 500, makes sense because over a long period of time the index has a positive bias toward companies with rising market capitalizations, Mr. Fuss said. “In general, with equities, low turnover and low costs lead to better returns over a long time period,” he said.
But when fixed-income exchange-traded funds are weighted by market cap — and most of them are — they are simply giving the largest weighting to the company that issues the most debt. Read more... posted by Charles Monat Associates at 12:19 PM
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