The development of USA Bond Fund
America bond variety, issuing department is mainly for the government or the departments, companies, state or local government, in addition to foreign currency bonds and issued by foreign governments and agencies in the America bonds, bond funds are mainly invested in bonds. USA bond market stability, issuing structured, periodic fixed, with the characteristics of.
About 1/3 America mutual fund bond fund originated in 1935. By 1958 the bond fund has not specifically listed as a kind of fund, at the time of the 189 mutual funds, only 13 of bonds and preferred stock fund. Until 1975, the need for statistical , America Investment Fund Association will "bonds and income fund" special column for a class. In the 390 mutual funds at the time, a total of 104 bonds and income fund, the bond fund only 35. In 1985, the bond and the income of the fund to 492, total assets of $134800000000. By the end of 1992, bonds and income fund has reached 1629, the net assets of $577300000000, money market mutual funds of more than $546200000000 of net asset value industries exclusive Ngau tau. Securities investment fund to $522800000000 of net assets value column third, according to Lipper analytical services agency statistics by the end of 1994, USA bond fund has reached more than 2800, plus the state bond funds, a total of more than more than 6800.
American bond fund with the bond issues emerge as the times require. With the rise and fall of the stock market, bond funds also experienced several stages of development: one is from the mid 30's to mid 60's through 25 years of primary period; two is at the end of 60's to 70's development stage; three is the prosperity period of 80 years; four is 90 time metaphase down period.
USA early in 1924 issued a bond, but that is to help the government solve the the first World War military spending, people buy this kind of bond is not for the purpose of investment, but for the sake of patriotism. When issuing corporate bonds between income between 4.5%-7%, buy only a few conservative individuals and institutions. Government bond yields less, less than 4%. The company investment fund first appeared only in order to meet the people of stock investment enthusiasm. However, the 1929 stock market peaked at 4.83%, AAA bond yields more than 3.48% stock returns more than one percentage point higher, some people began to pay attention to the bond fund. In 1935, Keystone company first established mutual funds, including four bond fund. However, since the 40's to 60's stock funds flourished, economic development and in the war of the deposit rate and the bond rate is 2.5% to 4% of the low level, these are to stimulate the stock market's prosperity, while bond funds since the advent of the low ebb period of 25 years of experience.
Upgrade, until 1965, the Vietnam War increasing inflationary pressures, the Federal Reserve monetary tightening policy to ease the financial pressure, interest rates began to rise. At the same time, American Congress will Federal National Mortgage Association to Private Companies, and the establishment of the Government National Mortgage Association, a year later founded the Federal Home Loan Mortgage Corporation. These companies are issuing bonds, to raise funds for the domestic construction and residential projects. Since then USA government bond funds began to rise, to 80 years gradually sweeping the fund industry. The two oil price plummeted in 70, inflation, interest rates high, great influence on the financial sector America president to resign. Almost out of control at the end of the 60's inflation pressure caused by the high interest rates to 70 years, great opportunities for the development of the bond fund. By the financial regulation and the two recession, stock price volatility is bigger, inflation makes the stock investors suffered heavy losses, when the stock fund net redemption of $10400000000. Forms the sharp contrast with this is the bond and income fund net sales reached $5000000000, the net asset value of fund rose 50%, a number of new bond funds set up. In 1982 August, the big bull market to promote the development of stock and bond funds. As the economy improves, people of money at hand to increase investment, more and more inclined to look for professional portfolio management; personal retirement savings plan is becoming increasingly popular, capital flows are increasingly abundant to invest in higher risk return become easy.
In 80 Bond Fund's charm lies in its high yield, high quality bonds or corporate bond real returns of up to 13% ~ 14%. The inflation rate is 4%, the bond fund returns of up to 10%. The Leman Brothers Company statistics, in 1982 government bond yields an average of 30%, high-quality corporate bonds reached 40%. Although the 1983 bond prices declined, income of less than 10%, but the next few years until 1987, bond yields remain at 15%. This situation naturally led to the best-selling 1986 bond fund, bond fund sales reached $180000000000 in 1985, more than $135000000000 in net asset value. The government budget deficit increase bond issue heat guaranteed government bond funds continue to grow, the issuance of a large amount of mortgage securities related to meet this kind of fund demand. At the same time, the 1986 tax reform act by many tax loopholes, people seek other tax exempt income channels more to state and municipal tax exempt bond fund. With the increase in short-term interest rates, investors more willing to seek higher yielding government bonds fund.
But from the beginning of 1987, the actual inflation and inflation expectations increased, USA government restrictions on bank reserves strengthened the interest rate level. In April the bond index monthly return fell 2.45%, reaching the lowest recorded since May 1984. In September the government began to take measures, to reduce bank reserves by increasing their rate and open market operation, the short-term earnings to rise gradually. To 1988, despite inflation in 4% above, the bond market began to reverse. Although the 30 year Treasury only from 1987 8.95% rise to 9% in 1988, but the 3 month Treasury bills rose from 5.86% to 8.37%. In 1989 March, short-term interest rates peaked at 9%, or even slightly higher than the long-term interest rate. To 5 by the end of the 30 year bond yields fell to 8.6%, while the March treasury bill yields only slightly to 8.92%. This situation led to the 1989 monetary market fund is up to 5 times higher than the bond fund sales situation. From the end of 1990 to 1992 October Clinton succeeded Bush came to power, the government eased to 3 month treasury bill earning plummeted from 6.63% to 3.03%, and 30 - year bond prices only slightly to 7.63% from 8.26%. This means that if plus inflation, treasury bill rate is almost zero, and long-term bonds, real interest rates remain at 4% or above. The short-term securities and long-term securities income gap to encourage investors to seek higher returns on long-term bonds
In February 4, 1994, the Federal Reserve Federal Open Market Committee decided to fine tune the deposit reserve, so that the short-term market interest rates increased 25 basis points. The government decided to control inflation is originally wants to let the long-term bond investors, however, yields the decided to have the opposite effect. Investors sold bonds, bond prices fell. There is a lag, increase sales of redemption.
The reason the bond fund rising in 80's and 90's are: 1 through investment in money market mutual funds, performance, the fund service facilities and convenient satisfied, turn to longer-term investment in bond funds; 2 people thirst for high returns; and 3 more bonds issued by the government and companies; 4 domestic tax bills, including: (1) allows the municipal bond fund of fund holders dividends from federal taxes; (2) improve the federal income tax rate to encourage investors to buy a mutual fund; 5 through retirement plans to invest in more and more mutual funds; financial institutions run by 6 mutual fund business is increasing, in various forms, and actively at the same time, all kinds of financial institutions through the high salary and promotion to mobilize the sales personnel, dealers, engaged in fierce competition for investors.
America bond paper
In addition to American treasury bonds and local government bonds, USA other government agencies (usually government agencies federal) often issue bonds, financing activities. These agency bonds (Agency Bonds), mainly used for support and public policy project, such as agriculture, small business and for the first time home buyers loans. But, can't underestimate the scale of agency debt. According to the USA Bond Market Association (Bond Market Association) statistics, currently on the market of agency debt has reached $845000000000. These bonds although unlike Treasuries as a complete credit guarantee (full-faith-and-credit guarantee), but because it is issued by government agencies, investors still quite optimistic about the bond.
Agency bonds are issued such department:
* the Federal National Mortgage Association (Federal National Mortgage Association, Fannie Mae)
* the Federal Home Loan Mortgage Company (Federal Home Loan Mortgage Corporation, Freddie Mac)
* the farm credit system of financial sponsor company (Farm Credit System Financial Assistance Corporation)
* the Federal Agricultural Mortgage Company (Federal Agricultural Mortgage Corporation, Farmer Mac)
* the Federal Home Loan Banks (Federal Home Loan Banks)
* the Student Loan Marketing Association (Student Loan Marketing Association, Sallie Mae)
* University Construction Loan Insurance Association (College Construction Loan Insurance Association, Connie Lee)
* the Small Business Administration (Small Business Administration, SBA)
Although most federal agency securities investors are institutional investors, individual investors can invest in the federal agency debt market.
Most bonds you have ever seen by the following three groups: the sale of America government, state and local governments or enterprises. But because the bonds are issued a variety of different types of these entities, in order to share the risk and return, so investors a headache. Below we briefly introduce the common bond for several:
American government bonds
This issue by "Uncle Sam" bonds are called treasury bills. There are three categories:
* American short-term treasury bills (Treasury Bills) - the period from ninety days to one year
* American Treasury note (Treasury Notes) - the period of two to ten years
* USA long-term treasury bonds (Treasury Bonds) - the period of ten to thirty years
People generally believe that the Treasury bond investment is the most secure, because there is USA government credit support. Unless the natural calamities and man-made misfortunes, otherwise you will withdraw their money. The longer the maturity of a bond, the interest will be higher, because the risk you take will be greater, so, thirty years of treasury bonds attractive than T-bill ninety days or five years or more note. But it also bears the inflation and credit risk.
But compared with other bonds due in thirty years, even if the bond is safe. It also has an advantage: your investment income is exempt from state and local taxes.
Local bonds
Risk of this bond is treasury high level, but in terms of Taxation given compensation. Thanks to the following provisions USA Constitution: the federal government shall not levy taxes to state and local bonds (and vice versa). Better yet, local governments often residents within the state tax free bonds, so, this kind of bond returns are often exempt from city, state, federal taxes. (this makes people feel happy state of affairs pardon. Known as the three heavy tax) But also a price to pay: the tax on high earners attraction is great, so the interest on bonds is lower than the debt required to pay the.
Corporate bond
Corporate bonds generally in all risk bond returns in a maximum, because even big, stable companies in financial difficulties, poor management and competitive situation, more vulnerable than the government. The city also has a bankruptcy precedent, but very rare. More common is once a scenery of the company due to foreign competitors or due to management errors and was crushed. Pan Am, LTV and Steel example Chrysler bankruptcy still make fresh.
That is to say, as you take more risk, so the enterprise bond is fixed investment returns in the most profitable. Enterprise credit is low, the higher the return. The maturities of the bonds are the following:
* short: one to five years
* medium: five to fifteen years
* long term: fifteen years
The company and the government credit can be monitored through two debt rating organization: the standard & Poor's and Moodie. They are based on the long-term repayment ability entity to assess its credit rating. In Aaa, Aa, A and other letters, they can help us to determine the interest rate the company or government.
Of course, the enterprise strain every nerve their ratings remain high -- A and Baa difference may imply additional interest to pay millions of dollars. But even those ratings below investment bottom line (Ba or less) companies issuing bonds. These "garbage" bond for ordinary investors, speculative too strong, but the rewards are high and let people stare.
Zero coupon bond (Zero-Coupon)
This bond every year did not like ordinary bonds pay interest. It takes less than face value of the discount price sale, maturity, interest you can get all the accumulated and Recyclable principal.
This bond is mainly to people in need of university tuition fees or pension as the main sales object. Buying the bonds for two reasons: one is that you can be maturity in children reading university; two is because the bonds in general than the ordinary bond returns to the high number of.
Disadvantage is that: it should pay tax. Because the interest rate is generally every half year running time, so this kind of bond holders must pay tax on the interest accumulated occasion. That is to say, the money before, must first pay taxes. This makes many investors hesitate about what move to make the zero coupon bond.
Company bonds
Start a company, do business, always in need of funds. The opening of a new branch, upgrading equipment all need money. Generally speaking, there are three channels of financing, the issuance of stocks, bank loans and the issuance of bonds to investors to borrow money.
There are many types of bonds. Many corporate bonds have a special clause, allowing the bondholders to repay the principal on bonds before maturity.
Some corporate bonds are convertible, because according to the regulation, these bonds can be converted into ordinary shares in certain circumstances. According to the related stock price, convertible bonds than can not convert the bonds may be more attractive.
Most corporate bonds is fixed interest bonds. When the bond matures, the company is willing to pay the interest is fixed, and will not change.
Some companies use floating rate bonds, to determine the interests of bondholders. These rates vary with some index and change, like Treasury bills and money market index. These bonds rose to the interest rate has a protective effect, but more than the same period of the fixed rate bond yields lower.
In addition some of the company's bonds, commonly known as the "zero coupon bond (zero-coupons)", don't pay regular. Do not pay interest? Not exactly.
Sell only these bonds to ratio much lower prices, at full face value at maturity payments to bondholders. The bond holders with the principal return, also obtained the corresponding interest.
No matter how interest structure, the company will have to pay interest attributed to one point, that is to enable investors to think how high interest rate bonds worth the investment. When you buy a bond, you should believe that the company will eventually together with regular interest payments to you.
In addition to listen to the company's statement, you can turn to the special assessment bond grade companies, such as Moody's Investors Services, Fitch IBCA and standard & Poor's ratings services (Standard & Poor's Rating Services) in the bond grade evaluation.
The following is the Moody's bond rating standards
*Aaa - the best quality, the minimum investment risk.
*Aa - according to various standards are high quality bonds, and Aaa grade bond together, high-grade bonds (high-grade bonds).
*A has many good investment characteristics, is in general superior bond.
*Baa - intermediate bond. Baa above grade bonds are often considered to have investment value.
*Ba - containing speculative factors, the future is not guaranteed. Ba below grade bonds are often referred to as speculative bonds.
*B - usually lack a feature is an ideal investment tools should be.
*Caa - poor grade bond.
Bond *C - the lowest level, without any practical value for investment.
Corporate bond is usually higher than the local government bonds have higher returns. There are two reasons: first, the government , suffering financial Ordinary Company than local risk is big, therefore the return on a bond is high; secondly, yields on corporate bonds is subject to tax, while local government bonds.
Classification American Bond Fund
Classification number
A bond fund, tax year five to ten years
Short term American Treasury Fund 1540
Short term American government bond fund 108335
Short term investment grade bond fund 112307
The mid American Treasury Fund 1441
The mid American government bond fund 77225
The medium-term investment grade bond fund 1233211
Ordinary America Treasury Fund 1480
Ordinary USA government bond fund 1457718
Adjustable rate mortgage bond fund 7750
GNMA mortgage bonds to fund 473212
American mortgage bond fund 552010
A corporate bond fund 894724
BBB grade corporate bond fund 692814
The common bond fund 43168
High income bond fund 936032
Income fund 21156
Balanced Fund 1535725
The income elasticity of the fund 20135
Convertible bond fund 24203
Bond fund 1170
Short term global bond fund 3740
The short one global market bond fund 330
The common global income bond fund 106262
A total of 1452563188
Two, tax exempt Bond Fund (National)
Short term municipal bond fund 37149
Medium term municipal bond fund 82299
Ordinary municipal bond fund 1848851
Insurance municipal bond fund 41225
High Income Municipal Bond Fund 36226
A total of 38017580
Three, tax exempt Bond Fund (Dan Yizhou)
A total of 26931000322
Note: according to the Werner Renberg "on the bond fund" one book data
Status American bond fund market
Since last year, the global bond market outperform the stock market, bond funds and low efficient operation risk characteristics attracted many investors. According to statistics, in April this year, inflows into stock funds fell from 29600000000 in March to $11800000000, or 60.14%; and flows into bond funds are from 6700000000 dollars to 7800000000 dollars, an increase of 16.42%, this decrease add narrowed the gap between the two. In the past the Wall Street, bond funds is the most does not favor financial products. People thinks generally, investment in bond funds to pay various fees, cost-effective than direct investment in bonds. Now, people's views seem to be changing.
By the end of 2001, the total assets of American mutual fund of $6974900000000, its assets distribution structure is generally: equity funds accounted for 49.01% ($3418200000000), money market funds accounted for 32.76% ($2285300000000), mixture fund accounted for 13.26% ($925100000000), bond funds accounted for 4.96% ($346300000000). That is to say, in the America mutual funds, equity funds and money market funds, which together accounted for about 80% of total assets, is the mainstream varieties, in a dominant position; while the smaller proportion are mixed funds and bond funds, they are minor varieties, in a subordinate position. This can be from another angle to explain. During the 1990--2001 12 years, American mutual fund assets is the fastest growing stock fund, the rapid increase from $239500000000 in 1990 to $3418200000000 in 2001, an increase of up to 13.27 times; the second is the bond fund, from $36100000000 in 1990 to $346300000000 in 2001, an increase of 8.59 times; once again is the currency market funds, from $498300000000 to $2285300000000, an increase of 3.59 times; the last is the mixed fund, increased to $925100000000 from $291300000000, an increase of 2.18 times. Visible, the bond fund in the American mutual funds in the proportion of the smallest, but its total assets growth rate is faster.
So, now why investors for bond funds show strong interest? Because, global bond market since the trend over the last year, better than the stock market. In a global stock market fell at the same time, government bonds are generally rose. The trend of the stock market downturn, USA consumer confidence index fell unexpectedly, weak macroeconomic indicators, resulting in many Wall Street analysts expected USA Federal Reserve will postpone raising rates, these factors strongly support up overseas market.
Since March this year, the dollar against the euro and yen weakness, but it did not affect the market performance America bonds, America bond is still many local funds and investment varieties in many important global fund. Because of boom index trend is not consistent, although the consumer confidence index rose to at the end of the year, but expected the unemployment rate in May rose to seven year high of 6.1%, showed that USA economic recovery still in the mild stage, still suitable for investment bonds; terrorist attacks misgivings and unstable factors such as the conflict between India and Pakistan have not been eliminated, this will attract hedge funds into the bond market; the yen rise too much to Japan's economic recovery is negative, the Bank of Japan may intervene to buy a lot of America bond. With the economic situation gradually improved, the market will focus on the corporate bond market. Over the past 10 years, USA GDP to start strengthening, corporate bonds tend to have excellent performance. Therefore, the enterprise bond becomes the main object investors overseas market at present.
Recent overseas fund market appeared a few new features. Investors began to preference defensive investment mode, bond funds received close attention. To study the flow of funds from May this year, about equal amounts respectively into the USA bond funds and equity funds, the stock fund to absorb $10200000000, than in April fell by $4800000000; while the bond fund has seen positive growth in the flow of funds, up from $7600000000 in April to $9800000000. In fact, since last year, American bond fund has been sought after by the market and favor. In the market more than 阴跌 market conditions, investment confidence frustrated investors more with great care. In May this year, in the flow America bond fund overseas funds, most of which is invested in short-term and medium-term Bond Fund
New financial products to hedge the euro zone
Since the start of the euro, has been sluggish, the reasons are manifold; in contrast, the dollar in America promoting the rise of the stock market momentum rainbow remained fairly strong. With the America stock market adjustment and USA slows, US dollar exchange rate also face considerable pressure, thus, has been on the euro area financial market not too concerned about the USA institutional investors started to enter the European market, the enthusiasm of investment or even ignore risk management -- on the euro positions to hedge measures basic.
These are increasingly aware of the eurozone growth prospects that the euro area investors, the capital market will become the world's largest capital market; as an international reserve currency, the euro will grow rapidly, the euro denominated bond market will rapidly overtake including the US dollar, related to the products of other currencies scale. In addition, because the euro to the fiscal deficit is only half America fiscal deficit, therefore, the euro will become stronger currencies than the dollar.
If it is before 6 months, these views are difficult to accept heretical beliefs for most USA investors. However, as the euro was born, the EU meeting in Brussels officially confirmed the smooth operation of the exchange rate of the euro and the euro bilateral, America investors for the euro gradually deepen understanding. Now, a euro denominated single unified big market is being formed. So, with the USA investor enthusiasm for the euro continues to improve, not only the dollar signs in recent weeks, the euro, and USA investors began to think that the euro will become a strong currency globally in the long term; just because America investors believe the euro is a strong currency, so they to Euro denominated bonds that need not be against a weaker euro hedge.
Some institutional investors American think, the single currency could eliminate the existing European competition, inhibition of labor and financial measures, so, the European market competition will intensify, entrepreneurial forces will get excited. Although Europeans are reluctant to admit it, but Europe is more and more like USA.
As for the optimistic expectations of the euro, many American bond investors had been active users, derivative hedging products but strong, they judge the trend of Euro based, these always steady bond investors from around this year not in the euro's investment position to hedge.
From the actual operation situation, America investors in assets will be converted into euros, more clearing concern capital, also is to ensure that as the payment behavior right at the right time, and for the risk of currency itself does not very worried. American investors in the euro investment in hedge operation is relatively passive, they think the euro area financial market has not yet formed a need to hedge specific risk management.
In fact, the recent sharp fluctuations in USA stock market prompted the USA investors to overseas markets to seek better returns, it may be five years first appears attractive investment diversification.
In the financial markets of the euro zone investment, the reality is often American, investors often not used to invest in any currency risk, but more is the investment product value to consider. Some large institutional investors stressed, they will only in the special market environment will take hedging operations, for example, they feel a kind of currency risk or exchange rate setting not correct will be so.
USA investors, for the euro investment hedges, or intend to take hedging, the investment currency mainly German Mark. Some American investors more robust, as they often use the mixed mode Mark of Germany and other euro zone currency.
Look on the whole, the currency positions to hedge investors can be divided into two kinds, one kind is the passive type, but also can be said to be conservative, they think the potential loss of assets currency fluctuations caused by the derivative market profit fully hedged, another is the positive enterprising, not only to prevent the potential loss of currency fluctuations can cause, also hope that through securities expected currency movements and profit in the derivatives market transactions, but also to bear the loss of preparation.
The risk of portfolios in most of the big investors using the forward transactions, rather than trading options to hedge foreign currency denominated. In other words, they are often sold in a month, three months or six months forward Mark of Germany, at the same time buying dollars. Of course, the actual operation is not that easy, because the investment managers need to carefully analyze the actual changes of the two variables currency forward and securities value. So, if the investment manager to use forward transactions a month, the last trading day of each month will be related to currency exchange, and adjusted in the first trading day of the next month.
The predetermined financial market standard is 11 points in the morning every element of the last trading day of Greenwich mean time. The investment manager will be the initial transaction, he or she will according to the estimation, sell enough German mark hedge predetermined investment position. However, the investment manager didn't know exactly the Mark open positions, because the stock price and exchange rate changes constantly, so that the German Mark has also changed constantly. In the first trading day of the next month, these investors can accurately calculate the open positions, and adjusted accordingly to hedge.
Assuming a $1000000000 portfolio was 35% euro denominated. At the end of the month, investors will sell for 3500000 dollars a month of the German Mark, but in the end he is not on the $3500000 hedge, if Germany Mark appreciation, dollar open positions will increase, hedge positions also need to increase
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