Investors in these funds must be complete idiots..... Surely (don't keep calling me Shirley) The FED has been telegraphing it's going to raise rates... when isn't exactly certain - but there's no question it WILL happen. So to be in a junk bond fund -- or JNK or HYG -- knowing we're getting closer and closer to that "event" --- and then deciding NOW is the time to sell..... HELLO..... IDIOTS.
We all got caught with our pants down on the big and sudden oil price decline. This kind of thing happens from time to time. But not knowing that interest rate rise will affect your holdings is just plain being stupid.
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Originally Posted by ErikLS2
So yesterday a mutual fund company, Third Avenue Management announced it would not allow withdrawals from a high yield (junk) bond fund saying something like it could not find enough buyers for the assets in the fund which were needed to raise the cash to pay the investors who wanted out. They have not said when they will give investors their money. This is the first time I believe in history that a mutual fund has blocked withdrawals.This is going to motivate other investors in high yield debt investments to want their money I'm sure. I hope this one doesn't get out of hand.
Today Stone Capital Partners, a hedge fund and bound by different rules than a mutual fund, also suspended withdrawals in its credit hedge funds. They also didn't say when investors' money will be returned, which is only going to make more of them want their money. A hedge fund hasn't done this since the financial crisis.
And off to the races we go.......possibly. Monday is going to be interesting for sure.
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