Tuesday, July 17, 2012

Mailbag Cleanup: Bond Funds, UITF Types, and Portfolio Tracker Registration Using Twitter


Dear Investor Juan,

I've been investing in bond fund UITFs for a year now and I still don't get what makes their NAVPU go up. Which environment does it earn more? In an environment where interest rates go up and bond prices go down or in an environment that interest rates go down and bond prices go up?

In holding individual bonds, you know exactly what you'll earn but in bond funds I don't know how it will react to changes in interest rates. 


Dear Eugene,

As I discussed in this post, bond prices go up when interest rates go down, and vice versa. Since bond UITFs are basically just portfolios of government and corporate bonds, they should exhibit the same behavior. Effects of interest rates on NAVPUs, however, may not perfectly clear since: 1) the extent of the changes in the prices of a fund's bond components may be significantly different; and 2) interest earned on the bonds are kept in the fund and not distributed to unit holders.


Dear Investor Juan,

I have some money in the bank that I would like to invest in UITF's. I know BDO is a sure bet but which one product?  I won't be needing the cash for about 6 years.  Any suggestions.

Ms. Confused

Dear Ms. Confused,

First, in all of investing, there's no such thing as a "sure bet"; the only thing we have established in a past analysis was that BDO UITFs are more attractive than other offerings in terms of cost and a couple of other criteria.

Regarding your choice of UITF type, an investment horizon of six years would make you less immune to short-term fluctuations of stocks and enable you to take advantage of the generally better long-term performance of equity UITFs.


Dear Investor Juan,
I have a bit of a problem accessing the Bloomberg Portfolio Tracker. I click on Personal Finance >> Portfolio Tracker then sign in using Twitter but it takes me to a page where I can only edit my profile. There's no way I could get to the tracker page. Is there anything I missed? I have confirmed my email as well. Thank you so much. 


Dear foehns_419,

I tried connecting to Bloomberg using my Twitter account. After editing your profile, go to Bloomberg.com manually, click the PORTFOLIOS link on the upper right corner of the main page. If you're doing this for the first time, you'll land on a page with a link to construct your portfolio for the first time. Subsequent tries will take you directly to the Portfolio Tracker page.

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