ETF Expert

Dan Deighan, head of Deighan Financial Advisors, believes that the bond market is going to experience a “meltdown.” He pointed to weak demand for 2-year U.S. Treasury bonds on Monday, 12/28, as well as the steepening of the yield curve.

If you’re a U.S. treasury bond bear, “there’s an ETF for that.” The Proshares UltraShort 20+ U.S. Treasury Fund (TBT) has been a fan favorite for traders.

On October 8, 2009, in “Winds of Change Begin to Swirl,” I noted that investors were piling into TBT at 2x the normal rate as well as rejecting new 30-year treasuries at a paltry 4%. Since that time, TBT has skyrocketed 15.5%.

Yet when Deighan and other professionals speak about a ”bond bubble” on national TV, it seems as though they ignore a bevy of non-carbonated alternatives. Convertible bonds, foreign bonds, floating rate bonds, high-yield bonds, emerging market bonds  – I seriously doubt that Mr. Deighan was referring to all income-oriented possibilities.

Let’s consider one of my favorite discussion topics, “convertibles.” The SPDR Barclays Capital Convertible Bond Fund (CWB) is not only consistent in hitting 52-week highs, it has accumulated more than 4/5 of the S&P 500 in capital appreciation since its inception in April. Moreover, it’s delivered on a primary promise of a 5.75% annualized income stream. Last, but hardly least, it remains in a genuine uptrend.

In addition to treasury bubble believers using Proshares UltraShort 20+ U.S. Treasury Fund (TBT)… in addition to convertible bond advocates employing SPDR Barclays Capital Convertible Bond Fund (CWB)… emerging market debt has been the subject of great debate. They had been firing on all cylinders until Dubai World’s debt crisis over Thanksgiving caused the world to rethink its support.

Funds like iShares JP Morgan Emerging Market Bond (EMB) took an initial hit in late November. However, it has remained surprisingly firm in light of the news. What’s more, EMB may have drifted below a 50-day moving average, but EMB remains solidly above its long-term 200-day MA.

If you’d like to learn more about ETF investing… then tune into “In the Money With Gary Gordon.” You can listen to the show “LIVE”, via podcast or on your iPod.

Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company does not receive compensation from any of the fund providers covered in this feature. Moreover, the commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.

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