If your portfolio includes long bonds, specifically long treasuries, then you were among this week’s winners. T. Rowe Price U.S. Treasury Long-Term and Vanguard Long-Term U.S. Treasury notched the biggest gains amid the global market selloff. “Investors were concerned that slowing growth could bring a drop in rates and so they’ve retreated to long bonds,” said Christine Benz, director of mutual fund analysis with Morningstar said on "Morning Call."
The biggest losers were emerging markets funds. But despite the huge selloff in Asian markets, Latin America funds were the ones that fared the worst.
“Latin America has done better than emerging markets, emerging Asia, over the past few years,” Benz said. “Latin America is a very commodity heavy area and there are concerns about slowing growth in China and still fears that commodities in general could slow down.”
Benz’s pick for the week is DWS Intermediate Tax/AMT Free Fund .
“I’m hearing a lot about Alternative Minimum Tax from a lot of investors,” she said. “This is a muni fund and it also is AMT free. I think it is an exceptionally well-managed fund that has a long tenured manager who is risk averse and I think that’s what you want in a municipal bond fund.”
Benz’s pan is Fifth Third Intermediate Municipal Bond Fund .
“This is a fund that charges about 1% in expenses and you’re lucky to earn 5% on a bond fund these days,” she said. “You really don’t want to be seeding 20% of your overall gains in costs. Avoid the pricey ones in the bonds fund world.”