That kind of long term stability is what long-term fund managers and institutional investors look for.
For example, the iShare short-term fund mirrors the Lehman one- to three-year U.S. Treasury Index.
In most 401(k) plans, to move money from a stable-value account into a money-market fund or short-term bond fund, plan participants have to be invested in a riskier option for at least 90 days.
The story is similar with its top bond fund, the Virtus Multi-Sector Short Term Bond Fund, run by Virtus-owned money manager Newfleet Asset Management.
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What if you are buying a short- to intermediate-term bond fund, not the bond itself?
Last year, the average short-term bond fund gained about 9%, according to Morningstar.
To prevent yield chasing, most stable value funds prohibit transfers to similar options, such as a money market or short-term bond fund.
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Every spare dime goes into a short-term bond fund, where it is certain to hold its value and be available when the tuition bill arrives.
Second and more important, most private-sector workers belong to a state-pension scheme in which today's contributions, instead of going into a long-term investment fund, are used to pay today's pensions.
Among its best performing funds are the Virtus Multi-Sector Short Term Bond Fund run by Newfleet Asset Management and its Emerging Markets Opportunities Fund run by Vontobel Asset Management.
The commercial paper market is growing increasingly antsy and GE, not unlike a hedge fund, is stuck with some percentage of long-term assets that it is trying to fund with short-term money.
In the past several years, CIC has significantly reduced its holdings of public securities and accelerated a push into longer-term investments as the fund seeks to shield itself from short-term market swings.
Kraft says it plans to use cash on hand and short-term borrowings to fund the purchase.
Critics argue that he should allow borrowing to rise even further in the short term to directly fund capital spending.
The Vanguard Long-Term Tax Exempt Fund today is yielding 4.8%, or about 4.6% after state taxes (depending on where you live).
The industry in the U.S.--or, at least, the term "hedge fund"--dates back to 1949 and the money manager Alfred Winslow Jones.
And yet the long-term outlook for fund management should be bright.
It was this kind of violent and sudden volatility that caused the highly leveraged Long-Term Capital Management fund to require a bailout by Wall Street institutions in the fall of 1998.
Sotirios Keros, a 39-year-old pediatric neurologist in New York, says he plans to shift his emergency reserve to a long-term municipal bond fund when his CDs mature this summer.
It has a large financial services division and has come under pressure in recent days on concerns that even it, with its triple-A credit rating, would have trouble selling short-term debt to fund those operations.
Such a return-chasing approach might be justified if investors were rightly anticipating that a short-term improvement in the returns of a particular hedge fund indicated a long-term shift in favour of its style.
Besides long term JGBs, the fund has bought commercial paper and Tokyo-listed ETFs and REITs.
How about putting that money in a long-term CD or bond fund for your kids?
Corporations sell commercial paper, a short-term IOU, to fund day-to-day activities like payroll.
Besides its great long-term performance, the fund is also doing well this year.
At the same time Vanguard's New York Long-Term Tax-Exempt Fund, with an average duration of 6.8 years, offered a yield to maturity of 3.8%.
Then giant hedge fund Long Term Capital Management collapsed due to big bets on Asian currencies, causing problems also for the large banks that had financed it.
Managers began to use less internal leverage following the infamous blowup of the Long Term Capital Management hedge fund in 1999, although that has been edging back up in recent years.
Remember when the options-pricing pioneer Robert Merton won the award in 1997 a year before his hedge fund Long Term Capital Management imploded and almost took down the world financial system?
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With the paperwork expected to follow as much as days later, there is the potential for a breakdown approaching the scale of the Long-Term Capital Management hedge fund debacle, which all but crushed Wall Street in 1998.
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