May 18, 2015

Barrons points out the many risk in the latest bond "fad"--unconstrained bond funds. These are bond funds that many people may own in their portfolios and not even know it. Money has suddenly been pouring into these safe sounding funds that are leveraged 6 to 1 or worse with futures derivatives and contain in the range of 40 percent junk bonds. Most are betting on a huge spike in interest rates. If the the huge spike doesn't arrive on time the bond fund owner loses in several ways:  the low yields, the junk bond potential default, and the expense of hedging against an event that doesn't occur. Steve and Sinclair review them in segment 2 while Dan Shaffer of Shaffer Asset Management, a frequent contributor on Fox Business, joins the A Team for the Q & A.