Updates from the Merriman Research Team

Little known by most, behind the scenes at Merriman we manage a small hedge fund for many of our accredited clients. This fund, the Leveraged Global Opportunity Fund L.P., is now in its 17th year. During this time we’ve received various honors, and last week our fund made the finalist list for the 2011 HFMWeek U.S. Performance Awards for the Macro Under $1 Billion category. Winners will be announced at an event in New York on October 13th. More information is available on their website HFMWeek.com.


Sell TIPS to hedge against higher interest rates?

Is now the time to buy more TIPS in my 401(k) or to sell TIPS as a hedge against rising interest rates next year? I’m 57 years old and wonder if I should buy a short-term investment grade bond fund before interest rates go up. Or is it better to buy them when interest rates are much higher?

I cannot recommend what you should do because I have very little information about your situation, other than your age. But I can give you some pointers that might help you think about these questions.

You are asking questions involving market timing and also about your overall asset allocation. To get answers that make sense, you need to think clearly and logically about this. Bonds and bond funds are not quite as simple as you might think.

As Paul Merriman has written before, there are three rational reasons to own TIPS and other fixed-income funds. First, you might want to buy low and sell high in order to make a profit. Second, you might want these funds so you can collect the income they provide. Third, you might want them in order to dampen the volatility of the equities in your portfolio. (more…)