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March 16, 2010

In Bond Indexing, the Worst Debtor is First

Randall Forsyth, Barron's

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By RANDALL W. FORSYTH | MORE ARTICLES BY AUTHOR

AMERICA'S UNIMAGINABLY MASSIVE BUDGET DEFICITS are hastening the day when it could lose its gilt-edged triple-A credit rating, one of the top credit-rating agencies warned Monday.

But, not to worry. Based on the way most bond money is invested these days, the deeper the U.S. government sinks into debt, the more Treasury notes and bonds fixed-income portfolio managers will have to buy.

That is the necessary, simple-minded consequence of index...

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TAGGED: Treasuries, bonds, deficits, debt, Randall Forsyth

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