Bond

Over the past several years, retail investors in the United States have been moving their money into bond funds at a pace not seen in 23 years. The movement of money into fixed income funds by individual investors has outpaced contributions into equity funds for 30 straight months.

Bloomberg reports that Warrenn Buffett is shortening the duration on Berkshire Hathaway's fixed income holdings. Twenty one percent of Berkshire's bond holdings are short duration and due in less than one year. This represents a 3 percent increase from eighteen percent on March 31 of this year, and a 5 percent increase relative to the second quarter of 2009.

The consumer price index has fallen for two consecutive months: 0.2 percent in May and 0.1 percent in June. The unemployment rate in the United States remains at a persistent 9.5 percent, and in July the U.S. shed 131,000 jobs. Not exactly the type of news that supports a strong recovery or growth story. As discussed in a recent Wall Street Journal article , some large and very prominent investors are conditioning their investors and structuring their portfolios for deflation. PIMCO's Bill...

Bill Gross is the manager of the world's largest bond fund at PIMCO. Gross believes that "bonds have seen their best days" and that both inflation and real interest rates are headed higher.

Hedge funds are no longer the exclusive domain of professional and high net worth investors. A recent Business Week article discusses the emergence of exchange traded funds (ETFs) that are designed to track alternative investment indices. A start-up investment management company called IndexIQ has launched five of these types of funds over the past eighteen months.