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Post by chang on Jan 13, 2021 1:37:13 GMT
I posted something about this on M* around a year ago, but now that I am moving more money into muni bonds, I'd like to hear fresh thoughts. To set the scene, I own PHMIX, VWALX, VWLUX in about a 7:8:4 ratio. Here is a chart showing these 3 plus VWIUX, and also the category. (I included the much more-popular VWIUX to show why I bought VWLUX instead.) I haven't bought/sold PHMIX in a long time. First, it's much more expensive than the VG funds. (I know that it has earned its cost and more, but obviously it is a higher risk fund. Also, the latest M* report says "Instability in the analyst ranks supporting this strategy are worthy of monitoring." I wish I could read the entire report, but I am not a premium member. Can anybody share it?) The question is really: should I move all money in VWLUX into VWALX? The truth is that both funds are pretty similar. Similar durations (6.2 / 6.0 years); VWALX has a TTM yield of 3.15% vs. VWLUX's 2.84%. Identical ERs and asset sizes. SEC yields are a bit different: 1.92% vs. 1.33%. VWALX has 17.6% AMT while VWLUX has none .... but I don't think that will affect me. My thinking is pretty simple: the new Administration will be favorable to assisting the states, and bankruptcies should be almost non-existent. Should I dump all VWLUX into VWALX, or is there any benefit in keeping it? |
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Post by yogibearbull on Jan 13, 2021 2:06:25 GMT
Pimco bought Gurtin Muni Mgmt in 2019. But then integration became messy and several Pimco HY muni PHMIX people left. M* says it is watching this.
For credit quality, look at "BBB & below + NR":
HY PHMIX N/A [at M* or Pimco website]
HY VWALX 35.19% [so, core-plus in my definition]
LT VWLUX 12.93% [passable inv-grade]
IT VWITX 8.93% [inv-grade]
My suggestion would be to hold lot of core-plus VWALX and some of HY PHMIX.
If you want to venture some into risky muni CEFs, look at NVG, NZF, NMZ.
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Post by chang on Jan 13, 2021 2:21:06 GMT
yogibearbull : "But then integration became messy and several Pimco HY muni PHMIX people left." What's the takeaway for shareholders? This could be a positive, a negative, or not matter. I suppose the simplest thing is just to watch the returns for the next couple of quarters. As I said, this is my "high risk" fund, but I believe muni risks are going down, so I planned to just hold onto this. Interesting that VWLUX and VWIUX differ in credit rating. They do have different managers (while VWLUX and VWALX actually have the same manager.) CEFs look too richly priced. PML has a 15% premium. I know that the ones you mentioned have small discounts, but I look at PML just to gauge the entire CEF field. I held six CEFs at one point after the Whitney bottom, and slowly whittled them down until I owned only PML, and then finally let that one go a few years ago. I don't think I'll be interested again unless there is a major jolt to the entire muni bond CEF class.
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Post by acksurf on Jan 13, 2021 12:48:19 GMT
Pimco bought Gurtin Muni Mgmt in 2019. But then integration became messy and several Pimco HY muni PHMIX people left. M* says it is watching this. For credit quality, look at " BBB & below + NR": HY PHMIX N/A [at M* or Pimco website] HY VWALX 35.19% [so, core-plus in my definition] LT VWLUX 12.93% [passable inv-grade] IT VWITX 8.93% [inv-grade] My suggestion would be to hold lot of core-plus VWALX and some of HY PHMIX. If you want to venture some into risky muni CEFs, look at NVG, NZF, NMZ. Any thoughts on a VWALX alternative at Fidelity? |
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Post by yogibearbull on Jan 13, 2021 14:07:02 GMT
Pimco bought Gurtin Muni Mgmt in 2019. But then integration became messy and several Pimco HY muni PHMIX people left. M* says it is watching this. For credit quality, look at " BBB & below + NR": HY PHMIX N/A [at M* or Pimco website] HY VWALX 35.19% [so, core-plus in my definition] LT VWLUX 12.93% [passable inv-grade] IT VWITX 8.93% [inv-grade] My suggestion would be to hold lot of core-plus VWALX and some of HY PHMIX. If you want to venture some into risky muni CEFs, look at NVG, NZF, NMZ. Any thoughts on a VWALX alternative at Fidelity? Fido muni funds are tilted towards inv-grade. There is no Fido HY muni and only borderline Fido core-plus muni. It may be that Fido hasn't built its HY muni team(s). But non-Fido core-plus muni are available. Looking again at " BBB & below + NR": FTABX 18.51% [borderline core-plus] FHIGX 21.09 [borderline core-plus] NMBAX 29.68% [clear core-plus; no-load/NTF at Fido and Schwab] FWIW, muni funds with explicit quality objectives have less than 10% and HY muni more than 50%. So, there is a wide core-plus range from 10-50% but I look for 30-35% area. Unfortunately, M* has dropped quantitative credit quality indicators from its muni fund descriptions. The HY muni category only says "substantial" for "BBB & below + NR", but is silent otherwise. www.morningstar.com/content/dam/marketing/shared/pdfs/Research/860250.pdf?cid=RED_RES0002 |
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Post by chang on Jan 15, 2021 4:47:12 GMT
Pimco bought Gurtin Muni Mgmt in 2019. But then integration became messy and several Pimco HY muni PHMIX people left. M* says it is watching this. Out of curiority, when in 2019? the M* report flashing a warning is dated Nov. 25, 2020. PHMIX is Top 36%ile / 25%ile for the last 1 mth / 3 mths. It finished 2020 in the Top 9th %ile. So far, I see no reason to lighten up. |
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Post by yogibearbull on Jan 15, 2021 14:09:56 GMT
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Post by chang on Feb 9, 2021 23:56:50 GMT
Interesting to note that VWLUX was up a couple of pennies today while VWALX closed flat. (Of course, one day means nothing.) I'm keeping both positions for diversification's sake, although overall I am 5:1 HY to IG.
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Post by Chahta on Feb 10, 2021 0:16:31 GMT
Bond fund pricing is black magic to me. Since I found out funds set the NAV themselves, according to some "accounting procedures", I try not to figure it out. Just hope to be able to bail at the right time if need be. As a reference I am 2:1 core plus to HY. The core plus were up $0.01 and $0.04. The HY was up $0.02.
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Post by chang on Feb 24, 2021 0:41:39 GMT
All munis have taken a hit this month, after many months of superb performance. HY and IG have been hit the same. (For me, that. means PHMIX, VWALX and VWLUX).
Question is: this a dip to buy on?
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Post by Chahta on Feb 24, 2021 2:47:32 GMT
I hope so. I owned 2 core plus and sold 1 of them. The remaining one was a new position so I am planning to buy again once things settle down. The one I sold in my taxable account is for living expenses to supplement my SS next year and beyond so I had to protect it.
I was counting on you to say what to do. ;-)
There is a conversation over at AC about the months that are not great for munis. Credit to dtconroe and FD1000.
From Delaware Study:
Strongest months
1. Jan
2. Aug
Above Average
3. Apr
4. May
5. Sep
6. Jul
Below Average
7. Dec
8. Feb
Flat/barely Negative
9. Nov
10.Mar
11.Jun
Strongly Negative
12.October
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Post by yogibearbull on Feb 24, 2021 3:12:55 GMT
Muni CEFs have sold off sharply with some at decent discounts. Move in rates alone doesn't explain the severity of their drop, so the sentiment seems to have shifted just as help from Stimulus3 will arrive soon for state and local governments which, in principle, should be good for munis. I am thinking of some shift from muni OEFs to muni CEFs. LINK |
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Post by chang on Feb 24, 2021 3:17:39 GMT
Chahta I'm not a great believer in seasonality. First, like all market timing, you need to be right not once but twice. Second, I'm just a skeptic; seasonality seems to work great until you actually try it with real money. Third, munis always come back, so I'd rather reinvest dividends at lower prices than try to get in and out at the right times. Munis are a B&H for me. Not sure if I've ever actually sold one except to shift to a different one. (I used to own a bunch of muni CEFs, but let them go one by one and always moved the proceeds into OEFs.) I'm thinking that as soon as I see an up-day, I will move some cash (VUSFX) into my muni funds.
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Post by Chahta on Feb 24, 2021 11:40:39 GMT
YBB, thanks for the analysis. The sudden drop in muni funds does seem odd given the support expected.
Admin, I agree about timing. I plan to hold my HY and core plus. I thought that my last post might add some perspective for then being out of favor suddenly.
I suspect that March 2020 may not have been erased from all memories yet and munis got in the way recently.
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Post by Chahta on Feb 24, 2021 13:01:26 GMT
Muni CEFs have sold off sharply with some at decent discounts. Move in rates alone doesn't explain the severity of their drop, so the sentiment seems to have shifted just as help from Stimulus3 will arrive soon for state and local governments which, in principle, should be good for munis. I am thinking of some shift from muni OEFs to muni CEFs. LINKDoes charting work for OEFs too? Looking at PTIMX, it appears to be over sold with RSI below 30 and MACD tanking. I am no TA person but find charts interesting. While nothing is guaranteed, would this help identify an entry point? Print SharpCharts from StockCharts.com.pdf (37.35 KB) |
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Post by yogibearbull on Feb 24, 2021 14:25:10 GMT
Muni CEFs have sold off sharply with some at decent discounts. Move in rates alone doesn't explain the severity of their drop, so the sentiment seems to have shifted just as help from Stimulus3 will arrive soon for state and local governments which, in principle, should be good for munis. I am thinking of some shift from muni OEFs to muni CEFs. LINKDoes charting work for OEFs too? Looking at PTIMX, it appears to be over sold with RSI below 30 and MACD tanking. I am no TA person but find charts interesting. While nothing is guaranteed, would this help identify an entry point? View AttachmentSure. I added a couple of OEFs to the chart. Point I was making was that selloff in muni CEFs has been much more dramatic than in muni OEFs. Muni CEFs have higher risks, but still compare the charts. LINK |
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Post by Chahta on Feb 25, 2021 19:16:44 GMT
I called Performance Trust today to get their take on muni funds. The interest rate move and retail investors selling has caused the downward move of muni funds. I was told that these funds are retail investor dominated so others, like myself, have sold muni funds. We are being handed a buying opportunity I believe.
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Post by chang on Feb 25, 2021 19:19:11 GMT
Making my first (small) buy of munis today.
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Post by chang on Apr 5, 2021 1:56:38 GMT
The only narrative I am hearing on taxes and interest rates is that they are going up and not going up, respectively. So can anyone give me a reason not to shift some cash into municipal bonds?
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Post by chang on Apr 15, 2021 21:37:11 GMT
Munis seem to be going up, even with equities turning up. I'm going to keep slowly adding to them.
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Post by fishingrod on Apr 15, 2021 21:54:29 GMT
I too will now start adding slowly to my muni funds, PRVAX, VWIUX, VWALX.
Just a little at a time, until better opportunities arise, as I know volatility will provide a better entry point, I believe. At this point I will wait until another window opens.
Fishingrod
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Post by Chahta on Apr 16, 2021 0:16:51 GMT
The only narrative I am hearing on taxes and interest rates is that they are going up and not going up, respectively. So can anyone give me a reason not to shift some cash into municipal bonds? I’m not sure about rates going up either. The ten year seems to have hit some resistance lately so good for our munis I hope. |
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Post by win1177 on May 2, 2021 12:12:21 GMT
I’m slowly adding to VWIUX and VWALX, in set amounts, every month to gradually bring our cash down. Cash has risen to 10-11%, and with yields essentially zero, trying to get a little more return than MM accounts. I am keeping about 40% in VWALX, and 60% in VWIUX. I see VWIUX as a little “safer” than VWALX, and use both as my “ballast” against equity shocks, sell offs, and general market risks. This is in our taxable accounts obviously.
Win
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Post by anovice on May 2, 2021 20:55:54 GMT
I’m slowly adding to VWIUX and VWALX, in set amounts, every month to gradually bring our cash down. Cash has risen to 10-11%, and with yields essentially zero, trying to get a little more return than MM accounts. I am keeping about 40% in VWALX, and 60% in VWIUX. I see VWIUX as a little “safer” than VWALX, and use both as my “ballast” against equity shocks, sell offs, and general market risks. This is in our taxable accounts obviously. Win How effective are these "core" (VWIUX) and "core-plus" (VWALX) muni bond funds as a "ballast" against equity shocks, sell offs, and general market risks? As a separate question, would they be more or less effective than a corporate bond fund such as Vanguard Intermediate-Term Investment-Grade (VFIDX) which contains little Treasury/Agency bonds? Anovice |
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Post by yogibearbull on May 2, 2021 21:07:14 GMT
anovice , munis are already spread products, and core-plus have even higher spreads. The ballast idea works for Treasuries only, and even there the effect has been weakening. In the March 2020 bond crash, corporates were simply terrible. Short-term corporates were almost as bad as intermediate-term mixed with governments + corporates. While bond crash won't happen soon again, this was a big revelation for me.
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Post by chang on May 2, 2021 22:24:17 GMT
I’m slowly adding to VWIUX and VWALX, in set amounts, every month to gradually bring our cash down. Cash has risen to 10-11%, and with yields essentially zero, trying to get a little more return than MM accounts. I am keeping about 40% in VWALX, and 60% in VWIUX. I see VWIUX as a little “safer” than VWALX, and use both as my “ballast” against equity shocks, sell offs, and general market risks. This is in our taxable accounts obviously. Win As noted in the OP I went with VWLUX over VWIUX. But VWALX beats them both over most time periods. |
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Post by chang on Aug 4, 2021 3:37:52 GMT
Refreshing this discussion. I know I have asked this before, but perhaps not with the chart (below). I made the right decision to go with VWLUX over VWIUX: it pays to go LT in munis, so it seems. However, I have been holding VWALX:VWLUX in about a 3:1 ratio. (If I include VWALX+PHMIX:VWLUX, it's about 5:1.) What has IG gotten me compared to HY? Nothing. IG grows slower when they're rising, and while it might drop a little faster when they both drop, the difference evaporates over any significant time period. Should I dump all my VWLUX into VWALX and not look back? |
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Post by FD1000 on Aug 4, 2021 4:02:31 GMT
I have been holding HY Munis for years, most times the longer duration, think at least PHMIX duration and never IG Munis. Remember, most HY Muni funds also have IG Munis, more flexibility and options help good managers to make more money.
VWALX is probably the highest rated HY Muni fund, I would not hold any higher-rated Muni fund than that.
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Post by chang on Aug 4, 2021 4:20:57 GMT
Can someone remind me which months are *supposedly* the weakest for munis?
Not that I believe in such things. The Romans used to make predictions based on a priest cutting open the carcass of a sheep and examining its intestines. I'm not sure that that isn't actually more actionable than T/A.
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Post by Chahta on Aug 4, 2021 11:33:05 GMT
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