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Post by chang on Jun 28, 2022 13:58:58 GMT
Observations: - Lands in upper half of category over EVERY time period from 1-day to 15-years (averaging around top 25%)
- Below-average risk and above-average returns over 5-10 years, per M* (link)
- Chart is ugly over 3-6-12 months
- Chart is almost flat since June 12
Is it time to start a DCA drip (and I do mean drip) into this fund? The intention would be to barbell. Rather than bang my head against the wall about whether to move large sums of cash into VGSH (see the ongoing 11-page thread), I'd rather just sprinkle a few dollars into a serious HY fund. What I would NOT like to see is what happened to VWALX from 5/18 - 6/14: a rollercoaster up and down. |
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Post by fishingrod on Jun 28, 2022 14:03:47 GMT
Was just looking myself.
The shorter duration high yield bond funds are at higher yields. The sweet spot seems to be 3-4 years.
I notice that VWEAX is 4.2 years currently.
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Post by Chahta on Jun 28, 2022 14:05:05 GMT
Only if you want to buy low. I went a little early but low. But I use OSTIX. SD if it helps. With bond funds expect the roller coaster ride. Will add down the road.
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Post by chang on Jun 28, 2022 14:20:47 GMT
Was just looking myself.
The shorter duration high yield bond funds are at higher yields. The sweet spot seems to be 3-4 years.
I notice that VWEAX is 4.2 years currently.
I'm not sure anything can be deemed a "sweet spot" with regard to bonds, except perhaps to be 50 feet away from the sight of them. But I want to restore an income stream at some point. The last thing I want to do is bottom fishing with bonds, but I just happened to look at the chart (and also HYG) and thought, well, might it not be worth hanging a small canary in the coal mine just to see what happens. |
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Post by fishingrod on Jun 28, 2022 14:20:54 GMT
The rollercoaster ride happened with both VWEAX and VWALX. The peaks and valleys were just more magnified by the longer duration of VWALX.
As long as rates are rising then there will be high volatility.
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Post by fishingrod on Jun 28, 2022 14:23:15 GMT
Was just looking myself.
The shorter duration high yield bond funds are at higher yields. The sweet spot seems to be 3-4 years.
I notice that VWEAX is 4.2 years currently.
I'm not sure anything can be deemed a "sweet spot" with regard to bonds, except perhaps to be 50 feet away from the sight of them. But I want to restore an income stream at some point. The last thing I want to do is bottom fishing with bonds, but I just happened to look at the chart (and also HYG) and thought, well, might it not be worth hanging a small canary in the coal mine just to see what happens. What I mean by sweet spot is that the shorter duration corporate bonds right now are paying more than longer duration bonds in some instances. |
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Post by chang on Jun 28, 2022 14:26:05 GMT
What I mean by sweet spot is that the shorter duration corporate bonds right now are paying more than longer duration bonds in some instances. Ah, I see. I thought you were referring to the downtrend (when, naturally, ST was losing less than IT and LT, but everything was plunging into an abyss). VWEAX at 4y duration is "IT" I suppose, and I've always considered it to be attractive in many ways - restrained credit risk, restrained duration, low ER, experienced management. |
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Post by fishingrod on Jun 28, 2022 14:30:43 GMT
What I mean by sweet spot is that the shorter duration corporate bonds right now are paying more than longer duration bonds in some instances. Ah, I see. I thought you were referring the downtrend (when, naturally, ST was losing less than IT and LT, but everything was plunging into an abyss). VWEAX at 4y duration is IT, and I've always considered it to be attractive in many ways - restrained credit risk, restrained duration, low ER, experienced management. For instance at Vanguard I can buy an individual corporate bond with a 5 year maturity with a higher yield than a 10, 20, or even 30 year corporate bond. One would think you would get paid more for going longer in maturity but, no.
VWEAX is a great fund and a shorter duration than I had first thought.
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Post by mozart522 on Jun 28, 2022 15:11:37 GMT
I'd probably wait. VWEHX is down almost 7% this quarter alone. HY usually does better in rising rate environments, so I'd want to know why it is down so much. Inflation and the cost of borrowing may be affecting the perception of credit risk for HY.
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Post by chang on Jun 28, 2022 15:33:43 GMT
I'd probably wait. VWEHX is down almost 7% this quarter alone. HY usually does better in rising rate environments, so I'd want to know why it is down so much. Inflation and the cost of borrowing may be affecting the perception of credit risk for HY. You're probably right. HYG/JNK is down 0.7%/0.9% this morning already. Volatile! I was just musing, but I'm in no hurry to lose money. |
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Post by Chahta on Jun 28, 2022 15:39:22 GMT
I'd probably wait. VWEHX is down almost 7% this quarter alone. HY usually does better in rising rate environments, so I'd want to know why it is down so much. Inflation and the cost of borrowing may be affecting the perception of credit risk for HY. It’s following the stock market down. |
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Post by mozart522 on Jun 28, 2022 15:45:30 GMT
I'd probably wait. VWEHX is down almost 7% this quarter alone. HY usually does better in rising rate environments, so I'd want to know why it is down so much. Inflation and the cost of borrowing may be affecting the perception of credit risk for HY. It’s following the stock market down. We can all see that, Mr. Fantastic  The question is why? |
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Post by junkster on Jun 28, 2022 16:19:49 GMT
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Post by junkster on Jun 28, 2022 16:50:08 GMT
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Post by anitya on Jun 28, 2022 19:13:48 GMT
What I mean by sweet spot is that the shorter duration corporate bonds right now are paying more than longer duration bonds in some instances. Ah, I see. I thought you were referring to the downtrend (when, naturally, ST was losing less than IT and LT, but everything was plunging into an abyss). VWEAX at 4y duration is "IT" I suppose, and I've always considered it to be attractive in many ways - restrained credit risk, restrained duration, low ER, experienced management. HY funds are not by design expected to have more than 4-5 yr Duration. 5Yr yields across credit spectrum, not counting MUNIs, are currently the best. |
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Post by Chahta on Jun 28, 2022 22:59:12 GMT
It’s following the stock market down. We can all see that, Mr. Fantastic The question is why? Um, because that is how HY works? It has never been considered ballast. To quote a friend of mine; “I let the market tell me”. |
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Post by anitya on Jun 28, 2022 23:12:21 GMT
chang , I would say, put in only 70% of your desired allocation to high yield and hang on to the other 30% to deploy in case HY gets cheaper. In any case, betting in fixed income market now has to start with a view on interest rates, independent of one's view on inflation - as strange as that might sound. In your view, have interest rates for your desired term (5 yr?) peaked (within a range) for the near future?
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Post by chang on Jun 29, 2022 5:38:04 GMT
Anitya: the answer would be 'no'. Does anyone think interest rates have peaked?
Yesterday’s volatility suggests to me that the damage is far from over, so I will continue to watch and wait.
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Post by anitya on Jun 29, 2022 18:49:12 GMT
It is possible we have seen the high in 5 yr interest rates for this cycle. If anybody is interested in buying corporate bond funds, I would rather buy investment grade individual bonds. If I did not buy a lot of 2 Yr Treasuries, I would have done just that.
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bf22
Commander
Posts: 135
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Post by bf22 on Jun 30, 2022 0:24:16 GMT
Anitya: the answer would be 'no'. Does anyone think interest rates have peaked? Yesterday’s volatility suggests to me that the damage is far from over, so I will continue to watch and wait. I think it is possible that the long end is getting close to a peak. Thus, for me, I'm slowly getting back into munis. Of course, what do I know.. |
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The question is why?
