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Post by chang on Jun 10, 2023 19:15:37 GMT
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Post by anitya on Jun 10, 2023 21:01:33 GMT
chang , During this last week, I bought 1+ Yr Treasuries at 5.25 ish%. I can not imagine MM getting over 5.5% in this cycle and so thought that Treasury yield is reasonable. You probably no longer have the state tax exemption benefit, but I would still consider 1 yr Treasuries better than PFIIX or even PIMIX so one can focus energies on equity opportunities. I have some Treasuries maturing in the next three weeks and if a similar yield is available at that time, I plan to rollover those proceeds as well into 1 yr Treasuries. If on the off chance, 2 Yr Treasuries are available at around 5%, I plan to take the 2yrs. Earlier this year I bought 2 yr at 5.25% but did not have much cash to back up the truck at that time. So, I am trying to keep some money in MM to space Treasury purchases more regularly.
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Post by retiredat48 on Jun 11, 2023 0:49:37 GMT
A money market fund yield can, and does, go down quickly when fed drops rates; Price is pegged at a dollar. a three yr duration fund gives you cap gain when rates fall; as well as retain the rate of interest for much longer.
A really, really smart investor would be buying 30 yr treasury zero coupon bonds, in anticipating lower rates, to reap the gains!
R48
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Post by yogibearbull on Jun 11, 2023 12:49:08 GMT
There will soon be a time to switch from T-Bills/m-mkt funds/ultra-ST bond funds/SVs to short/intermediate-term bond funds (core, core-plus) and multisector bond funds. As noted by others, the yield-curve is inverted and short maturities are working for now, but that will change. Timing may be tricky, but those who are gradually switching won't regret it. After a historically terrible 2022, this year has been much better for bonds. Reinvestments at 4-6% will also cover some mistakes.
My HY is via multisector bond funds only (except for some VG HY in my 403b; no multisector available there).
FR/BL are great for rising rates. But when rates are steady or declining, they act just like risky short-term HY (FR/BL are low-rated). That party is/maybe ending soon too.
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Post by Chahta on Jun 11, 2023 13:48:59 GMT
A money market fund yield can, and does, go down quickly when fed drops rates; Price is pegged at a dollar. a three yr duration fund gives you cap gain when rates fall; as well as retain the rate of interest for much longer. A really, really smart investor would buy 30 yr treasury zero coupon bonds to reap the gains! R48 How many do you own?  |
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Post by yogibearbull on Jun 11, 2023 14:24:10 GMT
30-yr will lock 3.89% now. It may good to repeat another technique in this thread - the tradeoff between buying x-yr now and roll vs buying 2x-yr now. Breakeven formula for that is: Roll Breakeven Yield = 2 (yield for 2x) - yield for 1xT-Bill 6-mo vs 1-yr 6-mo 5.39% 1-yr 5.17% Roll Breakeven 4.95% So, if YOU think that 6-mo will be higher than 4.95% in 6 months, buy 6-mo T-Bill now and then roll; if YOU think that 6-mo will be lower than 4.95% in 6 months, buy 1-yr T-Bill now. So, YOU don't have to look for what the others in the media are saying. T-Bill 1-yr vs T-Note 2-yr Roll Breakeven 4.01% T-Note 5-yr vs 10-yr Roll Breakeven 3.58% The idea will work for, say x-yr and 5-yr too but will require more rate scenario assumptions. The cleanest application if for x and 2x. home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202306 |
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Post by chang on Jun 11, 2023 16:12:18 GMT
Maybe worth noting that VWEAX has beaten PIMIX over every time frame from 1-10 years. Current 30 day SEC yield is 6.96%. Duration is 3.7 years, just slightly higher than PIMIX. ER is a rock bottom 0.13%.
I’m wondering whether PIMIX offers anything over VWEAX, besides all the shiny PIMCO bling.
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Post by yogibearbull on Jun 11, 2023 17:03:53 GMT
It so happens that my 403b has both multisector PIMIX and HY VWEAX, so, I watch both closely. I checked the 30-day SEC yields from the websites (M* has stale or no data) and also added some other funds for comparison:
Multi PIMIX 5.45%, 5/31/23; looks low, but it could be related to its significant holdings of Treasuries and current derivative positioning (that cash shown by M* is really to support derivatives). It's a black box run by IVASCYN/MURATA. I haven't read recent Pimco Outlooks.
Multi LSBDX 5.81%, 6/9/23; more aggressive multi for comparison; run by FUSS (he is cautious).
Multi FADMX 5.59%, 6/8/23; a tame multi for comparison. Doesn't deviate much from % in its prospectus target sectors - no all or nothing stuff here. Managed by Fido managers who run their own Fido funds in the target sectors although there is a lead manager to tinker some with allocations.
HY VWEAX 6.96%, 6/8/23. Looks OK for its 14.91% inv-grade (M* data). A conservatively run HY.
Holding HY and whether to hold better HY (BB) or junkiest HY (CCC) is related to fund manager's guess for the US recession - estimates vary between 2023-25.
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Post by Fearchar on Jun 11, 2023 17:11:39 GMT
Yes; VWEAX and PIMIX are highly correlated especially over the last year. PIMIX may have slightly less volatility:  Is this a cup with a handle chart? Both Big and Small? |
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Post by retiredat48 on Jun 11, 2023 17:52:26 GMT
A money market fund yield can, and does, go down quickly when fed drops rates; Price is pegged at a dollar. a three yr duration fund gives you cap gain when rates fall; as well as retain the rate of interest for much longer. A really, really smart investor would buy 30 yr treasury zero coupon bonds to reap the gains! R48 How many do you own? I didn't mean "NOW"; I meant when one thought rates would be reversing. I edited post to reflect this. And yes, currently, I own zero 30 year, 20 year or 10 year treasuries; but plan to own at least some ten year in the future. I have traded TLT (20 yr) in the past, and may do so again. I have posted the following often: To me, the investor who converts well, from money market funds to longer duration FI funds, will be the truly "successful investor."R48 |
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Post by sortatino2 on Jun 11, 2023 19:48:16 GMT
Vanguard Federal Money Market is at 5.05%. It will rise to 5.3% with the 0.25% rate hike (as predicted by futures) July 26. Will come back down to 5.05% in November with the 0.25% rate cut (as predicted by futures).
I plan to stay in MM for the time being. Will be looking for opportunities to move into HY Muni and Multisector going forward. I still think we have one big dip left in the market within the next year if this resembles every other end to rate hike cycles in recent history.
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Post by anitya on Jun 11, 2023 22:30:05 GMT
30-yr will lock 3.89% now. It may good to repeat another technique in this thread - the tradeoff between buying x-yr now and roll vs buying 2x-yr now. Breakeven formula for that is: Roll Breakeven Yield = 2 (yield for 2x) - yield for 1xT-Bill 6-mo vs 1-yr 6-mo 5.39% 1-yr 5.17% Roll Breakeven 4.95% So, if YOU think that 6-mo will be higher than 4.95% in 6 months, buy 6-mo T-Bill now and then roll; if YOU think that 6-mo will be lower than 4.95% in 6 months, buy 1-yr T-Bill now. So, YOU don't have to look for what the others in the media are saying. T-Bill 1-yr vs T-Note 2-yr Roll Breakeven 4.01% T-Note 5-yr vs 10-yr Roll Breakeven 3.58% The idea will work for, say x-yr and 5-yr too but will require more rate scenario assumptions. The cleanest application if for x and 2x. home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202306Just bumping up good Roll math post. |
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bd1
Ensign
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Post by bd1 on Jun 12, 2023 0:26:09 GMT
PFIIX and PIMIX both make level payments throughout the year, followed by an extra payment in Dec. The SEC yield does not capture the Dec payment - whatever it may be. The TTM does, of course, and TTM for both funds is over 7.1, courtesy of a high Dec 2022 extra payment. I do not know if there is any way to determine the payment for Dec 23.
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Post by yogibearbull on Jun 12, 2023 0:32:29 GMT
The way the 30-day SEC yield is calculated, from portfolio's bond components, not from what the fund distributes, you don't have to worry about missing the extra Dec fund distributions.
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bd1
Ensign
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Post by bd1 on Jun 12, 2023 3:51:21 GMT
Got it. Thank you.
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Post by steadyeddy on Jun 25, 2023 22:33:06 GMT
It so happens that my 403b has both multisector PIMIX and HY VWEAX, so, I watch both closely. I checked the 30-day SEC yields from the websites (M* has stale or no data) and also added some other funds for comparison: Multi PIMIX 5.45%, 5/31/23; looks low, but it could be related to its significant holdings of Treasuries and current derivative positioning (that cash shown by M* is really to support derivatives). It's a black box run by IVASCYN/MURATA. I haven't read recent Pimco Outlooks. Multi LSBDX 5.81%, 6/9/23; more aggressive multi for comparison; run by FUSS (he is cautious). Multi FADMX 5.59%, 6/8/23; a tame multi for comparison. Doesn't deviate much from % in its prospectus target sectors - no all or nothing stuff here. Managed by Fido managers who run their own Fido funds in the target sectors although there is a lead manager to tinker some with allocations. HY VWEAX 6.96%, 6/8/23. Looks OK for its 14.91% inv-grade (M* data). A conservatively run HY. Holding HY and whether to hold better HY (BB) or junkiest HY (CCC) is related to fund manager's guess for the US recession - estimates vary between 2023-25. Just came across this very informative post from yogibearbull. My questions are: 1. "Can we project how each of these funds might do in the event a recession materializes?" 2."If you were to hold one fund, which would it be for recessionary times?" |
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Post by yogibearbull on Jun 25, 2023 23:30:10 GMT
steadyeddy, HY and multisector bond funds are NOT for recession. Ideally one would sell or reduce them when recession is imminent - which is hard to know. Then, start buying them in the middle of recession - also hard to know.
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