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Post by FD1000 on Sept 26, 2023 13:39:16 GMT
Since early 2022, MM continue to be king. This easy, stable, no volatile category proved to be better than most categories. See attachment 1. It's not a surprise when the Fed officials have been shouting since early 2022 they are going to raise rates rapidly. Even in the last several weeks-months they are still telling us that rates will stay high for longer and may go up. 2023 has been a pretty good year for the SP500 but not for typical bonds funds. Don't fight the Fed is exactly what it means. MM continue to deliver in 2023, by the end of this month VMFXX will make 3.7% and better than treasuries VGSH(ST),VGIT...DODIX(good generic high-rated bond fund)...VWALX(Munis). See attachment 1. MM is also superior to CD/treasuries if you want to trade. Selling is easier and immediate and the yearly payout are pretty close to MM. There are several bond funds/categories that have done much better than MM with low volatility, I'm talking about, no more than 1-1.5% losses from peak to trough because these funds have much lower correlation to rates. BL funds are an easy choice. RSIIX is a good fund for most environment. see schrts.co/sBggugWJThere are better funds  Attachments:
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Post by sortatino2 on Sept 26, 2023 16:18:48 GMT
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Post by archer on Sept 27, 2023 15:09:03 GMT
There is also the ease of MM funds. I am in a much higher % of cash than normal due to selling equities. The money automatically goes to cash earning 4.98%. The buying of MM is automatic when moving out of other holdings. Of course 5% isn't much after adjusting for inflation, but compared to anything similar in volatility, it's about as good as it gets.
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Post by FD1000 on Oct 1, 2023 4:24:42 GMT
Some confuse yield with total returns.
You should pay attention to both. There are thousands of funds, but all you need is a few exceptions...and RPHIX is one them.
This fund is maybe the only fund close to a cash "sub", I have seen in years, and it was tested in the last several years.
YTD: VMFXX made 3.7% with no risk/SD...RPHIX made 4%..pretty close and not worth it.
But, when rates drop, and they will, RPHIX will make more, and it can be significant more...in bondland term it means 2+% more per year..
As with everything, bondland had several excellent bond OEFs opportunities in the last several months. These funds made 2-3 times more than RPHIX and didn't lose more than -0.2% from any peak in these several months. These funds had higher SD before but not in the last several months and that's the key.
All I know, there is a good chance, these low volatility, high yield (much higher than MM/CD/Treasuries) bond funds will finish 2023 with a double digit return.
...and I'm not talking only about bank loans.
It gets better, several months ago when I called one of the funds, the fund manager answered the call and we had a 20+ minutes discussion about the portfolio, categories and his assessment of the bond market. I still waited, the chart proved his narrative and I invested a big % in this fund. I also have been getting a monthly report what he has done and all the other good stuff. This is what I call a great service.
But, I don't cut a slack to any manager. If I see a 0.5% loss, I will first sell and ask questions later.
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Post by yakers on Oct 1, 2023 14:59:58 GMT
FD,
Do you have a bond fund (open or CEF) that you would buy & hold as a mail fixed income asset in a portfolio that would not require much oversight? Replacing something like BND or all purpose intermediate fund.
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Post by FD1000 on Oct 1, 2023 16:10:46 GMT
FD, Do you have a bond fund (open or CEF) that you would buy & hold as a mail fixed income asset in a portfolio that would not require much oversight? Replacing something like BND or all purpose intermediate fund. The best choices have been in trading. In the past, in 2010-2018, there were good choices, such as PIMIX, but the door is closed LT hold have done poorly in the last 5 years. Most made 2% annually and below. What does B&H mean? 3,5,10 years.
Below are several options for 3 years, no guarantees and without knowing the future. The more funds you own, the lower performance you will likely make.Higher-rated bonds: PMUBX Multi sector: RCTIX Good luck. |
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Post by Mustang on Oct 1, 2023 19:15:57 GMT
In the past when bond total returns were bad some advisors recommended Vanguard Wellesley Income as an alternative. I was already leaning that way because of its good performance throughout the Great Recession. But it hasn't had a good year. YTD return is basically zero. My portfolio of balanced funds (mostly moderate-allocation) is making around 4%. Barely more than Money Market. Since I'm a buy and hold investor I'm not really worried about it. It will recover. Using dollar-cost-averaging I'm still buying a little each month.
If rates go up bonds will take another hit. But eventually rates will start going down. Bonds will probably have a yield of 8-9% and bond values will rise. Wellesley Income will look good then. I'm OK with that happening 3-5 years from now.
Long-term or short-term really depends on when you intend to sell. If you intend to make withdrawals in 3 years then that is your objective. It doesn't matter if some think it long term or others think its short term. You don't want your investment to be down when you sell. For me 3 & 5 years is mid-term. (At least I hope my wife will not be making withdrawals sooner.) 10 years is long term and I hope she will be making withdrawals another 10-20 years after that. Opinions differ but long-term for me is longer than five years. Its 10 years and beyond. |
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Post by FD1000 on Oct 1, 2023 22:33:44 GMT
In the past when bond total returns were bad some advisors recommended Vanguard Wellesley Income as an alternative. I was already leaning that way because of its good performance throughout the Great Recession. But it hasn't had a good year. YTD return is basically zero. My portfolio of balanced funds (mostly moderate-allocation) is making around 4%. Barely more than Money Market. Since I'm a buy and hold investor I'm not really worried about it. It will recover. Using dollar-cost-averaging I'm still buying a little each month.
If rates go up bonds will take another hit. But eventually rates will start going down. Bonds will probably have a yield of 8-9% and bond values will rise. Wellesley Income will look good then. I'm OK with that happening 3-5 years from now.
Long-term or short-term really depends on when you intend to sell. If you intend to make withdrawals in 3 years then that is your objective. It doesn't matter if some think it long term or others think its short term. You don't want your investment to be down when you sell. For me 3 & 5 years is mid-term. (At least I hope my wife will not be making withdrawals sooner.) 10 years is long term and I hope she will be making withdrawals another 10-20 years after that. Opinions differ but long-term for me is longer than five years. Its 10 years and beyond. Wellesley has been one of the best conser allocation funds...but never for me. Over 20 years ago I recommended it to a relative. See ( fd1000.freeforums.net/thread/11/simple-case-when-retirement). 10+ years ago I started learning about bonds and especially bond funds and realized that I should learn a lot more about bonds because stocks are easier. The SP500 beats most funds when you look at 15-20 years. Bonds is where a good manager, or paying attention to markets can make you a lot more. My first bond fund was PIMIX, it opened my eyes to the possibilities of good bond management. In my world absolute performance mean a lot, it's not enough to beat an index. Example-1: In the last 3 years, total performance was(schrts.co/cVzHgpdE): BND (US bond index) lost 14.9%...VCIT(This is what W owns) lost -13.1%...VWIAX made 3.5% total = about 1.1% per year...VWENX (Wellington) made 15.75 = 4.5 times more. This is a huge difference for having just 25% more stocks. Example-2: The Fed officials have been screaming since early 2022 they are going to raise rates. Of course they did. Inflation went over 10% and the Fed fund was close to zero. Question 1: What would happen when rates go up? bonds meltdown. So why investors did nothing? I don't know. Sometimes it is very clear what would happen and why bond crashed in 2022. Question2: if rates go up, which bond category does better than most? Bank loans, another known fact. What happened in 2023? typical bonds did bad but bank loans did about 9-10%( schrts.co/ygNmxscH). Buy and hold is great for most, I have specific instructions what 3-4 funds my wife should buy if I'm gone and Wellesley is one of them. Wait, I have been teaching her how to do better with bond funds, and she is getting pretty good at that. Quote: "Bonds will probably have a yield of 8-9%"...BND(US bond index) 12 months yield=3% and Sec yield(the future)=4.8%... chances it will be at 8% are very low.Lastly, the difference within 3 years between Wellington to Wellesley is 12.25% (15.75-3.5). How long it would Wellesley you to get it back? Many years and that's the problem. |
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Post by Mustang on Oct 2, 2023 18:29:58 GMT
I admit I have had mixed feelings about Vanguard Wellesley over the years. Young investors who are still accumulation their portfolios shouldn't buy it. Like you said the S&P 500 does better. But is is also more volatile. A retiree who needs to buy food and pay the rent should not be forced to withdrawal when the market is down. I usually look at 2008 performance as an example: S&P 500 down 35%, VWIAX down 9.8%. This is why retirees own the fund. It's why it is in my portfolio for my wife. I assume its pretty much the same for you since you have recommended it to a friend and have it there for your wife. What you have said is true. Question 1: Yes. That is what happens when rates go up. Bonds trade at a discount. But the opposite is also true. When rates go down they trade at a premium. And, interest rates are not going to go up forever. They will come back down. Question 2: I'm not sure I'd bet on bank loans right now. Corporate loan defaults are jeopardizing the regional banks and as consumers run out of savings and max out their credit cards there will be a big increase in defaults. Note: Average student loan payment is somewhere around $400. They now have to start making payments. Consumers are spending every penny they get and then some. Where are they going to get the money to repay these loans? The difference between Wellington and Wellesley is why I have both. The differences though are more than just having a different allocation of bonds. Wellington invests in a blend of stocks both growth and value. As an income fund Wellesley is predominately value. Growth stock have been good lately.
And, yes, I probably over estimated bond rates. But it may be closer than many people think. Inflation is not over. Worker strikes, both current and expected, give every indication that we will see spiraling inflation. If so the Fed will continue to raise rates. Maybe not this year but possibly next. JPMorgan CEO Jamie Dimon suggested 7%. A risk premium should put corporate bonds close to 8%.
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Post by FD1000 on Oct 6, 2023 14:10:37 GMT
MM still looks good. |
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Post by Broozer on Oct 11, 2023 4:17:25 GMT
MM still looks good. Sometime within the past year I've been keeping less in my bank checking account and more in my Schwab MM, now paying 5.2+%. None of this is considered as part of my investment portfolio, it's for daily living and bill paying, but I'm keeping more in there than is really necessary.
And as of about a month ago, Schwab's MM makes up about 20% of my portfolio, replacing a bond ETF.
So far, so good.
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Post by FD1000 on Oct 17, 2023 8:12:39 GMT
SNAXX(Schwab MM, min 1 mil)pays now 5.4%. Easy, no need to trade and rollover...and ready to trade any time.
My MM position is under 1% for about 5-6 months with only one trade since I can find excellent bond OEFs.
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mani
Lieutenant
Posts: 56
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Post by mani on Oct 17, 2023 17:09:09 GMT
SNAXX(Schwab MM, min 1 mil)pays now 5.4%. Easy, no need to trade and rollover...and ready to trade any time. My MM position is under 1% for about 5-6 months with only one trade since I can find excellent bond OEFs. What OEF do you prefer instead of MM? I have almost 10% of pf in Schwab MM. Seems like easy, near no risk money. |
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Post by FD1000 on Oct 17, 2023 17:42:02 GMT
SNAXX(Schwab MM, min 1 mil)pays now 5.4%. Easy, no need to trade and rollover...and ready to trade any time. My MM position is under 1% for about 5-6 months with only one trade since I can find excellent bond OEFs. What OEF do you prefer instead of MM? I have almost 10% of pf in Schwab MM. Seems like easy, near no risk money. Unfortunately, I don't post specifics anymore, but I can report that in 2023 I only owned bond OEFs and I already made double digits with a very low volatility.🤑 The following is another interesting info...high rated bond funds are entering their third year of losing money. VBTLX=tot US bond index + DODIX=good flexible bond funds are just an example of funds that lost money in 2021,2 and this year while the much riskier bank loans made a lot more. schrts.co/BFXNmJTc |
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Post by FD1000 on Nov 4, 2023 3:46:30 GMT
In one week things change. I have been posting about RPHIX as the best "sub" cash. This week is was up 0.35% and passed all MM. In my bond world, all I need is 1-2 good funds. When rates stabilized, and they probably did, or go down, MM rates will go down and this fund has a good chance to do better than MM. I don't use this fund because MM is the best option for a trader. Attachments:
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