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Post by chang on Oct 6, 2023 15:28:50 GMT
Fearchar ,Very simple. My last 3M T-bill just matured. I have two choices: 1. Reinvest in the next 3M T-bill maturing 1/11/24 with expected yield 5.461%2. Add to existing position in RPHIX with 30D SEC yield 5.42% www.schwab.com/research/mutual-funds/quotes/summary/rphix fundresearch.fidelity.com/mutual-funds/summary/76882K702Of course, I think the composite 3M yield in RPHIX with reinvestment of monthly disties will be higher than 5.42%. Note that investing the required amount (>$200K) from Fido either requires a $49.995 TF Fee, or three separate $5 fees over three days using AIP. I'm thinking to just buy the T-bill and check how things look in 3 months. Thoughts? EDIT: I have another 3M T-bill maturing on 10/12 at Vanguard. Different decision, because I hold RPHIX at Fido, not Vanguard. Will probably roll that one over, maybe toy with a longer duration if the yield is higher. Right now the 3M yield is still tops.
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Post by racqueteer on Oct 6, 2023 16:13:24 GMT
Why not USFR until rates actually fall? Then, maybe longer-dated T-bills?
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Post by yogibearbull on Oct 6, 2023 16:17:28 GMT
I recently rolled 3m into USFR (floating-rate Treasury Note ETF). These FRNs pay 3m yield (reset weekly, so little duration) PLUS a spread MINUS the ETF ER (15 bps). They have the highest credit quality and T+2 liquidity (Edited). Before, I was rolling 3m into 6m.
RPHIX is ST-HY with a magical touch. That could be fine too for a portion.
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Post by Fearchar on Oct 6, 2023 16:40:43 GMT
On the outside chance that the past may be useful to review, I compared RPHIX, USFR and RCTIX using an robust efficient frontier analysis. Historically, USFR has ultra low volatility, but so have been the returns. RPHIX provided significantly higher returns for nearly the same risk. RCTIX much higher returns, but much more risk too.  Of course, the current yield on risk free 3M TBills put all of the above to shame. |
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Post by yogibearbull on Oct 6, 2023 16:55:21 GMT
Fearchar, it's useless to look at FRNs during the time of ZIRP. The FRNs have been attractive since mid-2022 when the Fed started raising rates. Think of FRNs as 3m on weekly roll.
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Post by Fearchar on Oct 6, 2023 17:39:12 GMT
Your are correct yogibearbull, Thank-you. Need 3 years for Efficient Frontier analysis, so no point in using that tool for USFR. The spread is rather small, however, you'll be giving up the 0.15% ER for what impresses me as convenience because it's so easy to buy and trade T-Bills. Between E*Trade as of 8/31 and M* as of 10/5, it appears they only own 4 T-Bills!   |
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Post by chang on Oct 6, 2023 17:47:54 GMT
Why not USFR until rates actually fall? Then, maybe longer-dated T-bills? Never heard of it, actually. But 5.40% 30D SEC yield seems competitive. I guess they are doing something to make up that 0.15% ER. But I don't see a big difference. Fortunately buying T-bills is very easy. |
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Post by anitya on Oct 6, 2023 19:32:13 GMT
I recently rolled 3m into USFR (floating-rate Treasury Note ETF). These FRNs pay 3m yield (reset weekly, so little duration) PLUS a spread MINUS the ETF ER (15 bps). They have the highest credit quality and T+1 liquidity. Before, I was rolling 3m into 6m. RPHIX is ST-HY with a magical touch. That could be fine too for a portion. USFR is an ETF - should not it be T+2? |
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Post by racqueteer on Oct 6, 2023 19:32:34 GMT
Why not USFR until rates actually fall? Then, maybe longer-dated T-bills? Never heard of it, actually. But 5.40% 30D SEC yield seems competitive. I guess they are doing something to make up that 0.15% ER. But I don't see a big difference. Fortunately buying T-bills is very easy. No real difference, I suppose, but I feel a little locked in by the term. Since I have no way of knowing when rates will drop (though probably not for a long time), this leaves the options open, and I have a quick source of money if I want to go to more equity (I can use the money immediately at Schwab despite the settlement period). I like having easy options available. Not sure if there's any tax advantage in picking when you'll cash in, but, if so, that might be an advantage as well. Yogi can no doubt speak better to that point. |
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Post by anitya on Oct 6, 2023 19:44:38 GMT
Why not USFR until rates actually fall? Then, maybe longer-dated T-bills? Never heard of it, actually. But 5.40% 30D SEC yield seems competitive. I guess they are doing something to make up that 0.15% ER. But I don't see a big difference. Fortunately buying T-bills is very easy. Many times mentioned in the forum, including in a post directly addressed to you! |
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Post by yogibearbull on Oct 6, 2023 19:53:03 GMT
anitya , yes, fixed to T+2 liquidity. racqueteer , ETF USFR has full liquidity. As we approach better seasonality soon (Nov 1 - Apr 30), and both stock and bond markets are generally selling off, I want to be ready to buy a few things. The 3m or 6m T-Bills would mean using margin in the interim. So, my choices for maturing Treasuries now are USFR or ICSH or m-mkt funds, and I am going with USFR. And USFR offers the same state/local tax exemption that T-Bills offer. I am wary of magic funds like ST-HY RPHIX (it's junk after all) for MY safe money. These are general ideas for posters to look at. Some here don't ever buy T-Bills, and some only buy T-Bills. I go with the flow.
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Post by racqueteer on Oct 6, 2023 20:30:22 GMT
racqueteer , And USFR offers the same state/local tax exemption that T-Bills offer. The question I was raising has to do with the fact that at least some of my USFR is in taxable. When you sell an asset, the gain becomes taxable. My question was in whether that taxability applies to the gain in value of the asset even before you sell it. Are the 'gains' generated within the fund Federally taxable even tough you haven't sold? Not clear on that point; it's never come up for me previously. |
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Post by chang on Oct 6, 2023 21:22:13 GMT
Never heard of it, actually. But 5.40% 30D SEC yield seems competitive. I guess they are doing something to make up that 0.15% ER. But I don't see a big difference. Fortunately buying T-bills is very easy. Many times mentioned in the forum, including in a post directly addressed to you! I've been busy. I have not been this inactive with my investments for a long time. Fortunately I down own anything too bizarre. |
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Post by chang on Oct 6, 2023 21:25:26 GMT
I am wary of magic funds like ST-HY RPHIX (it's junk after all) for MY safe money. I know what you mean, but look at the record under one manager, particularly during the GFC, Covid, and the Great Bond Meltdown. I hid under RPHIX during the G.B.M. and was pleased with the results. As long as nothing changes with the fund, I'm OK with keeping unlimited amounts of money in it. |
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Post by anitya on Oct 7, 2023 0:47:50 GMT
racqueteer , And USFR offers the same state/local tax exemption that T-Bills offer. The question I was raising has to do with the fact that at least some of my USFR is in taxable. When you sell an asset, the gain becomes taxable. My question was in whether that taxability applies to the gain in value of the asset even before you sell it. Are the 'gains' generated within the fund Federally taxable even tough you haven't sold? Not clear on that point; it's never come up for me previously. Hi racqueteer, we discussed about this in the forum, May be in the past 1 mo. Search or go to the fund website for annual tax disclosure. May be it was in 2021, when the fund had very small distribution overall, a big chunk of that was capital gain distribution which did not / would not qualify for state tax exemption. In that this fund (and any fund) does not assure the level of state tax exemption like buying individual Treasuries. I own this fund. |
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Post by FD1000 on Oct 7, 2023 1:46:32 GMT
Is the money in a taxable account?
Does state tax matter to you since you live abroad?
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Post by chang on Oct 7, 2023 6:29:09 GMT
Is the money in a taxable account? Does state tax matter to you since you live abroad? Answers: Yes, No. |
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Post by chang on Oct 7, 2023 8:16:11 GMT
Why not USFR until rates actually fall? Then, maybe longer-dated T-bills? When rates peak and start to fall - yes, assuming the yield curve inversion reverses to a normal shape. As long as the yield curve is inverted and rates are stable or rising, I don’t see any reason to go long (sorry for repeating this so often). During all the whooping and hollering about 10Y yields > 4%, I just kept buying 3M or 6M T-bills, whichever yielded more. |
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Post by FD1000 on Oct 7, 2023 11:55:07 GMT
I would use RPHIX at Fidelity and VMFXX(VMRXX yield=5.42%) at Vanguard until rate start going down. No need to do anything more until that time. Too much effort is spent on 0.2% more annually and maybe RPHIX will surprise you to the upside. I would try calling a Fidelity rep/supervisor to waive the $49.95 fee. It's very difficult to achieve at Fidelity. USFR,VMFXX, RPHIX are very close at performance lately. schrts.co/jcFWMdFN |
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Post by Fearchar on Oct 7, 2023 13:02:09 GMT
It's possible that longer term debt may not make sense for a while.
The US Gov't is looking at a $1.7 Trillion annual deficient.
That will be financed unless spending is significantly reduced or taxes significantly increased.
Congress does not want either and struggled so much putting together just a stop gap plan that there is no longer a Speaker of the House.
Current plan runs out next month and 2024 is an election year which typically means nothing gets resolved.
So, it's entirely possible that there will be a massive surplus supply of long term debt until 2025 at the earliest.
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Post by racqueteer on Oct 7, 2023 15:59:34 GMT
I would use RPHIX at Fidelity and VMFXX(VMRXX yield=5.42%) at Vanguard until rate start going down. No need to do anything more until that time. Too much effort is spent on 0.2% more annually and maybe RPHIX will surprise you to the upside. I would try calling a Fidelity rep/supervisor to waive the $49.95 fee. It's very difficult to achieve at Fidelity. USFR,VMFXX, RPHIX are very close at performance lately. schrts.co/jcFWMdFNMore than lately. Looks like from early December 2022 until today, RPHIX and USFR have been nearly identical, but USFR less volatile. Both slightly outperforming VMFXX. |
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Post by racqueteer on Oct 7, 2023 16:06:41 GMT
It's possible that longer term debt may not make sense for a while. Wouldn't be surprised. Chang's point about the yield curve status is an additional factor. We could get a nice long, low/no-risk return here in lieu of more traditional bonds. Pair that with, say, QQQ, and you might have something viable. |
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Post by FD1000 on Oct 7, 2023 16:44:11 GMT
I would use RPHIX at Fidelity and VMFXX(VMRXX yield=5.42%) at Vanguard until rate start going down. No need to do anything more until that time. Too much effort is spent on 0.2% more annually and maybe RPHIX will surprise you to the upside. I would try calling a Fidelity rep/supervisor to waive the $49.95 fee. It's very difficult to achieve at Fidelity. USFR,VMFXX, RPHIX are very close at performance lately. schrts.co/jcFWMdFNMore than lately. Looks like from early December 2022 until today, RPHIX and USFR have been nearly identical, but USFR less volatile. Both slightly outperforming VMFXX. We are talking about small differences. Based on the stocchart, For YTD USFR is leading by 0.3%. For 6 months, only 0.2%. For 3 months tie. |
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Post by FD1000 on Oct 7, 2023 16:49:47 GMT
It's possible that longer term debt may not make sense for a while. Wouldn't be surprised. Chang's point about the yield curve status is an additional factor. We could get a nice long, low/no-risk return here in lieu of more traditional bonds. Pair that with, say, QQQ, and you might have something viable. Sounds as a good idea, concentrate on great categories. |
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Post by chang on Oct 8, 2023 16:54:09 GMT
Follow-up question. As of right now, the next 3M auction has an expected yield of 5.439%. The 6M has an expected yield of 5.432%. Essentially identical.
Until now, I have been buying whatever has the highest yield (3M, 6M, or 9M) and when it matures, rinse and repeat.
Normally I would never make short-term predictions about rate movements, but if things spiral in the Middle East and money floods into USTs, then rates will dip.
Hence, just this once, should I buy the 6M instead of the 3M?
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Post by django on Oct 8, 2023 19:19:15 GMT
Follow-up question. As of right now, the next 3M auction has an expected yield of 5.439%. The 6M has an expected yield of 5.432%. Essentially identical. Until now, I have been buying whatever has the highest yield (3M, 6M, or 9M) and when it matures, rinse and repeat. Normally I would never make short-term predictions about rate movements, but if things spiral in the Middle East and money floods into USTs, then rates will dip. Hence, just this once, should I buy the 6M instead of the 3M? I put in a big order for Monday's 3 month on Friday. I'm not changing anything. As long as the yield stays above my money market accounts, I'll be a happy camper. |
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Post by yogibearbull on Oct 8, 2023 19:38:15 GMT
django, Monday is a federal holiday, so your 3m Auction order will be filled on Tuesday (not Monday), Oct 10. Others may even enter Auction orders until early-Tuesday.
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Post by django on Oct 8, 2023 19:52:32 GMT
django, Monday is a federal holiday, so your 3m Auction order will be filled on Tuesday (not Monday), Oct 10. Others may even enter Auction orders until early-Tuesday. oh shoot. I guess that means Treasury Direct also isn't working tomorrow. TD was the last account I still have connected to Chase. I went to add my new bank this weekend, and of course, proceeded to mess up on a security question which locked my account down. |
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Post by django on Oct 10, 2023 16:48:39 GMT
Fidelity Fixed Income Analysis tool is showing my 3 month T-Bill purchase at todays auction came in at a 5.503% rate. A bit better than I expected.
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