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Post by Chahta on Jun 21, 2021 15:55:34 GMT
I read somewhere that VWEAX is buying junkier stuff these days to boost yield. That PIMIX TR quoted above is not even for 1/2 a year yet. Not that bad for a partial B&H in bondland. It’s a tough time for bonds other than HY munis it seems.
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Post by retiredat48 on Jun 21, 2021 18:35:54 GMT
retiredat48 What's your opinion about VWEAX? Yield is 4.47% (TTM) / 3.13% (30d SEC), with a duration of 3.8 years. While many "total bond" funds are yielding well under what a decent LV equity fund pays, VWEAX is yielding quite a bit more than you'd get from a VEIRX or SCHD..... although you could get 3.85% from SPHD. I've owned VWEAX for quite a while. It is not a popular fund — criticized for a deteriorating NAV, for a risk-adjusted return inferior to many MS funds or even Wellesley. But it hasn't done me any harm (although one might ask how much good it has done, compared to the alternatives). It provides very cheap HYB exposure. Despite the common view that HYB is closely correlated to US equity, I have noticed that on many a day when the market takes a big stumble, VWEAX manages to close flat. Anybody want to argue that I should replace it with more UST bond (and lose the yield) or HY equity (and take more equity risk)? Willing to listen. BUMP for retiredat48 . I think you missed this. I know your thoughts about IG/IT bonds, and I sold VBILX/BIV/PIGIX last year just after you dumped BCOIX, and I owe you for that good advice. However .... well, I won't repeat what is written above. Thoughts? Edit: Its 1.87% YTD return isn't anything to celebrate, but neither is PIMIX's 1.47% return, powered by the Pimco Brain Trust. From memory, it seems I answered this already?? Is there another thread on this subject? Otherwise, I will reply. R48
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Post by anitya on Jun 21, 2021 20:27:02 GMT
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Post by uncleharley on Jun 21, 2021 21:36:27 GMT
Inflation expectations have peaked for now. They could turn back up but the Fed probably wouldn't care. The latest Taper talk is that if inflation runs a little hot, that is O K. Kaplan & Bullard are saying that a faster tapering of the buying of treasuries could prolong the lower short term interest rates. They did not comment on what a faster taper may mean to intermediate or long term rates.
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galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on Jun 21, 2021 21:52:41 GMT
To me bonds are like vegetables. Good for you. I don't like either. But I eat them. And our port holds them.
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Post by yogibearbull on Jun 21, 2021 21:58:50 GMT
Inflation expectations have peaked for now. They could turn back up but the Fed probably wouldn't care. The latest Taper talk is that if inflation runs a little hot, that is O K. Kaplan & Bullard are saying that a faster tapering of the buying of treasuries could prolong the lower short term interest rates. They did not comment on what a faster taper may mean to intermediate or long term rates. 5-, 10-, 30- year market inflation-expectations from FRED. Note values over 2% and recent mid-May peak. fred.stlouisfed.org/graph/?g=CXhU
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Post by chang on Jun 22, 2021 0:54:49 GMT
BUMP for retiredat48 . I think you missed this. I know your thoughts about IG/IT bonds, and I sold VBILX/BIV/PIGIX last year just after you dumped BCOIX, and I owe you for that good advice. However .... well, I won't repeat what is written above. Thoughts? Edit: Its 1.87% YTD return isn't anything to celebrate, but neither is PIMIX's 1.47% return, powered by the Pimco Brain Trust. From memory, it seems I answered this already?? Is there another thread on this subject? Otherwise, I will reply. R48 retiredat48: No I don't believe you have (not on this thread anyway).......
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Post by chang on Jun 22, 2021 0:56:43 GMT
I read somewhere that VWEAX is buying junkier stuff these days to boost yield. That PIMIX TR quoted above is not even for 1/2 a year yet. Not that bad for a partial B&H in bondland. It’s a tough time for bonds other than HY munis it seems. There was an M* article about HY bonds getting junkier, and VWEAX was mentioned, BUT in the negatory (as Snagglepuss would say): big-bang-investors.proboards.com/thread/539/bonds-trading-dangerous-territory-lately
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Post by anitya on Jun 22, 2021 2:46:36 GMT
Inflation expectations have peaked for now. They could turn back up but the Fed probably wouldn't care. The latest Taper talk is that if inflation runs a little hot, that is O K. Kaplan & Bullard are saying that a faster tapering of the buying of treasuries could prolong the lower short term interest rates. They did not comment on what a faster taper may mean to intermediate or long term rates. 5-, 10-, 30- year market inflation-expectations from FRED. Note values over 2% and recent mid-May peak. fred.stlouisfed.org/graph/?g=CXhU Not sure you guys noticed, the link I provided takes you to BofA Global fund manager survey.
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Post by yogibearbull on Jun 22, 2021 12:29:43 GMT
anitya, yes I noted that. Inflation-expectations can be survey/opinion-based (your data) or market/measurement-based (FRED data) and both seem to agree that there was a near-term peak in May.
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Post by anitya on Jun 22, 2021 14:51:20 GMT
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Post by Chahta on Jun 22, 2021 15:42:51 GMT
That chart is amazing. But one must think it could easily go the other way with such extreme movements.
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Post by uncleharley on Jun 22, 2021 21:59:47 GMT
That chart makes me want to run and hide!
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Post by FD1000 on Jun 23, 2021 13:16:20 GMT
Fixed income is the one category I like to show that what you read in most articles/opinions isn't all true. If you ask me what funds you like to own for another 20+ years without the ability to sell, I would say Vanguard index+managed bond funds BUT I would say the same about stocks too. I hardly ever owned VG funds and as long as I can find better funds I will keep up and the difference is huge if you trade successfully.
It's not a secret I own mostly bond OEFs and trade them. Using CEFs instead isn't my cup of tea. After watching them for years, their sudden much higher volatility is unpredictable. I can easily show a loss of 3-5% within 2-3 days while bonds OEFs hardly moved. This unpredictability is what I don't like. Another point, T/A indicator don't work well with bond OEFs, T/A can show that a fund is overbought for months, and it still keeps going up.
Let's look at several options/myths that were mentioned in this thread. - HY Muni: NHMAX vs VWALX. YTD 7.3% vs 3.2% the numbers speak for themselves. What happened in 03/2020? I don't care, I sold prior and bought after. BTW, Schwab lets you own Munis in IRAs while Fidelity doesn't. I have been in Munis in IRAs for years. - Rates up means your bond fund lost. YTD, rates were up, BND+VBILX lost but NHMAX made 7.3%. Being in the right funds can be huge, in this case it's over 9% difference. - Bonds are only for ballast/income, they don't grow like equities. not in my case, again look at NHMAX YTD. Or what about a retiree that has enough and doesn't want to lose ever more than 15%. Where is the solution for someone like this? I can never get an answer on this simple question. - PIMIX? I sold PIMIX in 01/2018 after I held for about 7 years and a huge % and never looked back. The huge AUM has been a huge obstacle. YTD at 1.6% is all you need to know. The funny thing is investors still load on this fund. - Trading bond funds isn't for me. Funny thing is that many posters who say it, have no problem trading stocks funds, single stocks, gold+silver, CEFs but somehow, they can't do it with bond OEFs. - Several articles about bonds, inflation and prediction. The screaming heads are yelling for months(years) about so many things and...stocks are up nicely, if you know what bond funds to own you made money in bonds too. Predictions in most cases are off by months and years. VWEAX own now junkier stuff. If you don't trust you fund managers, sell...or, maybe the fund managers think it was an opportunity. Why worry about what will happen instead of looking what has happened so far and make decision based on current markets.
Bottom line: as a retiree I need to make about 4% annually to cover expenses + inflation. Since retirement in 2018 I made more than 3 times that annually in the last 3 years, mainly in bond OEFs.
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Post by Chahta on Jun 23, 2021 16:20:57 GMT
If an investor bought PIMIX (or any other fund with a good record) 10 years ago for $12 and has collected 5% (4% now) all along, while the principal is intact today, how is that bad? I realize PIMIX is not a trading type of OEF.
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Post by Chahta on Jun 23, 2021 18:53:54 GMT
The answer to an investor that does not want to lose more than 15%? The answer is "do not sell." Buy quality funds, invest long term and hold an AA you are comfortable with and generates money to use. Why does it matter if my portfolio declines temporarily as long as I have a plan to generate money that I need to live on? It hurts to see a decline but that is investing.
But I am having a little fun buying muni funds low, selling higher, then buying again. NHMAX is on my watch list for the next cycle, maybe later this year.
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Post by rhythmmethod on Jun 23, 2021 22:30:26 GMT
If an investor bought PIMIX (or any other fund with a good record) 10 years ago for $12 and has collected 5% (4% now) all along, while the principal is intact today, how is that bad? I realize PIMIX is not a trading type of OEF. Right. On checking, my CB is $10.68. That's not including several K where I used the dividends to purchase equities, also sold some to lock in in gains and purchase even more equities. All this is to say, holdings people have don't live in a vacuum. When someone bot has a lot to do with how it functions. PIMIX has been good to me and would cost me a lot in taxes to sell. I don't have a strong opinion of what would be better. For a good amount of my FI, it's "good 'nuff". Equities are where the action is IMO. Devoting all one's intellectual resources to FI is like studying a lot to get a C.
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Post by Chahta on Jun 23, 2021 22:41:37 GMT
Holy CB, Batman. If had a CB that low I would be ecstatic. But you better believe I will buy more in the low 11s.
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Post by jongaltiii on Jun 24, 2021 14:19:04 GMT
My CB on PONAX is $8.47 and I am happy about that. However, that won't influence my decision to sell it or trade for a better fund. At present, I'm not convinced of the positive or negative future of this funds performance. Do you all have an opinion on its future performance?
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Post by Chahta on Jun 24, 2021 15:40:39 GMT
All we can go on is the past but PIMIX makes the yield a priority. I first learned of this fund 4 years ago, when I first started learning about bond funds. I was 100% equities until 65 years old and got serious about setting up retirement. I am envious of a CB that low. I don't see how you could ever lose. It is similar to owning SPY at a CB equivalent to S&P of 2000. Of course it is up to you to sell or not but if you are in retirement I could see that as a very long term holding as long as the yield is well above inflation. One holding should not have the chance to ruin your portfolio on it's own unless you want to be trading. I will leave TR for my equities but bonds need to supply yield for me.
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Post by retiredat48 on Jun 24, 2021 18:11:45 GMT
All we can go on is the past but PIMIX makes the yield a priority. I first learned of this fund 4 years ago, when I first started learning about bond funds. I was 100% equities until 65 years old and got serious about setting up retirement. I am envious of a CB that low. I don't see how you could ever lose. It is similar to owning SPY at a CB equivalent to S&P of 2000. Of course it is up to you to sell or not but if you are in retirement I could see that as a very long term holding as long as the yield is well above inflation. One holding should not have the chance to ruin your portfolio on it's own unless you want to be trading. I will leave TR for my equities but bonds need to supply yield for me. What does cost basis have to do with anything an investors owns, today? Each investment or asset you own, needs to be assessed continuously as to its worth and meaning to ones portfolio of holdings...TODAY. Cost basis irrelevant, but yes plays a role for tax purposes if you sell in taxable accounts. The cost basis of VWELX Wellington Fund, which I have owned since 1953, is irrelevant to whether to continue to hold. Like, does it matter if my cost basis is two, or three, pennies a share? But tax handcuffs can occur if in taxable accounts. R48
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Post by rhythmmethod on Jun 24, 2021 22:11:38 GMT
All we can go on is the past but PIMIX makes the yield a priority. I first learned of this fund 4 years ago, when I first started learning about bond funds. I was 100% equities until 65 years old and got serious about setting up retirement. I am envious of a CB that low. I don't see how you could ever lose. It is similar to owning SPY at a CB equivalent to S&P of 2000. Of course it is up to you to sell or not but if you are in retirement I could see that as a very long term holding as long as the yield is well above inflation. One holding should not have the chance to ruin your portfolio on it's own unless you want to be trading. I will leave TR for my equities but bonds need to supply yield for me. What does cost basis have to do with anything an investors owns, today? Each investment or asset you own, needs to be assessed continuously as to its worth and meaning to ones portfolio of holdings...TODAY. Cost basis irrelevant, but yes plays a role for tax purposes if you sell in taxable accounts. The cost basis of VWELX Wellington Fund, which I have owned since 1953, is irrelevant to whether to continue to hold. Like, does it matter if my cost basis is two, or three, pennies a share? But tax handcuffs can occur if in taxable accounts. R48 I'm just a simpleton but CB on a product that pays 4%, is relatively safe, fits my asset allocation and has appreciated 13+% in 16 months is a good reason to hold. Also, tax handcuffs and a lack of a better place, IMO, to reinvest it make it a worthwhile hold currently. The future may change of course. So far it's working for me. Could I or someone do better?..sure, but the same could be said for every area of my life ;-)
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Post by chang on Jun 26, 2021 0:01:08 GMT
BUMP for retiredat48 . I think you missed this. I know your thoughts about IG/IT bonds, and I sold VBILX/BIV/PIGIX last year just after you dumped BCOIX, and I owe you for that good advice. However .... well, I won't repeat what is written above. Thoughts? Edit: Its 1.87% YTD return isn't anything to celebrate, but neither is PIMIX's 1.47% return, powered by the Pimco Brain Trust. Obviously not R48. It seems to me like you have adapted your bond positions to one of a well managed proportion of FI to equity. If you are still holding VWIAX, VGWAX you are getting some trad. Int term corp. FI (if you believe the auto balancing adds value as I do) that is well placed. You've already moved your previous Int. term to ultra short and added VWEAX. I'm choosing just to let PIMIX make those decisions for me. That's not a better choice just my take. I think your reasoning is sound based on your preferences and outlook. I had a great run with VWEAX but am no longer holding it. JMO. Indeed, I have "traditional" exposure to bonds through VGWAX and VWIAX, and a chunk of DODIX [which went XD today, in case anyone is wondering why it dropped]. My big 2020 sells were VBILX/BIV and PIGIX. It may be that I am sacrificing some income, but I have generous slugs of municipal bonds, which generate [tax free] income and have been enjoying rising NAVs. So I'm not exactly a bondophobe. My only requirement is that my bond funds be "sleep-easy" and hands off. Considered differently, it removes the distraction of worrying about MS bond funds, so I can focus whatever time I have for investing on equities. I know there are those who spend 48 hours a day thinking about bond funds, which is a testament to the depth and complexity of bonds. But that's not where the real money is made. Sure, a low-risk, low-reward strategy can be formulated around bonds, although the ratio of time devoted/reward reaped might arguably be excessive. Moreover, those who play in bond-land but aspire to greater reward often end up fooling around with dynamite (IOFIX, SSEMX...), and there goes your "low risk" strategy out the window. I'm curious what was your thinking at the time you sold VWEAX? That would be interesting for me to consider. I won't argue with PIMIX's record, but it's got several strikes against it, and would not be a "sleep easy" fund for me.
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Post by rhythmmethod on Jun 26, 2021 2:44:44 GMT
Obviously not R48. It seems to me like you have adapted your bond positions to one of a well managed proportion of FI to equity. If you are still holding VWIAX, VGWAX you are getting some trad. Int term corp. FI (if you believe the auto balancing adds value as I do) that is well placed. You've already moved your previous Int. term to ultra short and added VWEAX. I'm choosing just to let PIMIX make those decisions for me. That's not a better choice just my take. I think your reasoning is sound based on your preferences and outlook. I had a great run with VWEAX but am no longer holding it. JMO. I'm curious what was your thinking at the time you sold VWEAX? That would be interesting for me to consider. I won't argue with PIMIX's record, but it's got several strikes against it, and would not be a "sleep easy" fund for me. In a word, "panic". It was very inelegant actually. When the poop hit the fan, it coincided with all my work being canceled. Little would I have imagined that I'd get busier than ever and risk would climb the proverbial stairway to heaven. So, I sold, thinking it was higher risk than I wanted. It was a few weeks later, still not knowing what to do, I threw a very big chunk of change at PIMIX. Kind of a shoulder shrugging Hail Mary pass. As it turned out it was okay, quite good for a FI move. So, I'd like to say that a chart or some intellectual inspiration that I could define as the reason. I suspect there are a lot of investments made from a gut reaction and that was mine. Regarding PIMIX, I know it's a black box but that and higher quality PTIAX in combo with my multi-asset/ balanced group are okay for me. The net result is that it allows me to focus on equities. So in that regard, it functions the same as your choices, which are also good. I remember more than once capecod saying PIMIX was "good enough" for his OEF FI. Still shrugging shoulders kind of.
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Post by chang on Jun 26, 2021 5:17:46 GMT
Thanks RM. When I compare PIMIX and VWEAX over 1-3-5 years they actually appear to move in quasi-lockstep, except the VG fund is more volatile. Almost as if VWEAX is a mildly leveraged version of PIMIX. But VWEAX is a cheap date at 0.13%; whereas PIMIX (not exactly a petite beauty at $140 billion) needs 1.09% to party with. (And PONAX 1.49%!) Pimco either makes up that ~1% difference with dazzling managerial brilliance, or more risk … or both … or neither, since its 3-5 year average annual return trails VWEAX by about 1%. Edit: VWEAX has actually proven well superior to DODIX, if you ignore the March 2020 crash. See the 1-3-5 year charts below.
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Post by rhythmmethod on Jun 26, 2021 13:44:44 GMT
Yep. chang, VWEAX has proven to be a the better performer. Also the pretty country girl happy with a beer and movie while PIMIX is a chubby spoiled girl that still needs to be wined and dined! Perhaps a better metric of measurement is the net result of DODIX and VWEAX vs. PIMIX and to lesser degree PTIAX. I have some pretty serious handcuffs on PIMIX. I’ve trimmed it in IRAs I was holding it in for more balanced funds. I use the dividends to purchase equities or feed the cash account, 🤷🏼♂️
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Post by anitya on Jun 27, 2021 7:05:59 GMT
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Post by Chahta on Jun 27, 2021 11:32:17 GMT
Using Backtest Portfolio to compare VWEAX, PIMIX and PTIAX as long term holds shows that VWEAX is last in most categories for 1-10 years. I would not consider DODIX since the yield is low. The assumption that HY has the closest correlation to equities is true. My earlier statements about holding PIMIX and PTIAX because the NAV always recovers (in the past of course) is true about VWEAX as well. It is obvious that Vanguard doesn't work as hard to earn 4% yield due to the lowest ER and turnover. I would not hold any of them more than 10-15%.
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Post by chang on Jun 27, 2021 11:53:26 GMT
Sometimes long (10-15 year) returns have value, but I tend to ignore more than 3-5 years when it comes to bonds.
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Post by rhythmmethod on Jun 27, 2021 13:10:06 GMT
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