DBLTX and DBLFX

PSA

Would the combination of these two bond funds comprise a CORE band holding? I was thinking of selling $5,000 of TGEIX in my Roth and adding $5,000 of DBLFX instead, perhaps with adding more DBLFX as I sell more of my TGEIX. DBLTX is now my only "core" bond fund in my non-retirement portfolio at Fidelity. I can "sneak in with DBLFX by only needing a minimum of $5,000 for an IRA. Comments and or suggestions would be greatly appreciated. Thanks

Paul

MaxBialystock

Both of those funds are on fire, and have short track-records, just remember. I'd say what you're trying to do by pairing them up to form a sort of core-holding in bonds makes sense; makes more sense, I think, that stashing all monies in a passive index fund which dooms you to mediocre returns from the get-go. Gundlach knows how to make money!

PSA

Thanks Max for your cogent remarks to my question. Of course, I would welcome othet comments.

Paul

catch22

Hi PSA,

My inflation adjusted 2 cents worth.

As I don't recall your other bond fund holdings at the moment; I can only note about what you asked.

DBLTX and DBLFX do not offer what I consider to be bond diversification; although both funds have very nice returns at this date. The two combined offer exposure to the mortgage and Treasury bond areas. For this reason, our house would not consider these two alone as a core holding, because of the narrow focus of the holdings.
You did not note whether the selling of TGEIX would only reduce this holding or eliminate this holding.

EM bond funds have been impacted during periods of 2011 from a stronger dollar; as the Euro Zone problems persist. However, at the very least, being invested in EM bonds offers diversification of a bond portfolio area, with perhaps a static NAV at this time; but one is being paid a decent yield while waiting for a reversal in dollar strength, which will likely happen going forward.

TGEIX indicates a recent yield of about 6.9%. Even with a NAV that is sorta stuck at this time, with a little forward and then a little backward related to the U.S. dollar strength, I look at this in the following manner.

Let us assume the NAV of the EM or any bond/equity fund is sideways or stuck for the full calendar year and in the end really never changed much for 12 months. For the EM bond fund you noted, the result would be similar to the fact that one placed $5K, $25K or $100K into a CD or any other investment you choose, and the underlying original money outlay is not expected to grow by itself (the NAV), but the real reward is the yield one is earning.

The funds you noted, are all decent choices; but by themselves for our house do not offer enough diversification in bonds. Bonds, no less than diversification in equity investments may offer support for one another if a particular sector is impacted by a special event.

Not unlike a diverse collection of equity sectors that may form a core of equity holdings in a given time frame, the same applies to bonds. Not all bond sectors react to given events in the same fashion. What could be a negative impact upon the mortgage bond area; may have a positive impact upon another bond sector; from an unforseen event.

A current prime example is the U.S. 10yr Treasury (2% yield), vs the Italian 10 yr gov't bond bond at about 7% yield. This is a hugh spread in the bond world. Where one's bond money may have been 3 months ago in either of these areas would have had very large outcome differences for one's monies.

I note all of the above jabber; as to "what if" related to mortgage bond area is greatly impacted by federal level legislation or a more serious problem in the mortgage related area that we can not forsee today.

In my opinion, one either needs to have 5 bond funds that invest in different sectors; or perhaps 2 bond funds that have total flexibility to move their/your monies wherever management feels is the best bond sectors to provide the maximum return.
These and this number of mixed bond funds then become "a core" holding of bonds; without one fund standing by itself in a narrow sector.

Take care,
Catch

Pat_F

Why don't you just use RNSIX?

PSA

Catch - Thanks for your useful comments. Actually my Roth IRA includes PETDX, TGEIX and now I just purchased $10,000 worth of DBLFX, with only a $75.00 transcation fee. I made the purchase today, selling $10,075 worth of TGEIX. So to sum it all up, I will own equal amounts of PETDX, TGEIX and DBLFX in my Roth account at Fidelity, in addition to $275,000 of DBLTX in my non-retirement Fidelity Premier Brokerage Account. All four funds I am currently reinvesting the dividends, so that when I expect to retire next year, I will take the dividend from all four funds in lieu of a pension. Despite market volitaility I should do quite nicely with the dividends. I would love to hear from David's comments about my current holdings.

Investor

I believe there is a large overlap between the two DBLFX. Late Peter Bernstein used to say: If you are happy about all of your holdings, you are not diversified enough. I do not believe holding the two bond funds you have said will provide a diversified core bond portfolio.

AndyJ

The DBL core FI fund (Dlfnx and Dblfx are the investor and inst'l share classes, respectively) is indeed a diversified, intermediate-ish bond fund - currently holding 25% agency mortgages, 22% CMOs, 19% treasuries, 18% U.S. corporates, and 11% foreign (entirely corporate at this point, as I recall). He's got considerable flexibility in the prospectus language, but of course his core competency is mortgages, so it's hard to imagine the team going to, say, 10% mortgages unless the sky is falling.

If you consider the fund to have a short track record, here's how to scope out the long term record:

* Go to M* and type in TGCFX (JG's old fund at TCW).
* From the summary/quote page for TGCFX, select the chart page.
* In the compare box, type in DBLFX or DLFNX.
* The latter line overlaid on the former gives you JG's long term track record as a core bond fund manager. You'll note that his new fund has been whacking his old one since the MetWest managers took it over.

Actually, right now, I think a bond portfolio made up of his old fund (run by TCW/MetWest) and the new Dbl fund are pretty close to the ideal combo for a minimalist U.S.-based core-(slightly) plus bond allocation (the former fund, pretty conservative; the latter, just a little adventurous).

prinx

This is a very important topic. I think many of us including myself find it very challenging in creating a core bond fund portfolio. I wish I could find a total bond fund which covers the the entire gamut but apparently the word total is misleading because no total fund is.
It would be very helpful for many of us if we could see several broad diversified bond portfolios with emphasis on simplicity and not including many different funds in the same class.
There after the MFO board members could add additional funds to the class on their own to diversify the class. For maximum benefit the help we need should be focused precise and simple. I find bonds to be much more challenging than equities. I hope David will participate in this discussion.
Burt

MikeM

PSA, I don't own it, but I would think RPSIX , tr price spectrum income, comes pretty close to what you and others are describing as a diversified core holding for bonds. It holds a diversified mix of other TRP bond funds and does the portfolio management for you. This is really a steady-eddie fund that probably isn't going to shoot the lights out but will give you good safe/conservative returns (kind of like all the TRP funds I guess). If this fund was your main "core" bond fund, you could always spice up your bond segment with other less diversified funds like the Doubleline funds. Note; RPISX does hold a small amount of equity income in the form of PRFDX.

Personally, I hold MWTRX, LSBRX and HSTRX in my fixed income bucket. Yes, I know the Hussman fund is not labeled a bond fund, but it has similar conservative volatility and steady bond-like returns.

Personally, I thought about adding DBLFX to my mix, but ultimately decided against it. My reasoning was that great returns, like the Doubleline funds are having, has to come with added risk. I already have a bond fund with that type of risk - LSBRX. The Loomis Sayles fund has proven management on it's side so I'll stick with that. And, hot funds can never stay hot forever. Heck, just a year ago the Pimco Total return fund was on everyone's star list.

I also thought about some comments on this board made by BobC and David. I can only paraphrase, but essentially Gundlach may be a good bond picker, but there is something lacking in his moral and possibly business judgement. Does it matter that he's not a nice guy? Of course not, but I'm not sure I trust him totally- that's just me.

Good luck to you.