A Portfolio That Continues To Be A Work In Progress ... Changes In Fixed Income & Hybrid Income Area

Old_Skeet

Hello,

A couple weeks ago I listed my portfolio's holdings. I thought I'd keep those that might have an interest in what Skeeter might be up to ... well ... "updated."

This past week I conducted a review of both my fixed and hybrid income funds. I did this as I felt this would be a good time to visit this area since equities have had since a strong upward run in January putting many fixed income funds under stress.

With this, in the fixed income area I sold STIAX due to my concern with its possible ability to front a rising interest rate environment. I reclassified and moved NEFZX from the hybrid income area to the fixed income area. I then made an opening purchase in NWQAX, a flexible income fund that seeks out yield to replace the open space left in the hybrid income area.

I have linked the fact sheet on NWQAX for those that might be interested.

http://www.nuveen.com/Home/Documents/Default.aspx?fileId=57457

I have now placed NEFRX on my watch list since it is the only income fund that I presently have showing negative returns thus far this year. I am looking at NAMFX or NARAX for its replacement along with possibly LBNDX. I plan to continue to watch NEFRX and if it continues to underperform … I’ll most likely will remove and replace it with another fund, yet to be determined, in the near future.

My income funds are listed below.

Income Fixed: LIGRX, LALDX, NEFRX, NEFZX, THIFX and TPINX

Income Hybrid: CAPAX, FKINX, ISFAX, PASAX, PGBAX and NWQAX

Next week I’ll be doing a review of the growth area of my portfolio.

Stay tuned … have a good weekend ... and, Good Investing.

Skeeter

MikeM

Thanks for the update Skeeter. Curious; how do you qualify if a fund belongs in your income bucket or hybrid income bucket? A fund like PGBAX I can see being in a hybrid or allocation bucket, and the others too. But a fund like NEFZX has only 59% (according to M*) in bonds but is in your fixed income bucket. Just wondering how you classify buckets.

Jim0445

Until today, I've only been an interested reader of posts here. My first post is to ask what readers here think of so-called Stable value funds offered in 457 plans. At age 67, I'm trying to move my equity ratio down to 50% and have been buying good Intermediate term funds, generally with durations of 4 years or less such as DBLTX, DODIX, MWTRX, TGBAX and VFIJX (in English, Doubleline TotRet, Dodge & Cox Income, Metro West TotRet, Templeton Global Bond and Vanguard GNMA). I don't plan to begin taking distributions other than the RMDs (age 70.5 yrs). With the prospect of rising interest rates (not certainty) and declining net asset values, I'm thinking of selling approximately half of these bond positions and moving the money into my Stable Value fund offering a yield of approximately 2.6% but with a history of stable value. I say "half," because I realize that no one knows where interest rates are going for sure. What are your thoughts? Thanks.

Derf

Reply to @Jim0445: one other piece of information might be of use. What is your equity-bond ratio at this time. fwiw , dollar cost average into your 50 - 50 ratio.
have a good weekend, Derf

Jim0445

Reply to @Derf: Thanks. My equity-bond ratio is approximately 60-40 but gradually moving toward 50-50 by exchanging equity funds inside taxdeferred accounts into bond funds. (Most of my equity funds are held in taxable accounts - mostly in index funds.)

hank

Thanks Skeet. Nice review. Not familiar with these funds - being largely at TRP. However, my stake in DODIX has risen in past several months. I ripped my allocation model apart pretty good last week also. Net-net is a slightly more conservative stance - owing partially to valuations, but more to age & circumstance.

Without knowing your funds, my take is you're now in a more conservative stance. ... Hey - It's as if 08-09 never happened. Happy days are here again. . Banks are healing. Home prices rising. Dow & S&P close to pre-crash levels. NASDQ well above. Retail Joe's back in equities. (What's to worry:-)? Take care.

fundalarm

Skeeter, i noticed many of your funds are A share classes that cary a front load. Are you buying them without load?

fundalarm

Reply to @Jim0445: you might want to start a new discusson on this and leave this one for skeeter and his responses. i would respond in a separate threat.

Old_Skeet

Hi MikeM,

Thanks for the question.

I now know who’s been looking under the hood, so to speak. Caught me with a 427 in a car badge 327.

http://www.cars-on-line.com/61495.html

I have to agree, that form my first thoughts it fits more the profile of a hybrid fund than fixed income. Generally, for it to be a true fixed income fund it would have to have at least 80% of its holdings in bonds, and/or a combination of bonds and cash for it to be in the fixed income community. However, I made an exception to this rule and placed it in the income area and here is why. I wanted the fixed income group as a whole to have some representation with some mixed assets. So by combing it with the other fixed income funds in the group, the group as a whole Xrays … Cash 18%, US Stocks 3%, Foreign Stocks 1%, Bonds 72%, Other Assets 3% and Not Classified 4%. Certaintly, seeing the large position of cash being held by this group of funds speaks volumes about the investment climate, form my thoughts, as cash is usually used as a stablizer or a medium of exchange.

So Mike, I found flexibility and moved it to fixed income so the group as a whole could gain some representation beyond just mostly bonds and cash type assets.

Not saying what I did was “truly” right … But, it is what I did … And, I have now provided my reasoning in doing this.

Thanks again for your question and as always your comments and questions are always welcome.

Skeeter

Old_Skeet

Hi Hank,

The more conservative way would have been to have kept STIAX. As I responded to MikeM, I moved a more aggressive fund, NEFZX, to the fixed income area and booted STIAX. I did this because I felt the fixed income group needed some exposure to assets besides the usual cash and bonds found in most fixed income funds. The move is some what out of character by my definition of a fixed income fund having at least 80% of its assets in bonds and/or bonds and cash holdings. I did this because I felt adding NEFZX would help the group as a whole weather the anticipated upcoming interest rate headwinds.

Time will tell if this was a prudent move.

Skeeter

Old_Skeet

Hi fundalarm,

I currently have four accounts. A taxable account, a self directed IRA account, a 401k account consisting of a deferred comp side and a profit sharing side and a health savings account.

Although I may own the same fund in more than one of the accounts they are usually of different share classes. With this and to keep things simple for Skeeter, I list and track all of them under the A share umbrella weather they are or not. Some A share funds I currently owned were purchased many, many years ago and passed to me by both gift and inheritance. In my tax deferred accounts they may have been purchased through a commission type structure and were commissionable and some were of the non commissionable type share classes.

So it is a hodge podgy type thing.

Skeeter

hank

Reply to @Skeeter: Thanks for the extra help - got it. (-:

Investor

Reply to @Skeeter: If you are going to make such justifications you can drop a pure equity fund in your fixed income group and if the proportion is small enough it would produce similar X-ray. I think you are making a superficial classification.

Having said that I think you should be looking at your total portfolio instead of pieces of bits like this.

Mark

Reply to @Investor: concur