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I am eliminating bonds from my self managed portfolio as much as I can
Obviously, I don't know what type of bond funds you have already or will eliminate. I can only offer this, as we all "see" the markets from our own knowledge and perspective.
Note: The following view/comparison does not include either narrow focused or junk bond funds; with the exception being AAA narrow focused bond funds/etf's.
SO. I had 2 phone calls from friends, about a month ago, regarding their bond funds. They're both conservative investors and don't fiddle with their holdings often and hold about an even mix of equity (SP500 type) and bonds (active managed total return bond funds). They were concerned that their bond funds had become negative for returns. This was the short period when credit markets became stuck. As we know now and what could be assumed, is that the FED moved in to unwind the log jam.
The had fully expected that these would show positive returns when the equity market was crashing. Generally speaking, this would be normal expectation; except a short period in bondland was different. However, I did express that indeed their bond funds were supportive in their portfolio, although showing a small negative return at the time.
I provided the following information (now updated through April 7) using $SPX and FTBFX (a fairly typical total return bond fund).
The $SPX and FTBFX start at Jan. 2018, as this period found 4 periods of equity "fits"; being, Feb. 8, Mar. 21, Oct. 29 and the big melt of Dec. 24, 2018.
This is the total return data from Jan. 2018 through April 7, 2020 and two other periods:
--- Jan. 2018 - April 7, 2020
$SPX = - 1.4% FTBX = + 9.9%
--- 1 year, April 7, 2019 - April 7, 2020
$SPX = - 8.1% FTBFX = + 6.2%
--- March 19, 2020.....this date, being a period + or - a few days of when bonds, including AAA where behaving badly; and when I received the phone calls. The following is the YTD returns as of March 19.
$SPX = - 25.5% FTBFX = - 5.4%
The conversation expressed that while the bonds were not + YTD; the bond fund did indeed function properly, in regards to the loss comparison with $SPX.
The above amounts to how one views an outcome and what are or were the reasons for arriving at a given monetary place.
As for today and with many U.S. bond areas; there is not likely a prior period or a future period when more support from the FED is taking place. The support crutches, for many bond areas, are in place, IMHO.
Hi @catch22. Good perspective. You are probably right. My largest bond holding coming into this... IOFAX. Obviously in retrospect not a core bond holding like FTBFX. You've given me reason to think further. I do wonder after the FED crutch is taken away though, how much of a support will even core bonds turn out to be?
Analysis at the end, after the performance. Performance......One month...YTD as of 5/29/2020
Multi PDIIX…3.1....-2.35 PUCZX…3.8…-3.7 JMUTX....4.0....-5.1 TSIIX.....3.1….-0.1 PTIAX….1.9….-0.2 Multi(high % securitized) PIMIX.....2.3….-3.4 EIXIX…..3.1….-0.4 VCFAX...2.8....-10.8 IOFIX.....6.3....-26.3 HY Munis PHMIX…..3.4.....-3.1 NHMAX....4.6.....-7.3 OPTAX.....3.2.....0.15. ORNAX….3.9…-5.25 BSNIX....2.8....3.4 GWMEX….5.0…..-3.1 (IG Munis but BBB+A rating) NVHAX…1.5…-6.2 (ST duration HY Munis-lower SD than the above) Inter Term CORe/CORE PLUS SAMFX.......0.7.....8.0 BCOIX......1.3…...4.4 SCCIX.....1.3....11.2 ANBEX……1.6....12..9 BND….......0.7…...5.7 Bank Loans/Floating rate EIFAX.......4.3.....-8.2 Uncontrain/Nontrad IISIX..........3.0....-6.3 PMZIX......1.5….-0.1 JSIAX……1.5….-0.3 HY +EM HYG.........2.95.....-4.5 PHIYX.......4.0.....-4.1 FNMIX……7.5……-6.4 Corporate PIGIX….…1.7.….0.1 VCIT……..2.7…..3.5 Preferred PFINX…...2.7……-6.0 OTHER FXAIX.…..3.8..…-5.0 (SP500) PCI………7.0... -23.7 (CEF)
Observations:
Last month was another rebound month. Several bond funds made as much money as stocks.
Multi- did great. TSIIX(multi) + EIXIX(Multi securitized continues to show the best risk/reward. JMUTX shows good momo. IOFIX shows the best momo but I can’t forget its meltdown
HY Munis had a great rebound in May. BSNIX had the best risk/reward. GWMEX had the best momo.
Inter term – did well. If you doubt about finding better funds then look at ANBEX.
Bank loans – Good rebound but still big losses YTD
Uncontrain/Nontrad-PMZIX with great risk/reward but if you want to make money look at IISIX,JSIAX.
HY+EM – Good rebound in May.
Corp – In a tough market VCIT beat PIGIX.
SP500-Just -5% for YTD. The price crossed the 200 moving average, that means to start buying if you were out.
PCI-CEF got crushed more than stocks YTD and are still behind. If markets stabilize they will make more money than stocks.
===========================
My own portfolio
As expected from a trader I go where I see momentum but still look at risk/reward. The market looks better than before and why I start taking more risks.
Early in the month, I had 3 holdings but mostly in ANBEX(core plus)+BSNIX(HY Munis) but I switched to GWMEX(HY Munis)+TSIIX(Multi) + EIXIX. I have over 50% in GWMEX, a smaller position in TSIIX, and a much smaller in EIXIX.
Stats: My portfolio made over 8% YTD.
For 3 years I made over 9% average annually with SD lower than 2 (remember, my goals were 6+% and SD lower than 3). My portfolio never lost more than 1% from any last top. So, when they tell you that bonds (I also trade stocks,CEFs) are boring with no future I keep chuckling and the unbelievers will continue to dismiss the numbers.
Thanks for sharing. Just wondering why you would commit so much to ANBEX. For two of its first three years of existence it was middling at best. This year it went crazy good, but how could you know that enough in advance to capture the gain? I also suspect you traded out expecting reversion to the mean in ANBEX, is that correct?
Thanks for sharing. Just wondering why you would commit so much to ANBEX. For two of its first three years of existence it was middling at best. This year it went crazy good, but how could you know that enough in advance to capture the gain? I also suspect you traded out expecting reversion to the mean in ANBEX, is that correct?
It's called momentum. But, as you can see from my post I no longer hold it.
Thanks, also, when you say you don't hold funds that lost more than 1%, what holding period do you use. If one of your funds lose 1% in a day do you nix it then and there?
Unlike some other commentators, I take you at your word with these results, but they are little assistance without better understanding of your methodology.
Would you mind reviewing again what parameters you monitor, the frequency and how you make your buy and sell decisions?
1) my favorite 3 bond categories. Multisector, NonTrad, HY Muni. Since 2019 I also use HY Munis in my IRA, it's unusual but I look at risk/reward, and this category given me good results. Schwab let you buy these funds in IRA (after you acknowledged it) but not Fidelity. 2) concentration, usually 3 funds but many times one fund over 50% like now. 3) all my funds must perform well, at least not losing. It's not necessary the best performance but a good risk/reward. 4) SD=volatility is very high on my list. If any bond fund I own loses more than 0.5% from the last top I start asking why. If it loses 1% from its last top I sell immediately in most cases. Did others in the same category follow? can I find a better fund? the HY Muni bonds are similar but Multi+NonTrad can be unique. IOFIX/EIXIX are different than more typical JMUTX/PUCZX multi. 5) charts+trends are my friends, they tell me much more what is going now than most articles/opinions/experts. 6) be flexible, look at markets in general. Are they "normal", crazy? special situations call for a different approach. Example1: the Fed announced they will increase rates a couple of years ago. Bank loans is usually one of the best categories. Example2: we had a meltdown last March, what funds I want to use. I found ANBEX. I haven't used the high-rated bond fund for years. 7) I'm a trader, this means I may hold weeks/months or switch earlier and it could be a huge % of my portfolio.
Looks like ANBEX responded amazingly at the end of February, beginning of March. I hold the Fidelity multi-sector bond FADMX, it did not fair well. Similar to GWMEX.
Seems to me It’s hard to get apples to apples comparisons. I hold BBN and would like to compare it to the Hy-yield munis listed but most tools wouldn’t allow me to compare an OEF to a CEF. And if they did , I’m not sure if BBNs distributions are included.
One more thought, IOFIX got waxed in March. Hope nobody here was holding it!
I use this link to bring up a growth of $10K chart for an OEF, then add whatever fund (OEF or CEF or ETF) or stock to the chart and it will show you growth of said security, assuming distributions reinvested. Used to be easy to do at Morningstar, as you pulled up an OEF’s chart, and then added tickers, but since they changed the site, you have to use a link similar to this that links to the old chart tool.
Thanks Graust! The new M-star chart is tough to deal with. I always use Stockcharts but it’s not clear to me that they include distributions. https://stockcharts.com/freecharts/perf.php?BBN,FSITX,FTBFX,GWMEX,TSIIX,ANBEX Maybe the only true way is to download the corrected data from Yahoo Finance and throw it into a spd sheet - which is a lot of work.
Thanks Graust! The new M-star chart is tough to deal with. I always use Stockcharts but it’s not clear to me that they include distributions. https://stockcharts.com/freecharts/perf.php?BBN,FSITX,FTBFX,GWMEX,TSIIX,ANBEX Maybe the only true way is to download the corrected data from Yahoo Finance and throw it into a spd sheet - which is a lot of work.
From the same source, stockchart, I think this(link) maybe be easier but only allows 5 funds. The easy part is by letting you select the period easily. You have one month and all the way using start/end dates.
The best IMO is PortfolioVis. It has many more choices and you can see SD, max draw, Sharpe, Sortino and more but allow you only 4 funds. See (link) for BBN,GWMEX,TSIIX,ANBEX for 3 years. It shows how BBN SD=12 is 2-3 times higher than the others
OK, thanks - I see that these charting tools do assume reinvested dividends. And, yes, BBN has offered some good opportunities to rebalance. I probably didn’t act on them. While it is king of the %SD, you do need to compare it to the other HY Munis: https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults
1) Abandon bonds = Rediculous idea. I have talked to many retirees and they don't want the high volatility that stocks offer 2) Delay Social Security: you can do lots of calculations based on estimates but you can't predict the future. Just start in the middle, my wife and I will start taking SS at age 65 because of the above + Medicare and taxes will be deducted from SS too. 3) immediate fixed annuities: not an easy choice. If you don't have enough you can't afford it. If you have enough you don't need it. You also can't assume treasury yield will stay lower and since I don't care about treasuries I also know funds that pay over 4%. PIMIX stills pays over 5%. 4) tax efficiency: always important.
Most of these generic articles/research hardly ever offer what to do such as 1) not all bonds are treasuries 2) there are several great mutual funds 3) most retirees can't work forever or delay their retirement and don't have enough money. I want to see more ideas.
Example1: in one month, GWMEX,ORNAX,NHMAX made over 6%. Example 2: I think that Kitces has better ideas than most. See (link) “rising equity glidepath” actually does improve retirement outcomes = start at lower % in stocks and increase gradually
Call it confirmation bias, but I generally agree with Clements. At least a couple of years ago I wondered (and posted) whether low rates coupled with interest rate risk rendered the value of bonds over cash dubious. I've written favorably about Buffett's propsed allocation, 10% short term (effectively cash), 90% equities. Though I disagreed with his singleminded focus on the S&P 500. This cash/equity approach is also essentially Evensky's 1985 two bucket strategy.
Figuring on a 4% withdrawal rate, the 10% cash could buffer a bear market taking 2.5 years to recover. Clements suggests 25% cash, or around a 6 year buffer. I might split the difference and put half of that 25% in cash, half in vanilla bonds, figuring that the bonds will do better even with modestly rising interest rates, if one waits 3 years or more.
As Clements noted, the expectation value of SS is greater if one delays taking benefits. This is especially true if one is focused on one's own lifetime and not on legacies. If one has a financial need for monthly checks before age 70, one can fill the gap with a temporary life annuity.
Which brings us to annuities. Dr. Wade Pfau says much the same thing as Clements - that the lower the current interest rates, the bigger the bargain annuities are, thanks to mortality credits. "Essentially, while the cost of funding retirement with an annuity increases as interest rates decline, the cost of funding retirement in other ways increases even faster than for the annuity. Therefore, the annuity becomes a better relative deal."
Speaking of Dr. Pfau, while he and Michael Kitces suggested seven years ago that a rising glidepath might provide a slightly higher probability of success (not running out of money over 30 years), subsequent research by Dr. David M. Blanchett showed that a traditional declining glidepath would work better in an environment with low interest rates and highly valued stocks. As it was in 2015 when he wrote his paper, and as it is now.
They had an ongoing exchange about this. Here's one part:
I re-ran the analysis that Michael and I did in our initial article, but I switched to the new capital market assumptions I use which allow for increasing bond yields over time while keeping a fixed average equity premium over bonds. ... It does indeed seem that retiring at times with particularly low bond yields, which can be expected to increase over time, may not favor rising equity glidepaths during retirement. It essentially causes the retiree to lock in low bond returns and even capital losses on a bond fund as bond yields gradually increase (on average) over time.
This is not to say that rising equity glidepaths are never a good idea. ... If interest rates were at a higher initial starting point, I’m guessing that rising glidepaths would look much better in his analysis.
Rising glidepath has a big advantage of not losing as much in the first critical years. So, even if all 3 (rising, declining, stagnant) glidepaths are similar I still prefer to start with a lower % in stocks.
Some people like posting narratives. I prefer hard numbers.
Start with $1,000, withdraw $40 (4% real, i.e. inflation adjusted) annually over 30 years. Do this with declining equity portfolios (e.g. 100% down to 0%) and with rising equity portfolios (e.g. 0% to 100%). Backtest against historical data, using rolling 30 year periods starting with 1900-1929, ending with 1980-2009.
Then look at the failure rates (portfolios that didn't last 30 years), and how much you'd wind up with at the end of the 30 year period.
Pfau and Kitces (2014) find support for RE strategies during retirement and justify their findings with the notion of sequence of returns risk. ... [I]f large negative returns occur at the beginning of the retirement period, the portfolio is far more likely to be depleted than if the same returns occurred by the end of such period...This is a plausible argument and perhaps applies to the simulations discussed in Pfau and Kitces (2014). ... However, the support for DE [declining equity] strategies found here (at least when compared to RE [rising equity] strategies) calls into question how relevant sequence of returns risk has been empirically... In other words, however plausible in theory, sequence of returns risk does not seem to have been a key determinant of portfolio failure in this broad sample.
Big advantage for rising equity? Plausible but not borne out. Nor as noted previously do Pfau's simulations bear this out under market conditions like today's.
Way too often people go with their gut, or their fears, rather than rational analysis and cold hard numbers. That's why only about 5% of people wait until age 70 to take SS, it's part of why there's an annuity puzzle.
For those who don't want to read Estrada's complete paper, there's Larry Swedroe's page about it. He concludes:
To summarize, while Estrada presents evidence favoring the use of a DE [declining equity] glide path over a rising one, and also shows that a static 60/40 allocation is preferable to an RE [rising equity] portfolio, the most prudent strategy of all is not to “set it and forget it” with any of these options.
The most prudent approach is to adapt a strategy to actual market returns and valuations.
As I said several times before I don't follow any of these but my own rules which I started years ago preparing for retirement. Since 2018 I practiced stricter rules 1) 6+% average annually 2) SD under 3 3) never lose 3% from any last top 4) complete flexibility to do whatever I want/need. I exceeded these rules by a lot.
===============
Anyway, the thread is about bond funds so let's get back to it.
Last Thursday was another pivotal day for me. VIX jumped to almost 41, stocks crashed, the risk is elevated, rated are down sharply but BND wasn't up which is what you expect from a high rated bond index. VBTLX which is equal to BND but doesn't trade was up 0.08%. When rates decrease so much I expect bond fund like VBTLX to make more than 0.08%
All the above didn't make sense to me. Maybe it is just short term. I do the usual when the markets don't make sense to me I sell. It is unusual because in most cases I'm invested at 99+%. In the last 10 years, I was out of the market just 12 weeks (only in 5 weeks I was at 95+% in cash)
Last Thursday I was at about 50% cash and Friday at 95+% in cash. HY Munis which I had close to 60% of my portfolio were on a tear in the last month and even last week. It was time for me to sell.
YTD I'm way over my goals of 6%. I can take time out and can "miss" some performance.
@FD1000 Global equity weak today (Monday, June 15) and U.S. equity market open appears to be weak. VIX trying to push above 41 again. Treasury issues happy, pre-market (Sept. contracts) 'Course, this doesn't always translate to other bond sectors; as high yield bonds may not be very happy today, nor some marginal junk corp. bonds, but..... There must be a bond area you plan to buy, eh? Keep us posted with your next entry/exit points, as to when and where; so that some here may participate, if they choose.
@FD1000 Global equity weak today (Monday, June 15) and U.S. equity market open appears to be weak. VIX trying to push above 41 again. Treasury issues happy, pre-market (Sept. contracts) 'Course, this doesn't always translate to other bond sectors; as high yield bonds may not be very happy today, nor some marginal junk corp. bonds, but..... There must be a bond area you plan to buy, eh?
Keep us posted with your next entry/exit points, as to when and where; so that some here may participate, if they choose.
@FD100 you may have told us before but how do you avoid redemption fees on some of these funds?
Congratulations on establishing your system that seems to work almost all the time. How much work does it take to evaluate incoming data daily or hourly and trade so frequently? Sounds close to a real job to me
@FD100 you may have told us before but how do you avoid redemption fees on some of these funds?
Congratulations on establishing your system that seems to work almost all the time. How much work does it take to evaluate incoming data daily or hourly and trade so frequently? Sounds close to a real job to me
I do pay commissions sometimes but I try to buy Instit shares because I have an agreement to buy them at Schwab with fees waived. Selling is always free because Instit shares don't have short term fees. Several funds have their own short term fees and why I don't buy them. Even if I pay fees they are negligible when I make thousands.
It takes me just minutes every week for my portfolio because I have all the lists I need to see momentum and looking at my preferred pre-selected funds. Example: if I want to buy HY Munis the 4 funds (NHMAX,ORNAX,OPTAX,GWMEX) are my top choices and what I have been using but I always take another look at other funds. Investing has been my passion for years. I do spend more if I post something that needs research, analysis and more.
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(link) "Stocks erased earlier losses and rose Monday, after the Federal Reserve said it would begin purchasing individual corporate bonds as part of its emerging lending program to inject liquidity into the virus-stricken economy.
Earlier in the session, the Dow was off as many as 762 points, or 3%, as investor jitters over rising coronavirus cases in key parts of the country stirred up an extension of last week’s pullback in equities."
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My main investments are bond OEFs, will see in the next several days where markets are going
Comments
You noted: Obviously, I don't know what type of bond funds you have already or will eliminate. I can only offer this, as we all "see" the markets from our own knowledge and perspective.
Note: The following view/comparison does not include either narrow focused or junk bond funds; with the exception being AAA narrow focused bond funds/etf's.
SO. I had 2 phone calls from friends, about a month ago, regarding their bond funds. They're both conservative investors and don't fiddle with their holdings often and hold about an even mix of equity (SP500 type) and bonds (active managed total return bond funds). They were concerned that their bond funds had become negative for returns. This was the short period when credit markets became stuck. As we know now and what could be assumed, is that the FED moved in to unwind the log jam.
The had fully expected that these would show positive returns when the equity market was crashing. Generally speaking, this would be normal expectation; except a short period in bondland was different. However, I did express that indeed their bond funds were supportive in their portfolio, although showing a small negative return at the time.
I provided the following information (now updated through April 7) using $SPX and FTBFX (a fairly typical total return bond fund).
The $SPX and FTBFX start at Jan. 2018, as this period found 4 periods of equity "fits"; being, Feb. 8, Mar. 21, Oct. 29 and the big melt of Dec. 24, 2018.
This is the total return data from Jan. 2018 through April 7, 2020 and two other periods:
--- Jan. 2018 - April 7, 2020
$SPX = - 1.4%
FTBX = + 9.9%
--- 1 year, April 7, 2019 - April 7, 2020
$SPX = - 8.1%
FTBFX = + 6.2%
--- March 19, 2020.....this date, being a period + or - a few days of when bonds, including AAA where behaving badly; and when I received the phone calls. The following is the YTD returns as of March 19.
$SPX = - 25.5%
FTBFX = - 5.4%
The conversation expressed that while the bonds were not + YTD; the bond fund did indeed function properly, in regards to the loss comparison with $SPX.
The above amounts to how one views an outcome and what are or were the reasons for arriving at a given monetary place.
As for today and with many U.S. bond areas; there is not likely a prior period or a future period when more support from the FED is taking place.
The support crutches, for many bond areas, are in place, IMHO.
Be well.
Catch
Performance......One month...YTD as of 5/29/2020
Multi
PDIIX…3.1....-2.35
PUCZX…3.8…-3.7
JMUTX....4.0....-5.1
TSIIX.....3.1….-0.1
PTIAX….1.9….-0.2
Multi(high % securitized)
PIMIX.....2.3….-3.4
EIXIX…..3.1….-0.4
VCFAX...2.8....-10.8
IOFIX.....6.3....-26.3
HY Munis
PHMIX…..3.4.....-3.1
NHMAX....4.6.....-7.3
OPTAX.....3.2.....0.15.
ORNAX….3.9…-5.25
BSNIX....2.8....3.4
GWMEX….5.0…..-3.1 (IG Munis but BBB+A rating)
NVHAX…1.5…-6.2 (ST duration HY Munis-lower SD than the above)
Inter Term CORe/CORE PLUS
SAMFX.......0.7.....8.0
BCOIX......1.3…...4.4
SCCIX.....1.3....11.2
ANBEX……1.6....12..9
BND….......0.7…...5.7
Bank Loans/Floating rate
EIFAX.......4.3.....-8.2
Uncontrain/Nontrad
IISIX..........3.0....-6.3
PMZIX......1.5….-0.1
JSIAX……1.5….-0.3
HY +EM
HYG.........2.95.....-4.5
PHIYX.......4.0.....-4.1
FNMIX……7.5……-6.4
Corporate
PIGIX….…1.7.….0.1
VCIT……..2.7…..3.5
Preferred
PFINX…...2.7……-6.0
OTHER
FXAIX.…..3.8..…-5.0 (SP500)
PCI………7.0... -23.7 (CEF)
Observations:
Last month was another rebound month. Several bond funds made as much money as stocks.
Multi- did great. TSIIX(multi) + EIXIX(Multi securitized continues to show the best risk/reward. JMUTX shows good momo. IOFIX shows the best momo but I can’t forget its meltdown
HY Munis had a great rebound in May. BSNIX had the best risk/reward. GWMEX had the best momo.
Inter term – did well. If you doubt about finding better funds then look at ANBEX.
Bank loans – Good rebound but still big losses YTD
Uncontrain/Nontrad-PMZIX with great risk/reward but if you want to make money look at IISIX,JSIAX.
HY+EM – Good rebound in May.
Corp – In a tough market VCIT beat PIGIX.
SP500-Just -5% for YTD. The price crossed the 200 moving average, that means to start buying if you were out.
PCI-CEF got crushed more than stocks YTD and are still behind. If markets stabilize they will make more money than stocks.
===========================
My own portfolio
As expected from a trader I go where I see momentum but still look at risk/reward. The market looks better than before and why I start taking more risks.
Early in the month, I had 3 holdings but mostly in ANBEX(core plus)+BSNIX(HY Munis) but I switched to GWMEX(HY Munis)+TSIIX(Multi) + EIXIX. I have over 50% in GWMEX, a smaller position in TSIIX, and a much smaller in EIXIX.
Stats: My portfolio made over 8% YTD.
For 3 years I made over 9% average annually with SD lower than 2 (remember, my goals were 6+% and SD lower than 3). My portfolio never lost more than 1% from any last top. So, when they tell you that bonds (I also trade stocks,CEFs) are boring with no future I keep chuckling and the unbelievers will continue to dismiss the numbers.
FUND...3 YR...SD
SPY.....10.15...16.9
VBINX...8......10.7
VWIAX...6.4...6.9
Mine.....9+....under 2
It looks better after the rebound but at the end of March(see below), it was so much worse. See PV(link)
FUND...3 YR...SD
SPY.....5......14.9
VBINX...4.45....9.3
VWIAX...4.17...6
Mine.....not far from the above
The above is not a recommendation, you must do your own due diligence. My holdings can change at any time
Would you mind reviewing again what parameters you monitor, the frequency and how you make your buy and sell decisions?
Thanks
2) concentration, usually 3 funds but many times one fund over 50% like now.
3) all my funds must perform well, at least not losing. It's not necessary the best performance but a good risk/reward.
4) SD=volatility is very high on my list. If any bond fund I own loses more than 0.5% from the last top I start asking why. If it loses 1% from its last top I sell immediately in most cases. Did others in the same category follow? can I find a better fund? the HY Muni bonds are similar but Multi+NonTrad can be unique. IOFIX/EIXIX are different than more typical JMUTX/PUCZX multi.
5) charts+trends are my friends, they tell me much more what is going now than most articles/opinions/experts.
6) be flexible, look at markets in general. Are they "normal", crazy?
special situations call for a different approach.
Example1: the Fed announced they will increase rates a couple of years ago. Bank loans is usually one of the best categories.
Example2: we had a meltdown last March, what funds I want to use. I found ANBEX. I haven't used the high-rated bond fund for years.
7) I'm a trader, this means I may hold weeks/months or switch earlier and it could be a huge % of my portfolio.
Seems to me It’s hard to get apples to apples comparisons. I hold BBN and would like to compare it to the Hy-yield munis listed but most tools wouldn’t allow me to compare an OEF to a CEF. And if they did , I’m not sure if BBNs distributions are included.
One more thought, IOFIX got waxed in March. Hope nobody here was holding it!
I use this link to bring up a growth of $10K chart for an OEF, then add whatever fund (OEF or CEF or ETF) or stock to the chart and it will show you growth of said security, assuming distributions reinvested. Used to be easy to do at Morningstar, as you pulled up an OEF’s chart, and then added tickers, but since they changed the site, you have to use a link similar to this that links to the old chart tool.
http://quotes.morningstar.com/chart/fund/chart.action?t=PIMIX®ion=usa&culture=en_US
https://stockcharts.com/freecharts/perf.php?BBN,FSITX,FTBFX,GWMEX,TSIIX,ANBEX
Maybe the only true way is to download the corrected data from Yahoo Finance and throw it into a spd sheet - which is a lot of work.
The best IMO is PortfolioVis. It has many more choices and you can see SD, max draw, Sharpe, Sortino and more but allow you only 4 funds. See (link) for BBN,GWMEX,TSIIX,ANBEX for 3 years. It shows how BBN SD=12 is 2-3 times higher than the others
https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults
https://humbledollar.com/2020/06/farewell-yield/
1) Abandon bonds = Rediculous idea. I have talked to many retirees and they don't want the high volatility that stocks offer
2) Delay Social Security: you can do lots of calculations based on estimates but you can't predict the future. Just start in the middle, my wife and I will start taking SS at age 65 because of the above + Medicare and taxes will be deducted from SS too.
3) immediate fixed annuities: not an easy choice. If you don't have enough you can't afford it. If you have enough you don't need it. You also can't assume treasury yield will stay lower and since I don't care about treasuries I also know funds that pay over 4%. PIMIX stills pays over 5%.
4) tax efficiency: always important.
Most of these generic articles/research hardly ever offer what to do such as 1) not all bonds are treasuries 2) there are several great mutual funds 3) most retirees can't work forever or delay their retirement and don't have enough money. I want to see more ideas.
Example1: in one month, GWMEX,ORNAX,NHMAX made over 6%.
Example 2: I think that Kitces has better ideas than most. See (link) “rising equity glidepath” actually does improve retirement outcomes = start at lower % in stocks and increase gradually
Figuring on a 4% withdrawal rate, the 10% cash could buffer a bear market taking 2.5 years to recover. Clements suggests 25% cash, or around a 6 year buffer. I might split the difference and put half of that 25% in cash, half in vanilla bonds, figuring that the bonds will do better even with modestly rising interest rates, if one waits 3 years or more.
As Clements noted, the expectation value of SS is greater if one delays taking benefits. This is especially true if one is focused on one's own lifetime and not on legacies. If one has a financial need for monthly checks before age 70, one can fill the gap with a temporary life annuity.
Which brings us to annuities. Dr. Wade Pfau says much the same thing as Clements - that the lower the current interest rates, the bigger the bargain annuities are, thanks to mortality credits. "Essentially, while the cost of funding retirement with an annuity increases as interest rates decline, the cost of funding retirement in other ways increases even faster than for the annuity. Therefore, the annuity becomes a better relative deal."
Speaking of Dr. Pfau, while he and Michael Kitces suggested seven years ago that a rising glidepath might provide a slightly higher probability of success (not running out of money over 30 years), subsequent research by Dr. David M. Blanchett showed that a traditional declining glidepath would work better in an environment with low interest rates and highly valued stocks. As it was in 2015 when he wrote his paper, and as it is now.
They had an ongoing exchange about this. Here's one part:
Start with $1,000, withdraw $40 (4% real, i.e. inflation adjusted) annually over 30 years. Do this with declining equity portfolios (e.g. 100% down to 0%) and with rising equity portfolios (e.g. 0% to 100%). Backtest against historical data, using rolling 30 year periods starting with 1900-1929, ending with 1980-2009.
Then look at the failure rates (portfolios that didn't last 30 years), and how much you'd wind up with at the end of the 30 year period. Data from Exhibit 1 in Estrada,The Retirement Glidepath: An International Perspective, The Journal of Investing (Summer 2016). Big advantage for rising equity? Plausible but not borne out. Nor as noted previously do Pfau's simulations bear this out under market conditions like today's.
Way too often people go with their gut, or their fears, rather than rational analysis and cold hard numbers. That's why only about 5% of people wait until age 70 to take SS, it's part of why there's an annuity puzzle.
For those who don't want to read Estrada's complete paper, there's Larry Swedroe's page about it. He concludes:
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Anyway, the thread is about bond funds so let's get back to it.
Last Thursday was another pivotal day for me. VIX jumped to almost 41, stocks crashed, the risk is elevated, rated are down sharply but BND wasn't up which is what you expect from a high rated bond index. VBTLX which is equal to BND but doesn't trade was up 0.08%. When rates decrease so much I expect bond fund like VBTLX to make more than 0.08%
All the above didn't make sense to me. Maybe it is just short term. I do the usual when the markets don't make sense to me I sell. It is unusual because in most cases I'm invested at 99+%. In the last 10 years, I was out of the market just 12 weeks (only in 5 weeks I was at 95+% in cash)
Last Thursday I was at about 50% cash and Friday at 95+% in cash. HY Munis which I had close to 60% of my portfolio were on a tear in the last month and even last week. It was time for me to sell.
YTD I'm way over my goals of 6%. I can take time out and can "miss" some performance.
Global equity weak today (Monday, June 15) and U.S. equity market open appears to be weak. VIX trying to push above 41 again. Treasury issues happy, pre-market (Sept. contracts) 'Course, this doesn't always translate to other bond sectors; as high yield bonds may not be very happy today, nor some marginal junk corp. bonds, but.....
There must be a bond area you plan to buy, eh?
Keep us posted with your next entry/exit points, as to when and where; so that some here may participate, if they choose.
you may have told us before but how do you avoid redemption fees on some of these funds?
Congratulations on establishing your system that seems to work almost all the time. How much work does it take to evaluate incoming data daily or hourly and trade so frequently? Sounds close to a real job to me
My-oh-my.
It takes me just minutes every week for my portfolio because I have all the lists I need to see momentum and looking at my preferred pre-selected funds.
Example: if I want to buy HY Munis the 4 funds (NHMAX,ORNAX,OPTAX,GWMEX) are my top choices and what I have been using but I always take another look at other funds.
Investing has been my passion for years.
I do spend more if I post something that needs research, analysis and more.
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(link) "Stocks erased earlier losses and rose Monday, after the Federal Reserve said it would begin purchasing individual corporate bonds as part of its emerging lending program to inject liquidity into the virus-stricken economy.
Earlier in the session, the Dow was off as many as 762 points, or 3%, as investor jitters over rising coronavirus cases in key parts of the country stirred up an extension of last week’s pullback in equities."
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My main investments are bond OEFs, will see in the next several days where markets are going