Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Historically, stocks have returned not 1⅔% but about 4% more than bonds (10% vs. 6%). So given today's interest rate differential between bonds and cash one expects a 75/0/25 portfolio to significantly outperform a 60/40/0 portfolio.
Things aren't quite this simple because we're looking at averages and when actual returns fluctuate and you're rebalancing, actual returns may differ somewhat. Still, it looks good for the stock/cash portfolio.
The choice between Bonds that yield next to nothing VS. Cash that also yields next to nothing is nauseating. The only reason I can remember HY interest rate CDs is because I was born over 5 decades ago. The Fed and it's magic toolbox have painted themselves into a corner. Asset bubbles will have to deflate EVENTUALLY - you can't kick the can down the road forever. And STIMULUS is great for a short-term fix, but there should be a limit. Our country is not good with limits of any kind, though. And letting markets play out naturally. We hate that idea, too.
So .. I think we can all agree without fed stimulus, handouts etc, we'd likely see another great depression. Might see one eventually after fed says no more. Where does this sheet show leave us?
Many think over next 10 years we'll be lucky to see 1% returns in stock market
Do you know of any 10year single A bonds that are paying over 2%?
Hide out there and in tbills, waiting for the cathie Wood tesla stock market crash
Timing market yes, but better than losing 25% in two weeks time
Posting for entertainment purposes only. Due your own due diligence
Once again, you can't have a sensible discussion on this subject without defining what is meant by "bond fund." YTD my bond fund portfolio is up .97% compared to BND which is down 3.09%. Going back to 2002 FAGIX (which admittedly holds some stock but is considered a HY fund) had a CAGR of 10.64% with a sharpe of .87 while VTI had a CAGR of 10.75% and a Sharpe of .67%. Meanwhile SHY (sometimes used as a cash surrogate) had a CAGR of 2.06% and a sharpe of .66%. Some may sleep well at night with that cash, but likely will do so in the poor house. Just my opinion of course.
Intimately related to the question of what is a bond fund is why own bonds or a bond fund in the first place? A reason often given is to reduce overall portfolio volatility, i.e. to zig when stocks are zagging. The mention of Sharpe ratio (based on volatility) suggests that volatility is indeed a major consideration.
If one is diversifying into bonds to control a portfolio's overall volatility, then HY isn't a great way to do it.
High yield bonds, also known as “junk” bonds, have always had an identity crisis. They show up in our portfolio reviews under the category of “bonds,” but in reality, they move more closely with the stock market than the bond market. ...
High-yield bonds historically have a correlation of .71 with stocks, and a correlation of .17 with traditional bonds, meaning they move much more closely with stocks than bonds.
If the intended use is simply to tamp down the volatility (reduce beta, serve as deadweight aka "ballast") of a stock-like investment, then investing in HY bonds in lieu of equities may serve that purpose. (This was implied by comparing FAGIX with VTI.) Alternatively one could dial down the equity volatility explicitly and precisely by adding cash. To reduce volatility by 25%, one can use a 75/0/25 portfolio (stocks/bonds/cash).
BTW, M* reports only five share classes of taxable bond funds with YTD returns of 0.97%. Three are not generally available to retail investors: TCRRX - the institutional version of PRCPX EGRIX - TF institutional share class available with retail mins EGRSX - R6 share class of EGRIX available only through large retirement plans ETSIX - A shares available load waived, NTF FXIDX - One of Pimco's FISH "comingled vehicles"
Except for the TRP HY fund, these are all nontraditional bond funds. ETSIX at least seems worth a look.
BTW, M* reports only five share classes of taxable bond funds with YTD returns of 0.97%. Three are not generally available to retail investors:
Not sure where M* is getting its info from but two of my largest HY holdings (FAGIX and DHHIX) and up over 3% and 1% respectively YTD.
MSF, did you meant to suggest up exactly .97%? Obviously when referring to my own portfolio I was referring to the aggregate of all my "bond" holdings.
Yes, those are the funds up exactly 0.97%. As you noted, that's not helpful if one is comparing with a multi-fund portfolio.
One isn't likely to achieve that return in either the aggregate or with an individual fund these days without using junk bonds. Out of 184 distinct funds returning at least 1% this year, only a dozen are investment grade. (M* screener).
Even limiting one's focus to HY bonds, out of 175 distinct funds, only 66 (about 3/8) have returned at least 1% YTD.
Don't stop believing in bonds MarketWatch ...And once you factor in a person's human capital, which Page argues acts more like a stock than a bond, a balanced portfolio with a healthy allocation...
Appears many folks still love bonds for diversification purpose/safety. The 20million dollars question [maybe] is how much should you be in bonds. For us about 20%, still have 15-20 yrs left before retirement.
Yes, those are the funds up exactly 0.97%. As you noted, that's not helpful if one is comparing with a multi-fund portfolio.
One isn't likely to achieve that return in either the aggregate or with an individual fund these days without using junk bonds. Out of 184 distinct funds returning at least 1% this year, only a dozen are investment grade. (M* screener).
Even limiting one's focus to HY bonds, out of 175 distinct funds, only 66 (about 3/8) have returned at least 1% YTD.
Yes, need HY to get return these days. I use a barbell for my bonds, plenty of core/core-plus on one end and HY on the other and juiced with CEF's which need to be timed right of course (bought PHK off the lows last spring and GOF after it got battered in the same drawdown, worked out pretty well so far).
Revisiting 1 of 2 bond funds I own PONAX. It's up 1.19% with an 1.49% ER! vs. JMUTX +2.19% / .86 ER, FADMX +1.50%/ .67% ER, BMSAX +1.48% / .9% ER. On the bright side, PONAX is performing better than my FXNAX Index (apples/oranges - I know) which is -2.35 but I'm still skeptical of PONAX - especially with such a high ER. Am I missing something? I know a few of you have PONAX but I've been a bit sour on the fund for almost 6 months. Those of you still in PONAX - any thoughts? I realize bond funds are like kryptonite these days but I'm thinking you may have more well reasoned thoughts on why to still be in this fund.
I don't own it. PONAX. The yield is good, given the bond-environment we're in. The AUM would give me pause. I hope you're not paying that front-load. Morningstar: "The team sets a monthly dividend and attempts to stick with it for at least a year. Prudence demands that number be set lower than what the portfolio's holdings actually produce each month to avoid a shortfall, and there's usually undistributed income at each year-end, which is paid as an extra dividend to avoid running afoul of IRS tax rules."
I considered PIMIX a few years ago but didn't invest in the fund. For many years, Pimco Income Fund delivered excellent returns with muted volatility. The fund's managers made shrewd investments in legacy, non-agency residential mortgage-backed securities (RMBS) after the Global Financial Crisis. Trailing 5 Yr. and 10 Yr. returns for PIMIX were in the top 1% of the Multisector Bond category as of 10/31/17.
The total AUM dedicated to vehicles using the same strategy, $124 B as of March 2017, gave me pause. It would be difficult for Pimco Income Fund to maintain meaningful exposure to legacy, non-agency RMBS while the supply of these securities was decreasing in the future. I also did not appreciate that Pimco has never closed a fund (to my knowledge) due to excessive AUM. This is not a very shareholder-friendly stance in my opinion.
Having said that, Dan Ivascyn and Alfred Murata are renowned and talented managers. Pimco is widely respected and it is a very well-resourced firm. I still believe PIMIX is a decent fund but doubt the stellar performance of the past will be replicated.
I don;'t own PONAX or PIMIX but I do own their CEF counter partners PCI, PDI and PTY. Why do I still own them? Because on the first of each month they politely drop $1K+ of distributions into my retirement account. To carry my lunacy even further I also hold IOFIX. Equities at current levels aren't compelling enough to me to make any switches.
Updating this from March of this year. Some performance numbers were mentioned above. 27 May, '21: RPSIX. +2.13% Y-T-D. A fund of funds. My other: PRSNX: + 0.23%. Multi-asset bond fund. Morningstar puts it in a peculiar category: World Bond, US dollar-hedged.
Not much to like, this year, apart from the monthlies. But that steady stream of income tastes delicious.
I like some types of bond (funds) in this wild environment. Risk assets climbing to the sky. Bonds will hold some water for you should most everything else go to hell in a hand basket. Who knows? Depends on your age, risk tolerance and what else you happen to own. Be careful with the BBB and lower grade paper. OK to own some and to speculate in the shorter end (1-2 years) I think. Anything out 3+ years go with the highest quality you can get. Don’t plan on getting rich. You won’t with bonds today. But might make a nice life raft if waters turn violent..
My usual comments: Not all bonds are higher-rated bonds. Bonds have several unique categories with different ballast, volatility and market conditions. Treasuries are a great ballast but terrible in rising rates. Bank loans are much better in rising rates. Munis are not as "safe" as treasuries but behave differently + give you Fed free tax. HY Munis is another option. Several Leveraged CEFs have similar risk/reward to stocks. Then you have Multi sectors funds where the managers MAY maneuver market condition better. So why all/most analysts/articles talk about treasuries is beyond me.
On the other hand stocks globally are correlated a lot more. Many retirees I know who have enough, including me, don't care as much about performance as they care about volatility. So, it depends on what you want to achieve and your style/goals. My portfolio is mostly bonds all the time except quick stocks/CEFs trading, something like 10/90. My portfolio performance in the last 3 years exceeded our need by 3 times with SD=2.42. I never lost more than 1% from any last top for at least 3-4 years.
Easy example: for 6 months...VBTLX(US Index) lost -2.3%...NVHAX(HY Muni shorter term) +7.55%...NHMAX(HY Muni longer term) +8.8%.
Bottom line: when someone tells you bonds are bad, they obviously don't know enough about bonds.
@FD1000. Rookies do need to learn the ins and outs. And even some folks who have learned quite a bit about how this all happens and about all the different menu items, so to speak, just don't care to babysit their stuff all the time. For me, it's my hobby in retirement. A nice problem to have.
@Crash, yes and no. Someone can do pretty well with minimal changes. I held PIMIX about 7-8 years. I held one HY Muni for 3 years. In the last several years I invested mostly in HY Munis + special securitized bond within Multi/NonTrad. So, I babysit it because I love it and it works pretty well but someone can make 1-2 changes annually and still do well. Many have no problem trading stocks/ETF/CEFs many times annually but somehow it can't be done with bonds or believe that bonds have only one category. Bonds are the true simple mainstream ballast to stocks and when you go deeper into several bond categories you will find they can do even more and have different correlation too. Sure, I used to be many years in stock funds at 85-100% but as I got older and especially in retirement I learned a lot more about bonds.
One factor I pay attention to is whether or not a fund is bloated. I've learned from others here that with BONDS, "bloated" means something different, than with stocks. I've read that bond funds are somehow able to handle monstrously gigantic amounts of AUM. I still remain wary..... Looking at my own:
PTIAX. $5.7B. PRSNX. $1.6B. RPSIX. $7.1B.
"A billion here, a billion there, and pretty soon, yer talking real money!" That quote originally referenced MILLIONS, not BILLIONS, and so there's a double entendre, there. The "youngsters" here might not remember that far back.
But those PIMCO funds, yikes! I can't imagine how they can keep their arms around all that money....
Since RPSIX is a fund of funds, it might be more appropriate to look at the size of its underlying holdings. Basically what RPSIX does is periodically rejigger the weights.
TRVZX (16% weight): $21.2B TRKZX (16%): $8.4B and a lot of other bond funds weighted 4-8%, and a few with even smaller weightings.
Alternatively, if you want to look at the size of RPSIX's bond holdings, you might want to subtract out the equity portion. Roughly 1/7 of the fund is comprised of the fund TRZQX. So the amount of bonds held (indirectly) by RPSIX is closer to $6.1B.
I look at the size but as long as the fund performing well according to my strict criteria I hold it. PIMIX was great until 2018, I sold it in 01/2018. PRWCX is still a great fund which I don't own. Of course indexes don't count.
I think a good portion of this argument relates to the issue of whether cash or longer duration fixed-income holdings are better to hold at this period in time. Looking at the macro picture (including historically low global rates) I’d say it’s a tough call. Younger more aggressive investors probably shouldn’t even be thinking about this one. But for older investors, looking to lower portfolio volatility, it may be an important consideration.
The problem I always have in bond fund discussions is that they (bond funds) come in so many different colors and stripes it’s hard to make meaningful comparisons. Corporate or government? Domestic or international? investment grade or lower quality? Duration? Fees? Indexed or managed? Does the income fund hold equities in addition to bonds (as does RPSIX)?
I refuse to get hung up on whose bond fund is better. For the small commitment to bond funds I hold, I’m mostly inclined to look at (1) credit quality, (2) duration, (3) fees & other costs and (4) hot-money indicators. Re the last, a fund that excels during good times may be a hazard to your financial health if a large number of holders decide to exit at the same time. Yes, for really serious bond investors there are some fund managers who have excelled in fixed income in the past. Pimco and Loomis Sayles come to mind.
The issue of bloat seems to gain traction here only when a fund is struggling. If you really want to avoid bloat, why would you own PRWCX?
@hank. PRWCX. I see what you mean: $50B. AUM. But at the moment, it's just 18% in fixed income. So, treat it as a stock-fund, yes? Which it purports to be, anyhow. Yes, Giroux has a magic sauce. He's got the Midas Touch. But at the same time, the likes of DODBX are outpacing PRWCX THIS year. Over the long haul, PRWCX has done better. I'm not so concerned about excellent bond performance in PRWCX. If I get a modicum of profit from the bonds in that fund, I'm happy. I'm not holding it for the bonds. I think that for anyone who knows what they're doing, they wouldn't hold that fund for the BONDS, either. Still, I like that it's a "balanced" fund, and can go up or down the scale, depending upon how the Manager reads the tea leaves.
Things in bond-land suck, these days. I'm hoping for just a 3% yield, lately. That feels like a bite in the ass. But I cannot, due to my risk tolerance--- given age and my status as a retiree--- hold more than I'm holding in STOCKS. Actually, the fund managers have me into more CASH than I'd like, so the stock-portion of the portfolio is a bit lower than desired. But on that score, I'll let them do the work for me. That's why they're there, eh?
Things in bond-land suck, these days. I'm hoping for just a 3% yield, lately
Then you're pretty much stuck with junk or an equity kicker. Otherwise you get that 3% yield at the expense of capital. That is, IG bond funds w/o equity get their yield by going long and losing value as rates rise.
This is what I've been able to find in terms of IG bond funds available to retail investors with a trailing 12 mo yield of at least 3%. Once one discards funds with significant equity states (allocation funds, target date funds), most of what's left are intermediate to long term funds with negative total return YTD.
It's a matter of personal comfort. I used the phrase simply to mean that many of the funds on the list, by design, include more than a de minimis amount of equity. Yes, I'm just substituting one expression for another here without defining them.
Consider the conventional wisdom: everyone including retirees should have some money invested in equity, at least 20%. Taking that literally, that 20% allocation to equity is being viewed as a significant amount that affects the behavior of the portfolio.
Take something like BLADX that has around 15% in equities. YTD VCSH (same bond style box as BLADX) is up 0.08%, and VOO is up 12.74%. Assuming no rebalancing (I'm lazy tonight), a 15% weighting in equities would give a total return of: 85% x 0.08% + 15% x 12.74% = 0.07% + 1.91% = 1.98%
BLADX's YTD return is 2.74%. A little higher than the calculation above, but the figures give you a pretty good idea of where that return is coming from. Nearly all from equity.
In years when bond and stock returns are not that far apart (say, 5% bond vs 7% stock), a modest amount of equity isn't going to make a big difference. But in years like this one, where bonds are returning nothing or are even losing money (BND is down 2.65% YTD), a 10% equity stake can mean the difference between losing 1% on the year and breaking even.
That may not sound like much. Remember though that we're talking about bonds and bond funds, where yields are under 3%. In that environment, a 1% improvement can feel like a lot.
Comments
Something to think about.
The only reason I can remember HY interest rate CDs is because I was born over 5 decades ago. The Fed and it's magic toolbox have painted themselves into a corner. Asset bubbles will have to deflate EVENTUALLY - you can't kick the can down the road forever. And STIMULUS is great for a short-term fix, but there should be a limit. Our country is not good with limits of any kind, though.
And letting markets play out naturally. We hate that idea, too.
Many think over next 10 years we'll be lucky to see 1% returns in stock market
Do you know of any 10year single A bonds that are paying over 2%?
Hide out there and in tbills, waiting for the cathie Wood tesla stock market crash
Timing market yes, but better than losing 25% in two weeks time
Posting for entertainment purposes only. Due your own due diligence
Good luck to all,
Baseball Fan
If one is diversifying into bonds to control a portfolio's overall volatility, then HY isn't a great way to do it. Forbes (2018), The Most Confused Identity In Your Portfolio: High Yield Bonds
If the intended use is simply to tamp down the volatility (reduce beta, serve as deadweight aka "ballast") of a stock-like investment, then investing in HY bonds in lieu of equities may serve that purpose. (This was implied by comparing FAGIX with VTI.) Alternatively one could dial down the equity volatility explicitly and precisely by adding cash. To reduce volatility by 25%, one can use a 75/0/25 portfolio (stocks/bonds/cash).
BTW, M* reports only five share classes of taxable bond funds with YTD returns of 0.97%. Three are not generally available to retail investors:
TCRRX - the institutional version of PRCPX
EGRIX - TF institutional share class available with retail mins
EGRSX - R6 share class of EGRIX available only through large retirement plans
ETSIX - A shares available load waived, NTF
FXIDX - One of Pimco's FISH "comingled vehicles"
Except for the TRP HY fund, these are all nontraditional bond funds. ETSIX at least seems worth a look.
Not sure where M* is getting its info from but two of my largest HY holdings (FAGIX and DHHIX) and up over 3% and 1% respectively YTD.
MSF, did you meant to suggest up exactly .97%? Obviously when referring to my own portfolio I was referring to the aggregate of all my "bond" holdings.
One isn't likely to achieve that return in either the aggregate or with an individual fund these days without using junk bonds. Out of 184 distinct funds returning at least 1% this year, only a dozen are investment grade. (M* screener).
Even limiting one's focus to HY bonds, out of 175 distinct funds, only 66 (about 3/8) have returned at least 1% YTD.
Don't stop believing in bonds
MarketWatch
...And once you factor in a person's human capital, which Page argues acts more like a stock than a bond, a balanced portfolio with a healthy allocation...
https://www.marketwatch.com/story/dont-stop-investing-in-bonds-2021-03-04
Appears many folks still love bonds for diversification purpose/safety. The 20million dollars question [maybe] is how much should you be in bonds. For us about 20%, still have 15-20 yrs left before retirement.
"The team sets a monthly dividend and attempts to stick with it for at least a year. Prudence demands that number be set lower than what the portfolio's holdings actually produce each month to avoid a shortfall, and there's usually undistributed income at each year-end, which is paid as an extra dividend to avoid running afoul of IRS tax rules."
For many years, Pimco Income Fund delivered excellent returns with muted volatility.
The fund's managers made shrewd investments in legacy, non-agency residential mortgage-backed securities (RMBS) after the Global Financial Crisis.
Trailing 5 Yr. and 10 Yr. returns for PIMIX were in the top 1% of the Multisector Bond category as of 10/31/17.
The total AUM dedicated to vehicles using the same strategy, $124 B as of March 2017, gave me pause.
It would be difficult for Pimco Income Fund to maintain meaningful exposure to legacy, non-agency RMBS while the supply of these securities was decreasing in the future.
I also did not appreciate that Pimco has never closed a fund (to my knowledge) due to excessive AUM.
This is not a very shareholder-friendly stance in my opinion.
Having said that, Dan Ivascyn and Alfred Murata are renowned and talented managers.
Pimco is widely respected and it is a very well-resourced firm.
I still believe PIMIX is a decent fund but doubt the stellar performance of the past will be replicated.
RPSIX. +2.13% Y-T-D. A fund of funds.
My other: PRSNX: + 0.23%. Multi-asset bond fund. Morningstar puts it in a peculiar category: World Bond, US dollar-hedged.
Not much to like, this year, apart from the monthlies. But that steady stream of income tastes delicious.
I like some types of bond (funds) in this wild environment. Risk assets climbing to the sky. Bonds will hold some water for you should most everything else go to hell in a hand basket. Who knows? Depends on your age, risk tolerance and what else you happen to own. Be careful with the BBB and lower grade paper. OK to own some and to speculate in the shorter end (1-2 years) I think. Anything out 3+ years go with the highest quality you can get. Don’t plan on getting rich. You won’t with bonds today. But might make a nice life raft if waters turn violent..
Not all bonds are higher-rated bonds. Bonds have several unique categories with different ballast, volatility and market conditions.
Treasuries are a great ballast but terrible in rising rates. Bank loans are much better in rising rates. Munis are not as "safe" as treasuries but behave differently + give you Fed free tax. HY Munis is another option. Several Leveraged CEFs have similar risk/reward to stocks. Then you have Multi sectors funds where the managers MAY maneuver market condition better. So why all/most analysts/articles talk about treasuries is beyond me.
On the other hand stocks globally are correlated a lot more.
Many retirees I know who have enough, including me, don't care as much about performance as they care about volatility.
So, it depends on what you want to achieve and your style/goals. My portfolio is mostly bonds all the time except quick stocks/CEFs trading, something like 10/90. My portfolio performance in the last 3 years exceeded our need by 3 times with SD=2.42. I never lost more than 1% from any last top for at least 3-4 years.
Easy example: for 6 months...VBTLX(US Index) lost -2.3%...NVHAX(HY Muni shorter term) +7.55%...NHMAX(HY Muni longer term) +8.8%.
Bottom line: when someone tells you bonds are bad, they obviously don't know enough about bonds.
So, I babysit it because I love it and it works pretty well but someone can make 1-2 changes annually and still do well. Many have no problem trading stocks/ETF/CEFs many times annually but somehow it can't be done with bonds or believe that bonds have only one category.
Bonds are the true simple mainstream ballast to stocks and when you go deeper into several bond categories you will find they can do even more and have different correlation too.
Sure, I used to be many years in stock funds at 85-100% but as I got older and especially in retirement I learned a lot more about bonds.
PTIAX. $5.7B.
PRSNX. $1.6B.
RPSIX. $7.1B.
"A billion here, a billion there, and pretty soon, yer talking real money!" That quote originally referenced MILLIONS, not BILLIONS, and so there's a double entendre, there. The "youngsters" here might not remember that far back.
But those PIMCO funds, yikes! I can't imagine how they can keep their arms around all that money....
According to the Dirksen Congressional Center, the closest he came was "The favorite sum of money is $1 billion – a billion a year for a fatter federal payroll, a billion here, a billion there."
https://dirksencenter.org/research-collections/everett-m-dirksen/dirksen-record/billion-here-billion-there
Since RPSIX is a fund of funds, it might be more appropriate to look at the size of its underlying holdings. Basically what RPSIX does is periodically rejigger the weights.
TRVZX (16% weight): $21.2B
TRKZX (16%): $8.4B
and a lot of other bond funds weighted 4-8%, and a few with even smaller weightings.
Alternatively, if you want to look at the size of RPSIX's bond holdings, you might want to subtract out the equity portion. Roughly 1/7 of the fund is comprised of the fund TRZQX. So the amount of bonds held (indirectly) by RPSIX is closer to $6.1B.
The problem I always have in bond fund discussions is that they (bond funds) come in so many different colors and stripes it’s hard to make meaningful comparisons. Corporate or government? Domestic or international? investment grade or lower quality? Duration? Fees? Indexed or managed? Does the income fund hold equities in addition to bonds (as does RPSIX)?
I refuse to get hung up on whose bond fund is better. For the small commitment to bond funds I hold, I’m mostly inclined to look at (1) credit quality, (2) duration, (3) fees & other costs and (4) hot-money indicators. Re the last, a fund that excels during good times may be a hazard to your financial health if a large number of holders decide to exit at the same time. Yes, for really serious bond investors there are some fund managers who have excelled in fixed income in the past. Pimco and Loomis Sayles come to mind.
The issue of bloat seems to gain traction here only when a fund is struggling. If you really want to avoid bloat, why would you own PRWCX?
Things in bond-land suck, these days. I'm hoping for just a 3% yield, lately. That feels like a bite in the ass. But I cannot, due to my risk tolerance--- given age and my status as a retiree--- hold more than I'm holding in STOCKS. Actually, the fund managers have me into more CASH than I'd like, so the stock-portion of the portfolio is a bit lower than desired. But on that score, I'll let them do the work for me. That's why they're there, eh?
MEMORIAL DAY, 2021:
https://www.poetryfoundation.org/poems/47380/in-flanders-fields
Then you're pretty much stuck with junk or an equity kicker. Otherwise you get that 3% yield at the expense of capital. That is, IG bond funds w/o equity get their yield by going long and losing value as rates rise.
This is what I've been able to find in terms of IG bond funds available to retail investors with a trailing 12 mo yield of at least 3%. Once one discards funds with significant equity states (allocation funds, target date funds), most of what's left are intermediate to long term funds with negative total return YTD.
Allocation 15%-30%: BLADX
Allocation (higher): NADCX (30%-50%), NADMX (50% - 70%), NDMAX (70%-85%), NDAAX (85%+)
Convertibles: SBFCX
Corporate: BYMIX, SIGYX
EM local currency: PYELX
HY muni: ETHYX (has IG portfolio)
Core bond: DUTMX (taxable munis), VKMGX
Core plus: AKGAX, MGBIX, CUGZX, FBDAX, PICYX, IICIX
Intermediate Gov: BTTRX (2025 zeros)
Long bond: DEEAX, RPLCX, VBLAX, VLTCX (corp.), VWESX
Muni long: VWALX, GUTEX
Short gov: IPFIX
Short bond: ANFLX, CSTBX, THOPX
Target date: NWHAX (2025), NWLAX (2035), NWMAX (2040), NWNAX (2045), NTDAX (2055), NWWRX (2060+)
World allocation: TEZIX
World bond: MPIFX
World bond, hedged: GBUSX, FGBFX
Derf
Consider the conventional wisdom: everyone including retirees should have some money invested in equity, at least 20%. Taking that literally, that 20% allocation to equity is being viewed as a significant amount that affects the behavior of the portfolio.
Take something like BLADX that has around 15% in equities. YTD VCSH (same bond style box as BLADX) is up 0.08%, and VOO is up 12.74%. Assuming no rebalancing (I'm lazy tonight), a 15% weighting in equities would give a total return of:
85% x 0.08% + 15% x 12.74% = 0.07% + 1.91% = 1.98%
BLADX's YTD return is 2.74%. A little higher than the calculation above, but the figures give you a pretty good idea of where that return is coming from. Nearly all from equity.
In years when bond and stock returns are not that far apart (say, 5% bond vs 7% stock), a modest amount of equity isn't going to make a big difference. But in years like this one, where bonds are returning nothing or are even losing money (BND is down 2.65% YTD), a 10% equity stake can mean the difference between losing 1% on the year and breaking even.
That may not sound like much. Remember though that we're talking about bonds and bond funds, where yields are under 3%. In that environment, a 1% improvement can feel like a lot.