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Aside on BLs and hoping to NOT derail very good thread...Noted here and on other MFO threads that posters seem to like PRFRX. It is in my group of about five or so fave OEFs in the cat. Personal faves however are NFRAX, RSFLX, FRFAX and FFRHX. Used to own both NFRAX and RSFLX but in late 2021 rolled all into NFRAX simply for consolidation of BLs and personal preference. FWIW, pretty partial to Nuveen, esp in BLs and HY Munis (NHMAX, NVHAX). Regardless the exact BL fund selected, agree it was a good place to be in 2021, continuing well into 2022 and perhaps beyond, depending on interest rate environment. OOSAX has had its year in the sun in the cat but don't know much about it or if that's sustainable for a previously underperformng fund in the cat. YMMV.
Not a lot of port moves specifically for 2022. We are nearing end of 10th year of retirement. We use 5-yr retirement portfolio strategies and are nearing the end of our 2nd 5-yr plan (June 2022). All major moves towards next 5-yr plan have been gradual/cumulative over past six months or so and will be completed by June.
Core for next five years will consist of 11 AA OEFs (and possibly 1-2 more) that can be detailed here or via PM if anyone is interested. Still reluctantly holding a smaller slug of dedicated bond OEFs (HY Munis, BL, Multi, ST HY), significantly reduced in number and aggregate $ amount from initial 5-yr plan plan. Also initiated much larger explore section during 2nd, 5-yr plan that will carryforward in next one, comprised of a coupla indivdual stocks and a coupla dedicated stock ETFs and OEFs. Former 10-yr CD ladder initiated at start of retirement continues to see final rungs fall off w/o being replaced. Maturing CD proceeds continue to be rolled to much higher risk cats, primarily explore stuff. Keeping an eye on 5-yr CD rates this year as they inch back to levels that may be acceptable replacements for some dedicated bond OEF holdings.
Will continue to make (what are effectively) tax-free IRA w/d's for personal spending wants/needs up to taxable income threshold in lieu of making Roth conversions. Continue to be ~96% under the umbrella (read, in tax-deferred a/c's) and ~4% in taxable. Haven't paid a dime in FIT/SIT since final year of employment in 2012 (state has actually been paying us $50 annually last coupla years via tax credits) and starting to look like that will all continue for at least five more years or until RMDs are um, required. Life-long tax planning strategy has been to Avoid, Defer, Minimize, and pay them on our terms when we want (read, ultimately have) to pay them.
REALLY appreciated the contributions of many of MFO regulars. Keep up the great work and contributions here and Happy New Year to all!
I too am perplexed by positioning in my fixed income sector. I planned for higher interest rates in 2021, and shortened duration. But the shortest stuff JCPB,VUSB, loss money ( although not much, but I would have been better off in cash) and core bond funds relatively crashed TGFNX (-1.5%) SUBFX (-1.2%).
While last year floating rates, junk ( even munis) and preferreds ( and I owned some) were the place to be, I just don't believe they will do well in 2022 unless interest rates collapse, along with the economy
As almost all stock valuations are so high, I am very reluctant to go all in on dividend stocks for my income.
Selected value funds may do less bad, and I am particularly partial to those that do not insist on being fully invested, like PVCMX.
Multi sector income funds like FMSDX may do well be are also at risk.
@sma3 : "While last year floating rates, junk ( even munis) and preferreds ( and I owned some) were the place to be, I just don't believe they will do well in 2022 unless interest rates collapse, along with the economy"
FR/BL do well when rates go UP, not down. After all, their rates reset to higher rates frequently. On the other hand, when rates are flat/down, they act just like short-term HY.
@stillers...I need to read your post carefully as it resonates with me...question if you are ok answering...by chance did you move to a lower tax state when you retired? I'm in a very high tax state but also own a home in a much lower tax state...wife and I are thinking of making the move in the next year or so. Question for all: Has anyone else moved to lower taxes in retirement? Did it work as planned? Happy with decision?
@sma3...agreed floating rate funds scare me...usually not highest rated bonds....took a real flush in the down draft in 2020.
I too am concerned about the rattling, swift elevator down in the markets...who knows...
Another fund I am dabbling with (and have owned in the past before it stalled out) is PMEFX, Penn Mutual 1847 Income fund. Really like the mgr who used to run Berwyn Income...seems like a fund you might be able to hang onto in "rough waters". I like the fund mgr's poise and thought process in the interviews I've seen him on.
@stillers...I need to read your post carefully as it resonates with me...question if you are ok answering...by chance did you move to a lower tax state when you retired? I'm in a very high tax state but also own a home in a much lower tax state...wife and I are thinking of making the move in the next year or so. ....
Best, Baseball Fan
No, we did not relocate. We've paid zero FIT/SIT post-retirement due to the structuring of our portfolio (detailed in prior post) since we started investing in 1980. Large part of our investment strategy, thanks to my first boss and investment mentor, has always been that tired, old axiom, "It's not how much you make, it's how much you get to keep." We do however live in a state with highly favorable tax treatment for retirees.
I just added CDC as a low volatility more defensive fund option. Lynn Bolin had a really nice writeup on the fund a few months back. Steady eddy fund that held up quite well in March 2020. max DD of 15%. Nice dividend too. I am also going to sell my technology fund BGSAX and trim back on holdings in MIOPX. Both have high PE multiples and Aren't well positioned for a rising rate environment. Evaluating a few other funds for purchase.
Comments
Core for next five years will consist of 11 AA OEFs (and possibly 1-2 more) that can be detailed here or via PM if anyone is interested. Still reluctantly holding a smaller slug of dedicated bond OEFs (HY Munis, BL, Multi, ST HY), significantly reduced in number and aggregate $ amount from initial 5-yr plan plan. Also initiated much larger explore section during 2nd, 5-yr plan that will carryforward in next one, comprised of a coupla indivdual stocks and a coupla dedicated stock ETFs and OEFs. Former 10-yr CD ladder initiated at start of retirement continues to see final rungs fall off w/o being replaced. Maturing CD proceeds continue to be rolled to much higher risk cats, primarily explore stuff. Keeping an eye on 5-yr CD rates this year as they inch back to levels that may be acceptable replacements for some dedicated bond OEF holdings.
Will continue to make (what are effectively) tax-free IRA w/d's for personal spending wants/needs up to taxable income threshold in lieu of making Roth conversions. Continue to be ~96% under the umbrella (read, in tax-deferred a/c's) and ~4% in taxable. Haven't paid a dime in FIT/SIT since final year of employment in 2012 (state has actually been paying us $50 annually last coupla years via tax credits) and starting to look like that will all continue for at least five more years or until RMDs are um, required. Life-long tax planning strategy has been to Avoid, Defer, Minimize, and pay them on our terms when we want (read, ultimately have) to pay them.
REALLY appreciated the contributions of many of MFO regulars. Keep up the great work and contributions here and Happy New Year to all!
While last year floating rates, junk ( even munis) and preferreds ( and I owned some) were the place to be, I just don't believe they will do well in 2022 unless interest rates collapse, along with the economy
As almost all stock valuations are so high, I am very reluctant to go all in on dividend stocks for my income.
Selected value funds may do less bad, and I am particularly partial to those that do not insist on being fully invested, like PVCMX.
Multi sector income funds like FMSDX may do well be are also at risk.
FR/BL do well when rates go UP, not down. After all, their rates reset to higher rates frequently.
On the other hand, when rates are flat/down, they act just like short-term HY.
Couple questions for you...
@stillers...I need to read your post carefully as it resonates with me...question if you are ok answering...by chance did you move to a lower tax state when you retired? I'm in a very high tax state but also own a home in a much lower tax state...wife and I are thinking of making the move in the next year or so. Question for all: Has anyone else moved to lower taxes in retirement? Did it work as planned? Happy with decision?
@sma3...agreed floating rate funds scare me...usually not highest rated bonds....took a real flush in the down draft in 2020.
I too am concerned about the rattling, swift elevator down in the markets...who knows...
Another fund I am dabbling with (and have owned in the past before it stalled out) is PMEFX, Penn Mutual 1847 Income fund. Really like the mgr who used to run Berwyn Income...seems like a fund you might be able to hang onto in "rough waters". I like the fund mgr's poise and thought process in the interviews I've seen him on.
Best,
Baseball Fan