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I prefer to look at total return. If we're looking at payout rates, the payout rate of T-bills is 0.00% (zero coupon). At this point, 6 month T-bills come out a bit better.
Annualized total return of RPHIX extrapolating from YTD (Jan &Feb, 59 days) of 0.72% comes out to about 4.53% with daily compounding. In a modestly rising interest rate environment I expect a slightly better return - with high turnover (164%), reinvestments should fetch a bit higher yield.
Projected yield on next auction of 6 month T-bills is 4.9%. Duration is 6 months (for zero coupon bonds, duration = maturity). Even if rates rise 3/4% in the next half year and one needs to liquidate, one should be able to get at least: 4.9% - 1/2 year x 3/4% = 4.525%
So in theory at least, one will get a somewhat better return with T-bills if held to maturity and will be risking very little if one sells early (mimicking the liquidity of RPHIX).
Pretty close to a wash (aside from state income tax concerns) - one might think of RPHIX as a hold. New cash? I would go with the T-bills.
I go back and forth on this fund versus treasuries now in the 4.7-5% range, but RPHYX has actually had a relatively good run the past 6 months.
What I see for total return over that time:
180 days +3.3% extrapolated 1 year return 6.6% 90 days +2.11% extrapolate 1 year return 8.4% 60 days +1.13% extrapolate 1 year return 6.8% 30 days +.41% extrapolate 1 year return 4.9%
Extrapolating the data is anything but exact, but I think it gives a closer idea than yield for where it's headed in comparison to other fixed income, like treasuries. Maybe I'm wrong on that. That said, this fund was the bulk of my withdrawal bucket for quite a while, but I have reduced it substantially the past couple months to buy treasuries.
The figures are old, e.g. M* reports a 1 month return (as of March 1) of 0.27%. Confirmed by RiverPark, whose page shows month return ending 2/28 as 0.27%. M* chart shows a return of 0.418% for 12/30/22 through 1/30/23.
All of this just confirms your writing that "extrapolating the data is anything but exact", and my common refrain that "what have you done for me lately" (here, the past month) distorts analyses.
Feb returns were unspectacular because rates were rising quickly, depressing the prices of holdings (even very short term ones). Thus one sees the occasional daily decline in RPHYX in Feb, but no decline in January or last December. This is why RPHYX/ RPHIX should hold its own unless there are more rapid rate increases. Outperform is more iffy.
@msf, I got my numbers from charting on 'StockCharts by just moving the bar 30, 90, 180 days and taking the 3/1 value. But as noted, the numbers are just a non-exact reference for comparison to a 1 year treasury. I think a better comparison than looking at just a given months yield.
Assuming compounding and 252 trading days per year, the 30 day figure would annualize to: 10 ^ [log (1 + 0.0041) * (252/30)] - 1 = 3.50% (or more simply, 0.41% x 252/30 = 3.44%)
The 180 day figure would annualize to: 10 ^ [log (1 + .033) * (252/180)] - 1 = 4.65% (or more simply, 3.3% x 252/180 = 4.62%)
Normally I would look back at least this far. But since rates have risen significantly in the past several months and speculation is that they won't rise as fast over the next few months, I would look more closely at the past 1-3 months. I would then fudge the result, increasing it somewhat since slower rate increases means less share price decline.
(Fudging is just another way of saying that Feb is not representative because of rapidly rising rates as suggested by some daily declines in share price.)
I took some of my RPHYX money off the table and am all about T-Bills for the moment. Will go back into RPHYX when treasuries come down. I am also taking the opportunity to diversify a bit into short-ish duration bonds.
FWIW, RPHYX disappointed me just a bit during the downturn, but not as much as did TRBUX. Not sure I'll be going back into TRBUX when things change.
Comments
Annualized total return of RPHIX extrapolating from YTD (Jan &Feb, 59 days) of 0.72% comes out to about 4.53% with daily compounding. In a modestly rising interest rate environment I expect a slightly better return - with high turnover (164%), reinvestments should fetch a bit higher yield.
Projected yield on next auction of 6 month T-bills is 4.9%. Duration is 6 months (for zero coupon bonds, duration = maturity). Even if rates rise 3/4% in the next half year and one needs to liquidate, one should be able to get at least:
4.9% - 1/2 year x 3/4% = 4.525%
So in theory at least, one will get a somewhat better return with T-bills if held to maturity and will be risking very little if one sells early (mimicking the liquidity of RPHIX).
Pretty close to a wash (aside from state income tax concerns) - one might think of RPHIX as a hold. New cash? I would go with the T-bills.
What I see for total return over that time:
180 days +3.3% extrapolated 1 year return 6.6%
90 days +2.11% extrapolate 1 year return 8.4%
60 days +1.13% extrapolate 1 year return 6.8%
30 days +.41% extrapolate 1 year return 4.9%
Extrapolating the data is anything but exact, but I think it gives a closer idea than yield for where it's headed in comparison to other fixed income, like treasuries. Maybe I'm wrong on that. That said, this fund was the bulk of my withdrawal bucket for quite a while, but I have reduced it substantially the past couple months to buy treasuries.
All of this just confirms your writing that "extrapolating the data is anything but exact", and my common refrain that "what have you done for me lately" (here, the past month) distorts analyses.
Feb returns were unspectacular because rates were rising quickly, depressing the prices of holdings (even very short term ones). Thus one sees the occasional daily decline in RPHYX in Feb, but no decline in January or last December. This is why RPHYX/ RPHIX should hold its own unless there are more rapid rate increases. Outperform is more iffy.
https://stockcharts.com/freecharts/perf.php?RPHYX&n=30&O=011000
"The box that moves from side to side inside the slider area is called the 'thumb,' which displays the number of trading days represented on the chart."
https://support.stockcharts.com/doku.php?id=other-tools:perfcharts
Assuming compounding and 252 trading days per year, the 30 day figure would annualize to:
10 ^ [log (1 + 0.0041) * (252/30)] - 1 = 3.50% (or more simply, 0.41% x 252/30 = 3.44%)
The 180 day figure would annualize to:
10 ^ [log (1 + .033) * (252/180)] - 1 = 4.65% (or more simply, 3.3% x 252/180 = 4.62%)
Normally I would look back at least this far. But since rates have risen significantly in the past several months and speculation is that they won't rise as fast over the next few months, I would look more closely at the past 1-3 months. I would then fudge the result, increasing it somewhat since slower rate increases means less share price decline.
(Fudging is just another way of saying that Feb is not representative because of rapidly rising rates as suggested by some daily declines in share price.)
FWIW, RPHYX disappointed me just a bit during the downturn, but not as much as did TRBUX. Not sure I'll be going back into TRBUX when things change.