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It's not too often that people buy load shares (at least without a load waiver). So I'm guessing that you've got a limited selection (e.g. in a 401K), and this is what you've got available.
For people with more flexibility, they might consider skipping even the retail 'D' shares and go straight to Institutional. Even with a transaction fee, that may come out cheaper over time. I did a little checking, and Scottrade claims to offer PIMIX with just a $100min. For a $10K lump sum investment, the 30 basis point difference between the Institutional and D shares makes up the $17 TF in about half a year. After that, it's all gravy. ('Course you do have to pay $17 to sell, though.)
Vanguard Total Bond Fund II, investor shares (VTBIX): -0.06% YTD. This even with the fact that the fund outperformed its benchmark index by 6 basis points.
Vanguard Total Bond Fund, investor shares (VBMFX): -0.22% YTD.
There are 16 unique intermediate term (mostly total market) index bond funds. Only three of them managed to make money this quarter:
- Vanguard Mortgage-Backed Securities (VBMIX - only the cheapest institutional class made money) - Two intermediate-term only Vanguard funds: Intermediate-Term Bond (VBIIX) and Intermediate-Term Corporate (an institutional class only fund, but available to retail customers in the ETF share class VCIT)
All total bond market index funds were losers. So the implication of your statement (which I happen to agree with) is that people should seriously consider whether holding total bond market index funds makes sense. I don't like them because the short term bonds they hold pay nothing (but add interest rate risk). Long term bonds can be okay as part of a portfolio if the manager is monitoring interest rate movements, economic trends, etc. But IMHO long term bonds are not great for holding passively.
Please explain your thinking on reevaluating any bond fund that has 1Q 2013 losses. I assume you mean sell? Why?
Lets look at Pimco Income (PONCX) in the last 6 years it has had 7 negative return quarters according to Yahoo finance. So why sell based on 1 quarter of negative returns?
Reply to @Art: Not at all, Art; I meant that almost every bond fund I follow (and every one I own) has made $ in 2013 so far, so it just was not that difficult to come up with a positive bond portfolio return. I didn't mean "any bond fund"; I was referring to a bond portfolio as a whole.
I was reacting to the same ol', same ol' "bonds are losers!" headline/talking point/ conventional wisdom ... when you (judging from your reasonable comment) & I both know bonds are not a monolithic asset class, and that active management at this point is the way to do bonds.
US. index-only investors lost $ in Q1, as msf notes, but for anyone else, the only way to have lost $ overall in bonds so far this year would have been with an allocation heavy in Treasuries, long-term investment grade, and/or $-denominated EM sovereigns.
My largest bond positions, fyi, are in PIGIX, PIMIX, and PDIIX. A toast to the gang at Pimco!
Comments
M* multisector bond fund returns
http://news.morningstar.com/fund-category-returns/multisector-bond/$FOCA$MU.aspx
It's not too often that people buy load shares (at least without a load waiver). So I'm guessing that you've got a limited selection (e.g. in a 401K), and this is what you've got available.
For people with more flexibility, they might consider skipping even the retail 'D' shares and go straight to Institutional. Even with a transaction fee, that may come out cheaper over time. I did a little checking, and Scottrade claims to offer PIMIX with just a $100min. For a $10K lump sum investment, the 30 basis point difference between the Institutional and D shares makes up the $17 TF in about half a year. After that, it's all gravy. ('Course you do have to pay $17 to sell, though.)
Vanguard Total Bond Fund II, investor shares (VTBIX): -0.06% YTD. This even with the fact that the fund outperformed its benchmark index by 6 basis points.
Vanguard Total Bond Fund, investor shares (VBMFX): -0.22% YTD.
There are 16 unique intermediate term (mostly total market) index bond funds. Only three of them managed to make money this quarter:
- Vanguard Mortgage-Backed Securities (VBMIX - only the cheapest institutional class made money)
- Two intermediate-term only Vanguard funds: Intermediate-Term Bond (VBIIX) and Intermediate-Term Corporate (an institutional class only fund, but available to retail customers in the ETF share class VCIT)
All total bond market index funds were losers. So the implication of your statement (which I happen to agree with) is that people should seriously consider whether holding total bond market index funds makes sense. I don't like them because the short term bonds they hold pay nothing (but add interest rate risk). Long term bonds can be okay as part of a portfolio if the manager is monitoring interest rate movements, economic trends, etc. But IMHO long term bonds are not great for holding passively.
AndyJ
Please explain your thinking on reevaluating any bond fund that has 1Q 2013 losses. I assume you mean sell? Why?
Lets look at Pimco Income (PONCX) in the last 6 years it has had 7 negative return quarters according to Yahoo finance. So why sell based on 1 quarter of negative returns?
http://finance.yahoo.com/q/pm?s=PONCX+Performance
Art
I was reacting to the same ol', same ol' "bonds are losers!" headline/talking point/ conventional wisdom ... when you (judging from your reasonable comment) & I both know bonds are not a monolithic asset class, and that active management at this point is the way to do bonds.
US. index-only investors lost $ in Q1, as msf notes, but for anyone else, the only way to have lost $ overall in bonds so far this year would have been with an allocation heavy in Treasuries, long-term investment grade, and/or $-denominated EM sovereigns.
My largest bond positions, fyi, are in PIGIX, PIMIX, and PDIIX. A toast to the gang at Pimco!
Bond funds the family holds are:
PTTRX
PYGFX
DIBRX Dreyfus has neg. return for the year.
MAINX
FSICX
TGTRX
RPHYX
PFODX
LSBRX