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.
Successful investors and traders are those who are able to be in sync with the rhythm (flow) of the market - nearly all the time. One of the *rare* fund managers who seems to have this knack is Dan Ivascyn of the Pimco Income Fund.
Must have been mainly the mortgages? PMZIX and TGLMX popped too, just not as much, altho DBLTX barely moved. EM debt was mostly up too ... that seems to be the main driver of PDIIX's daily price variation these days.
Reply to @AndyJ: NAVs on PDI, DMO, JMT and JLS went up more than 1% yesterday - outperforming the respective share prices. some mortgages got marked up apparently.
I am looking for some thoughts as to how best to reduce some funds, keep quality funds in their respective space, and maintain short to intermediate duration. As you look at this, keep in mind that I hold about the same amount of EM as I do investment grade corporates and HY (mainly short term duration in OSTIX)
Right now I have my EM debt mainly in TGEIX with some in PEBIX. I felt that TGEIX had the juice and PEBIX the conservative arm. I also have PIGIX and PIMIX which add about 27% and 19% respectively.
To eliminate one fund, one alternative would be to sell TGEIX and and PEBIX and buy PDIIX. Do you feel the 55% EM position in PDIIX is managed as well as TGEIX and PEBIX?
As a follow-up, I also have about a 1/3rd position in non-US developed, but I am concerned that I hold about 2 x as much in mortgages (DBLTX, TGLMX, PIMIX) as I do in EM, HY, and IG (VFIDX and PIGIX).
Another solution might be to sell DBLTX and TGLMX and distribute those proceeds between PIMIX, PIGIX, and PDIIX. This would reduce my mortgages, keep me in EM mainly with PDIIX (also PIMIX and PIGIX) and increase my in non-US developed with PDIIX, PIMIX and some with PIGIX. I would keep VFIDX and OSTIX as they are different animals. The bottom line is I would go from 8 funds to 5 funds.
I ended up with 8 funds because I have multiple retirement accounts that cannot be consolidated, but I did not intend to have as many funds, nor being so heavy in mortgages. But again, I did want good funds in their respective space. Also, I now have the ability to purchase institutional class Pimco funds at Vanguard Brokerage with lower minimums, that I did not have before, which will give me more versatility with changes/consolidation. In other words, with the lower minimums I now can put the same fund in two accounts.
That said, I would appreciate your thoughts and please include how you would allocate between mortgages, IG, EM, HY, and non-US developed in today's environment.
Mona, Bob C would be your best bet. I tend to be too much outside of the box for this forum and how I trade/invest. I also tend to concentrate in whatever is working best. My opinion is that you are overthinking this too much and you have too many overlapping funds. But then I think pretty much believe everyone here has far too many funds. Without going to Morningstar to analyse all your funds I would say get rid of DBLTX and PEBIX. I've always been a fan of TGLMX. You don't need PDIIX. I am not even sure you need OSTIX albeit it has been a good fund but lags PIMIX (aka PONDX) Whatever you do, I would overweight PIMIX.
Here are a few thoughts you might consider if you want to consolidate:
* PIMIX could easily be the only major source of mortgages in the portfolio, and it's worth a good-size position in general.
* If you want to own a rock-solid, low-risk fund with consistent return, DBLTX can fill that role ... and if that's a priority, I wouldn't worry too much about having two funds with substantial stakes in mortgages.
* I let PDIIX be my core position in EM debt, and add an ETF here & there when I think it'll be useful. The EM sleeve seems to be roughly equivalent to PEBIX ... not too wild, mostly $-denominated.
* I'd probably look at VFIDX and PIGIX as overlapping, & go with PIGIX in that space.
I have made a few moves that I would like to mention, but there might be another one or two more to go. Again, one of the problems is I have multiple retirement accounts that cannot be consolidated. This makes reducing the number of funds somewhat difficult, while trying to achieve some degree of balance between the different type of bonds.
1. I sold my positions in PEBIX and TEGIX.
2. I purchased PDIIX.
2. I sold VFIDX.
3. I added to PIMIX.
If I put this in units of 1, this is where I now stand.
I have 1 unit of investment grade bonds. A little comes from PIMIX, more from PDIIX, and the most from PIGIX.
I have 1 unit of emerging markets bonds. This is coming from PIMIX, more from PIGIX, and the most from PDIIX.
I have 1.5 units of high yield. 1/2 unit from PIGIX, PIMIX, and PDIIX. 1 unit from OSTIX.
I have 1/2 unit of non-US developed coming from the three Pimco funds.
I have 2.5 units of mortgages primarily between DBLTX, TGLMX, and PIMIX.
My flexibility lies in "account 1" where I hold DBLTX and TGLMX (clearly TGLMX has been a better performer for me). While I wanted to reduce the number of funds and in fact did by selling 3, I now may need to add one to obtain a better balance. I could sell DBLTX or TGLMX (some or all of one) and I still will be overweight in mortgages and on par with my high yield.
The question becomes, which of the two should I sell and what should I purchase. One alternative is as I interpreted what AndyJ said, I could sell all of TGLMX and put some of the proceeds in my existing position of DBLTX and some in a new position of PIMIX (or keep TGLMX and sell DBLTX). However, with DBLTX about 80% in mortgages the remainder cash and PIMIX 64% mortgages, I will still be considerably overweight in mortgages. Possibly that's fine and I take one fund away and add one.
While 1 out of the 1.5 units of high yield is coming from OSTIX, and I'm glad it is, if I add any one of the Pimco funds I own in other accounts, I will be adding to high yield, which does not thrill me. However, I do need to recognize that OSTIX is a lower risk high yield fund.
Since I only have a 1/2 unit in non-US developed, possibly for diversification, it might make sense to sell some or all DBLTX or TGLMX (if some then combine the remaining proceeds into the other) and purchase a 1/2 unit of a world bond fund such as MAINX.
I do agree with Hiyield that I am over thinking this, but I am pleased that I have made strides in reducing the number of funds, while seemingly losing nothing.
Your thoughts as to how best to handle "account 1" would be appreciated.
While I realize that it is pretty obvious that the Fed is going nowhere on short-term rates for probably at least the next 12 months, I remain cautious. The domestic bond funds we use have pretty flexible mandates, and managers have taken advantage of this, which is good. In most client portfolios, we use a mix of OSTIX, BSIIX, LSBDX, and GSZIX on the domestic side. Yeah, I know there are some foreign bond and currency holdings in some of these, but I am confortable with that, especially with LSBDX's Canadian currency/bond positions. For foreign bonds, we use TGBAX in every account, with GSDIX and GIMDX for the pure emerging market bond play (both dollar and non-dollar bonds). In Fidelity accounts, we opt for FNMIX and PLBDX.
We have spent some time looking at the kinds of bonds the above funds own, their average durations, etc. But given the fact that OSTIX, BSIIX, and GSZIX have very low durations and great management teams, we are comfortable with what they own. LSBDX has continued to reduce its duration, now averaging about 4.7 (very low by their standards). TGBAX is even lower risk at 1.5 duration.
Typically, we allocate about 50% to 'domestic' bond funds and 50% to 'foreign' bond funds. I would encourage investors to have some allocation to non-dollar, or local currency, EM bond funds.
We are considering a fund that owns more floating rate bonds, specifically BFRIX (almost zero duration), EIBLX or OOSYX. But those would be especially attractive as rates move higher.
A final note, as many posters already know, we have not used (nor would we use) DBLTX or any of Mr. Gundlach's funds. It's a matter of trust. We absolutely trust Carl Kaufman (OSTIX), Rick Rieder (BSIIX), Michael Hasenstab (TGBAX), Dan Fuss (LSBDX), and Sam Finkelstein (GIMDX and GSDIX).
You have provided me good thoughts. Thanks. At this point in time, I too am most comfortable with good management teams and funds with low average duration. That's why I am getting the larger part of my high yield from OSTIX.
I also like the idea of an approximate 50% allocation to domestic bond funds and 50% allocation to foreign bond funds. I am having difficulty figuring out how much allocation I currently have to each, which is one of the two reasons I am having a problem on which direction to go after my changes. It does appear that I have considerably more domestic than foreign and the reason I brought up the idea of MAINX. I do need to stay on a Vanguard Brokerage platform and I would have liked to see how Vanguard Total International Bond Index Fund fit in, but I understand it won't be available for a few more months.
The second reason I am having a problem on which direction to go in now and is related to the first, is I do not have a good feel as to how best to allocate between mortgages, IG, EM, HY, and non-US developed in today's environment. I only get the sense that I am overly allocated to mortgages because I have '2.5 units' compared to 1.5 of high yield, 1 of IG and EM, and 1/2 of non-US developed.
Another combination that comes to mind in addition to my prior post, is to sell both DBLTX and TGLMX and replace with PIMIX and a world bond fund. This would decrease my exposure to mortgages and increase it to foreign bonds, and give me more of a 'uniform' allocation between the different bond classes. However, I would be 'considerably' overweight in PIMIX, which may not be a bad thing.
Reply to @Mona: Mona, got your message; I'd just reiterate from above that PIMIX would be fine for all your mortgage exposure by itself, IMHO. I'd look at DBLTX apart from the specific asset category and decide whether you want a fund in the portfolio that's comparatively safe, balances risks well, that's not going to either shoot the lights out or take a swan dive, and provide some fairly steady income at a decent level. If that approach appeals, I'd keep DBLTX, and think of it in as an allocation to "safer, low-beta bond" more than to mortgages.
Another thought would be to have an additional fund house beyond Pimco and Osterweis in the portfolio, to hedge management group-think risk a bit more ... so DBLTX or TGLMX would help there, OR, as you mentioned in this last post, you could try a foreign bond fund instead. If your Asia allocation is light overall (considering stocks and bonds), that could be MAINX, which is pretty expensive but solid and with plenty of info about it right here on MFO. And to Bob's point above about currencies, which makes great sense, MAINX has mixed currency exposure.
Last, I'm with HY007 that an overweight to PIMIX is not a problem.
Comments
AndyJ, Hiyiels007, BobC, et al.
I am looking for some thoughts as to how best to reduce some funds, keep quality funds in their respective space, and maintain short to intermediate duration. As you look at this, keep in mind that I hold about the same amount of EM as I do investment grade corporates and HY (mainly short term duration in OSTIX)
Right now I have my EM debt mainly in TGEIX with some in PEBIX. I felt that TGEIX had the juice and PEBIX the conservative arm. I also have PIGIX and PIMIX which add about 27% and 19% respectively.
To eliminate one fund, one alternative would be to sell TGEIX and and PEBIX and buy PDIIX. Do you feel the 55% EM position in PDIIX is managed as well as TGEIX and PEBIX?
As a follow-up, I also have about a 1/3rd position in non-US developed, but I am concerned that I hold about 2 x as much in mortgages (DBLTX, TGLMX, PIMIX) as I do in EM, HY, and IG (VFIDX and PIGIX).
Another solution might be to sell DBLTX and TGLMX and distribute those proceeds between PIMIX, PIGIX, and PDIIX. This would reduce my mortgages, keep me in EM mainly with PDIIX (also PIMIX and PIGIX) and increase my in non-US developed with PDIIX, PIMIX and some with PIGIX. I would keep VFIDX and OSTIX as they are different animals. The bottom line is I would go from 8 funds to 5 funds.
I ended up with 8 funds because I have multiple retirement accounts that cannot be consolidated, but I did not intend to have as many funds, nor being so heavy in mortgages. But again, I did want good funds in their respective space. Also, I now have the ability to purchase institutional class Pimco funds at Vanguard Brokerage with lower minimums, that I did not have before, which will give me more versatility with changes/consolidation. In other words, with the lower minimums I now can put the same fund in two accounts.
That said, I would appreciate your thoughts and please include how you would allocate between mortgages, IG, EM, HY, and non-US developed in today's environment.
Mona
Here are a few thoughts you might consider if you want to consolidate:
* PIMIX could easily be the only major source of mortgages in the portfolio, and it's worth a good-size position in general.
* If you want to own a rock-solid, low-risk fund with consistent return, DBLTX can fill that role ... and if that's a priority, I wouldn't worry too much about having two funds with substantial stakes in mortgages.
* I let PDIIX be my core position in EM debt, and add an ETF here & there when I think it'll be useful. The EM sleeve seems to be roughly equivalent to PEBIX ... not too wild, mostly $-denominated.
* I'd probably look at VFIDX and PIGIX as overlapping, & go with PIGIX in that space.
G'luck, AJ
Thanks for your posts.
As a read both posts, other than your thoughts on PIMIX, they show there are many roads to Dublin.
Mona
AndyJ, Hiyield007, BobC, et al.
I have made a few moves that I would like to mention, but there might be another one or two more to go. Again, one of the problems is I have multiple retirement accounts that cannot be consolidated. This makes reducing the number of funds somewhat difficult, while trying to achieve some degree of balance between the different type of bonds.
1. I sold my positions in PEBIX and TEGIX.
2. I purchased PDIIX.
2. I sold VFIDX.
3. I added to PIMIX.
If I put this in units of 1, this is where I now stand.
I have 1 unit of investment grade bonds. A little comes from PIMIX, more from PDIIX, and the most from PIGIX.
I have 1 unit of emerging markets bonds. This is coming from PIMIX, more from PIGIX, and the most from PDIIX.
I have 1.5 units of high yield. 1/2 unit from PIGIX, PIMIX, and PDIIX. 1 unit from OSTIX.
I have 1/2 unit of non-US developed coming from the three Pimco funds.
I have 2.5 units of mortgages primarily between DBLTX, TGLMX, and PIMIX.
My flexibility lies in "account 1" where I hold DBLTX and TGLMX (clearly TGLMX has been a better performer for me). While I wanted to reduce the number of funds and in fact did by selling 3, I now may need to add one to obtain a better balance. I could sell DBLTX or TGLMX (some or all of one) and I still will be overweight in mortgages and on par with my high yield.
The question becomes, which of the two should I sell and what should I purchase. One alternative is as I interpreted what AndyJ said, I could sell all of TGLMX and put some of the proceeds in my existing position of DBLTX and some in a new position of PIMIX (or keep TGLMX and sell DBLTX). However, with DBLTX about 80% in mortgages the remainder cash and PIMIX 64% mortgages, I will still be considerably overweight in mortgages. Possibly that's fine and I take one fund away and add one.
While 1 out of the 1.5 units of high yield is coming from OSTIX, and I'm glad it is, if I add any one of the Pimco funds I own in other accounts, I will be adding to high yield, which does not thrill me. However, I do need to recognize that OSTIX is a lower risk high yield fund.
Since I only have a 1/2 unit in non-US developed, possibly for diversification, it might make sense to sell some or all DBLTX or TGLMX (if some then combine the remaining proceeds into the other) and purchase a 1/2 unit of a world bond fund such as MAINX.
I do agree with Hiyield that I am over thinking this, but I am pleased that I have made strides in reducing the number of funds, while seemingly losing nothing.
Your thoughts as to how best to handle "account 1" would be appreciated.
Mona
We have spent some time looking at the kinds of bonds the above funds own, their average durations, etc. But given the fact that OSTIX, BSIIX, and GSZIX have very low durations and great management teams, we are comfortable with what they own. LSBDX has continued to reduce its duration, now averaging about 4.7 (very low by their standards). TGBAX is even lower risk at 1.5 duration.
Typically, we allocate about 50% to 'domestic' bond funds and 50% to 'foreign' bond funds. I would encourage investors to have some allocation to non-dollar, or local currency, EM bond funds.
We are considering a fund that owns more floating rate bonds, specifically BFRIX (almost zero duration), EIBLX or OOSYX. But those would be especially attractive as rates move higher.
A final note, as many posters already know, we have not used (nor would we use) DBLTX or any of Mr. Gundlach's funds. It's a matter of trust. We absolutely trust Carl Kaufman (OSTIX), Rick Rieder (BSIIX), Michael Hasenstab (TGBAX), Dan Fuss (LSBDX), and Sam Finkelstein (GIMDX and GSDIX).
Hi BobC,
Thanks much for your post.
You have provided me good thoughts. Thanks. At this point in time, I too am most comfortable with good management teams and funds with low average duration. That's why I am getting the larger part of my high yield from OSTIX.
I also like the idea of an approximate 50% allocation to domestic bond funds and 50% allocation to foreign bond funds. I am having difficulty figuring out how much allocation I currently have to each, which is one of the two reasons I am having a problem on which direction to go after my changes. It does appear that I have considerably more domestic than foreign and the reason I brought up the idea of MAINX. I do need to stay on a Vanguard Brokerage platform and I would have liked to see how Vanguard Total International Bond Index Fund fit in, but I understand it won't be available for a few more months.
The second reason I am having a problem on which direction to go in now and is related to the first, is I do not have a good feel as to how best to allocate between mortgages, IG, EM, HY, and non-US developed in today's environment. I only get the sense that I am overly allocated to mortgages because I have '2.5 units' compared to 1.5 of high yield, 1 of IG and EM, and 1/2 of non-US developed.
Another combination that comes to mind in addition to my prior post, is to sell both DBLTX and TGLMX and replace with PIMIX and a world bond fund. This would decrease my exposure to mortgages and increase it to foreign bonds, and give me more of a 'uniform' allocation between the different bond classes. However, I would be 'considerably' overweight in PIMIX, which may not be a bad thing.
Mona
Another thought would be to have an additional fund house beyond Pimco and Osterweis in the portfolio, to hedge management group-think risk a bit more ... so DBLTX or TGLMX would help there, OR, as you mentioned in this last post, you could try a foreign bond fund instead. If your Asia allocation is light overall (considering stocks and bonds), that could be MAINX, which is pretty expensive but solid and with plenty of info about it right here on MFO. And to Bob's point above about currencies, which makes great sense, MAINX has mixed currency exposure.
Last, I'm with HY007 that an overweight to PIMIX is not a problem.