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Since bonds had their great pull back beginning in May, I reduced my allocation to fixed income by five percent (30% to 25%) and raised my allocation to equities by five percent (40% to 45%) keeping cash at 20% and alternatives at 10%. Currently, I am overweight in my cash allocation and underweight in my equity allocation form these targets. With this, I have been buying undervalued equities (mostly Europe and emerging markets along with some equity income funds that contained a good allocation to the undervalued sectors of the S&P 500 Index) when discovered. Presently, I am finding little to buy at this time and have now gone to the sidelines since most assets that I follow are now fairly to overvalued.
Hi Skeet: Sure appreciate all your reasoned comments.
Re bonds - which I believe you have been selling. They've been hammered this year, and rightfully so. Everything from unsustainably low yields (recently under 1.5% on the 10-year treasury) to possible default on munis by Detroit. I'm not a long term bond bull. But near term there may be some opportunities depending, as always, on which way the economy turns. The linked chart shows a nice uptick over the last month. High yield bounced +1.5% and long term treasuries +1.8%. Most bond sectors were up. I'd say if you're willing to play around here, some selective picks might possibly enhance fixed income performance over next few months. Not much else out there in fixed as I see it. Money Market funds are yielding effectively 0%. My ultra-short probably won't earn1% this year. RPHYX - used by many here - is up 2.17% & should pull about 3% by year-end.
Now - If you want to go heavier equities (or alternative investments) and cut back on fixed income, I have no issues there. On the other hand, if you want to hold some fixed income, some of the most beaten up bond sectors might be worth a look. A bit riskier IMHO is to rely on conservative allocation funds to replace or augment fixed income. I suspect that this approach is reality just a way of substituting a certain amount of equity investment for fixed income. FWIW, I recently upped the % of bond funds allowed in the fixed income sleeve to 65% - from the 50% where it had long sat. (Remainder is cash or ultra-short). I think the big losses in bonds this year are behind us. Beyond this year it's very problematic.
There's no right answers here. Really depends on risk tolerance and how important one views fixed-income to their portfolio & overall strategy. And, with double-digit advances in equities this year .... I doubt many are thinking much about whether they're making 1, 2, or 3% in fixed-income. (Fund flows seem to support that ). Regards
The income area of my portfolio consists of two sleeves an income sleeve and a hybrid income sleeve. Combined these two sleeves make up about 25% of my portfolio. The 5% reduction I made in the income area came from the income sleeve. With this, I am letting the fund managers decide where the better opportunities are to be found as I have been concentrating my efforts in the equity area. This is where the family has made most of our money from investing over the years and one of the reasons that I maintain higher cash levels than most. In this way, when I discover an opportunity I can fund it without having to use leverage or sell something that I might just wish ... not to sell.
In my fixed income sleeve I am currently holding three short term bond funds (THIFX, LALDX & ITAAX) along with two multi sector income funds (NEFZX & LBNDX). I may add another multi sector income fund possibly EVBAX or TSIAX. I was considering adding a home state muni fund but have ruled this out after studying them and doing some analysis work. In the past I have held some muni income for time-to-time.
In my hybrid income sleeve I hold six funds (CAPAX, FKINX, ISFAX, PASAX, PGBAX & AZNAX). These are mostly conservative allocation funds that kick off a good yield and they pretty much span the universe of most income type assets.
Overall, I am looking for the income area of my portfolio to cover its yield and other distributions and perhaps provide some capital appreciation this year. Thus far, it is looking like that it will.
Skeeter please explain the load issue as most of us don't have the option of bypassing a load. How does one do this if you want to acquire a load fund but not if a load is mandatory. Do you look for classes that are different than the load? Do you buy it from an investment adviser that waves a load? Please explain. prinx
I have found there is an art to buying sales load funds. Below I will share some of the ways I have used to navigate the sales load and better utilize nav buying.
One of the ways to pay a reduced sales load is to buy enough of a fund (or funds) to get a discount on the commission. Also, the commissions paid are usually less on fixed income products over equity products. With this, one can buy into a fund family through the purchase of a fixed income A share product where the sales load is usually in the three to four percent range (or less) and then do a nav exchange sometime out in the future into one of the fund family's A share equity products that has a sales load of lets say in the five percent or so range. Most brokerage houses that sell load base funds don't charge an annual wrap fee on these type products to hold in their brokerage accounts. The annual account fee does most times vary with each brokerage house and the type of account held so it may pay to check around. What might seem as the high cost purchase on the front end might indeed be a low cost option over time as management fees, etc. are usually less on sales commissioned funds over many no load funds and don't forget the wrap fees. I have found that you only pay the sales load one time and then are free to move around in that family of funds over time through net asset value exchanges without paying the sales load again. Once you remove your assets from the family ... let's say cash out ... you have a certain period of time to re-enter without paying the sales load again. In addition, most major fund families have a money market fund ... and, lets say if you wanted to go to cash you just park the sales proceeds in the money market fund until you are ready to buy into another fund within the family again ... all at nav.
This is just some of the ways that I am aware of that a mutual fund investor can manage the sales load net of paying some big bucks (usually one million invested with the fund family) to avoid it. One might wish to start reading more prospectuses on sales loads and discounts available to certain class of investors along with nav exchange privileges. In addition, most fund families sell at nav to those employed at a broker dealer that handles their products. So those that work in the industry can usually avoid the sales load but not always. Sometimes, I may just have to pay the full sales load to get the fund I want and if I do then I will keep the money invested somewhere in that family of funds as this avoids paying the sales load again. Usually, though, you can reinvest fund distributions sales load free within the fund and, at times, in other funds within the mutual fund family.
I hold mostly A shares as a good bit on my investments came to me by gift and inheritance where the sales loads were paid many years ago. I am now free to move around within the respective fund families choosing among their products via nav exchanges.
Also, I have heard of folks that rolled over their 401k account proceeds to an investment firm’s self directed IRA account and were able to in some cases repurchase mutual funds that they held within their 401k accounts at nav and/or combine these purchases with other funds already owned to secure discounts in their new purchases.
You might wish to read the fund prospectus on any fund being considered for purchase to see if any of the above might apply to you and how to better navigate nav transactions. In addition, you might wish to visit one of the many neighborhood brokerage houses such as Raymond James, Edward Jones or Scottrade (there are others) and speak with them on the type of accounts and products they offer and the cost and fees associated with each type of account and/or product(s) along with any discounts they may offer and the best way to obtain them.
Earlier in my investing history I invested solely in ntf with discount brokers, ignored funds with loads. Since that time many great fund families have been purchased by load families, although there still are many ntf families available. Like skeeter, a good portion of my current holdings were inherited. I made the decision to hire an advisor at ML whom I had known for a number of years, where I gained access to load funds with loads waved, institutional shares with lower expense ratios, access to many closed funds, and in general have lowered the expense ratios of the funds I hold. Also am able to buy stocks and etfs with no fees. Yes, I do pay an annual fee based on amount of assets under management, but it is less than I thought it would be, and I think almost half of is offset by having access to lower expense classes of funds. My advisor has kept me on track, and more than a few times, has stopped me from selling a stock due to my lack of confidence it would come back. We now use stop losses on stocks which are 25% of total. Down side is not having access to Vanguard funds but I was able to move VDIGX and VPCCX , just can't add to it. If I really wanted a fund unavailable at ML I would simply buy it directly from the fund family.
I am not advocating this for everyone, but wanted to show an alternative to paying loads and having access to a wider variety of investments while receiving advice.
I have been reading your post and have found your handle "slick" to be an interesting one and one that I bet has a story with it. Would you mind sharing how you came by it?
Mine comes form a dear departed pet ... and, I use to shoot a lot of skeet years ago before the gun recoil became too much for my shoulder.
I had to laugh when I read your post, since the handle "Slick" is also from a pet. He was a wonderful Half Arabian/Half Morgan cross that I had for about five years when I lived in Cleveland. I have used that handle since signing onto the internet in 1997. I have been asked by a number of people over the years if it was after Slick Willie in the Clinton era or some dubious part of my past. Sorry to disappoint anyone who relished the idea of a more interesting reason for the name. Got to admit, not too many women around named "Slick" lol. I guess most everyone assumed by the name that I was a gent.
No, I was not surprised at you being female because I have been following your post ... What puzzled me, though, was ... How did a gal come by the nick name or handle slick? Usually slick refers to someone that has hood-winked someone by being clever or through trickery. Now we know.
Hey Slick and Skeeter my handle prinx is named after my 3rd English Setter Prinx. There are probably a whole lot of us out there that want to keep our beloved long gone pets in our lives forever and ever. I use prinx at least 15-20 times per day. My long lost friend is always with me. prinx
Thanks for sharing ... I kinda wondered about your handle too ... five letters ... I wonder ... What mutual fund ticker bears that? So I ran it and I came up with T Rowe Price Summit Municipal Income ... A four star fund ... I tought you might have been connected with the fund someway?
Comments
Since bonds had their great pull back beginning in May, I reduced my allocation to fixed income by five percent (30% to 25%) and raised my allocation to equities by five percent (40% to 45%) keeping cash at 20% and alternatives at 10%. Currently, I am overweight in my cash allocation and underweight in my equity allocation form these targets. With this, I have been buying undervalued equities (mostly Europe and emerging markets along with some equity income funds that contained a good allocation to the undervalued sectors of the S&P 500 Index) when discovered. Presently, I am finding little to buy at this time and have now gone to the sidelines since most assets that I follow are now fairly to overvalued.
Skeeter
Re bonds - which I believe you have been selling. They've been hammered this year, and rightfully so. Everything from unsustainably low yields (recently under 1.5% on the 10-year treasury) to possible default on munis by Detroit. I'm not a long term bond bull. But near term there may be some opportunities depending, as always, on which way the economy turns. The linked chart shows a nice uptick over the last month. High yield bounced +1.5% and long term treasuries +1.8%. Most bond sectors were up. I'd say if you're willing to play around here, some selective picks might possibly enhance fixed income performance over next few months. Not much else out there in fixed as I see it. Money Market funds are yielding effectively 0%. My ultra-short probably won't earn1% this year. RPHYX - used by many here - is up 2.17% & should pull about 3% by year-end.
Now - If you want to go heavier equities (or alternative investments) and cut back on fixed income, I have no issues there. On the other hand, if you want to hold some fixed income, some of the most beaten up bond sectors might be worth a look. A bit riskier IMHO is to rely on conservative allocation funds to replace or augment fixed income. I suspect that this approach is reality just a way of substituting a certain amount of equity investment for fixed income. FWIW, I recently upped the % of bond funds allowed in the fixed income sleeve to 65% - from the 50% where it had long sat. (Remainder is cash or ultra-short). I think the big losses in bonds this year are behind us. Beyond this year it's very problematic.
There's no right answers here. Really depends on risk tolerance and how important one views fixed-income to their portfolio & overall strategy. And, with double-digit advances in equities this year .... I doubt many are thinking much about whether they're making 1, 2, or 3% in fixed-income. (Fund flows seem to support that ). Regards
http://news.morningstar.com/fund-category-returns/
Thanks for stopping by and for your comments.
The income area of my portfolio consists of two sleeves an income sleeve and a hybrid income sleeve. Combined these two sleeves make up about 25% of my portfolio. The 5% reduction I made in the income area came from the income sleeve. With this, I am letting the fund managers decide where the better opportunities are to be found as I have been concentrating my efforts in the equity area. This is where the family has made most of our money from investing over the years and one of the reasons that I maintain higher cash levels than most. In this way, when I discover an opportunity I can fund it without having to use leverage or sell something that I might just wish ... not to sell.
In my fixed income sleeve I am currently holding three short term bond funds (THIFX, LALDX & ITAAX) along with two multi sector income funds (NEFZX & LBNDX). I may add another multi sector income fund possibly EVBAX or TSIAX. I was considering adding a home state muni fund but have ruled this out after studying them and doing some analysis work. In the past I have held some muni income for time-to-time.
In my hybrid income sleeve I hold six funds (CAPAX, FKINX, ISFAX, PASAX, PGBAX & AZNAX). These are mostly conservative allocation funds that kick off a good yield and they pretty much span the universe of most income type assets.
Overall, I am looking for the income area of my portfolio to cover its yield and other distributions and perhaps provide some capital appreciation this year. Thus far, it is looking like that it will.
Skeeter
How does one do this if you want to acquire a load fund but not if a load is mandatory.
Do you look for classes that are different than the load? Do you buy it from an investment
adviser that waves a load? Please explain.
prinx
I have found there is an art to buying sales load funds. Below I will share some of the ways I have used to navigate the sales load and better utilize nav buying.
One of the ways to pay a reduced sales load is to buy enough of a fund (or funds) to get a discount on the commission. Also, the commissions paid are usually less on fixed income products over equity products. With this, one can buy into a fund family through the purchase of a fixed income A share product where the sales load is usually in the three to four percent range (or less) and then do a nav exchange sometime out in the future into one of the fund family's A share equity products that has a sales load of lets say in the five percent or so range. Most brokerage houses that sell load base funds don't charge an annual wrap fee on these type products to hold in their brokerage accounts. The annual account fee does most times vary with each brokerage house and the type of account held so it may pay to check around. What might seem as the high cost purchase on the front end might indeed be a low cost option over time as management fees, etc. are usually less on sales commissioned funds over many no load funds and don't forget the wrap fees. I have found that you only pay the sales load one time and then are free to move around in that family of funds over time through net asset value exchanges without paying the sales load again. Once you remove your assets from the family ... let's say cash out ... you have a certain period of time to re-enter without paying the sales load again. In addition, most major fund families have a money market fund ... and, lets say if you wanted to go to cash you just park the sales proceeds in the money market fund until you are ready to buy into another fund within the family again ... all at nav.
This is just some of the ways that I am aware of that a mutual fund investor can manage the sales load net of paying some big bucks (usually one million invested with the fund family) to avoid it. One might wish to start reading more prospectuses on sales loads and discounts available to certain class of investors along with nav exchange privileges. In addition, most fund families sell at nav to those employed at a broker dealer that handles their products. So those that work in the industry can usually avoid the sales load but not always. Sometimes, I may just have to pay the full sales load to get the fund I want and if I do then I will keep the money invested somewhere in that family of funds as this avoids paying the sales load again. Usually, though, you can reinvest fund distributions sales load free within the fund and, at times, in other funds within the mutual fund family.
I hold mostly A shares as a good bit on my investments came to me by gift and inheritance where the sales loads were paid many years ago. I am now free to move around within the respective fund families choosing among their products via nav exchanges.
Also, I have heard of folks that rolled over their 401k account proceeds to an investment firm’s self directed IRA account and were able to in some cases repurchase mutual funds that they held within their 401k accounts at nav and/or combine these purchases with other funds already owned to secure discounts in their new purchases.
You might wish to read the fund prospectus on any fund being considered for purchase to see if any of the above might apply to you and how to better navigate nav transactions. In addition, you might wish to visit one of the many neighborhood brokerage houses such as Raymond James, Edward Jones or Scottrade (there are others) and speak with them on the type of accounts and products they offer and the cost and fees associated with each type of account and/or product(s) along with any discounts they may offer and the best way to obtain them.
I hope, in some way, this helps.
Skeeter
prinx
Earlier in my investing history I invested solely in ntf with discount brokers, ignored funds with loads. Since that time many great fund families have been purchased by load families, although there still are many ntf families available. Like skeeter, a good portion of my current holdings were inherited. I made the decision to hire an advisor at ML whom I had known for a number of years, where I gained access to load funds with loads waved, institutional shares with lower expense ratios, access to many closed funds, and in general have lowered the expense ratios of the funds I hold. Also am able to buy stocks and etfs with no fees. Yes, I do pay an annual fee based on amount of assets under management, but it is less than I thought it would be, and I think almost half of is offset by having access to lower expense classes of funds. My advisor has kept me on track, and more than a few times, has stopped me from selling a stock due to my lack of confidence it would come back. We now use stop losses on stocks which are 25% of total. Down side is not having access to Vanguard funds but I was able to move VDIGX and VPCCX , just can't add to it. If I really wanted a fund unavailable at ML I would simply buy it directly from the fund family.
I am not advocating this for everyone, but wanted to show an alternative to paying loads and having access to a wider variety of investments while receiving advice.
Thanks for stopping by and making comments.
I have been reading your post and have found your handle "slick" to be an interesting one and one that I bet has a story with it. Would you mind sharing how you came by it?
Mine comes form a dear departed pet ... and, I use to shoot a lot of skeet years ago before the gun recoil became too much for my shoulder.
Just wondering???
Skeeter
I had to laugh when I read your post, since the handle "Slick" is also from a pet. He was a wonderful Half Arabian/Half Morgan cross that I had for about five years when I lived in Cleveland. I have used that handle since signing onto the internet in 1997. I have been asked by a number of people over the years if it was after Slick Willie in the Clinton era or some dubious part of my past. Sorry to disappoint anyone who relished the idea of a more interesting reason for the name. Got to admit, not too many women around named "Slick" lol. I guess most everyone assumed by the name that I was a gent.
No, I was not surprised at you being female because I have been following your post ...
What puzzled me, though, was ... How did a gal come by the nick name or handle slick? Usually slick refers to someone that has hood-winked someone by being clever or through trickery. Now we know.
Have a good evening ...
Skeeter
prinx
Thanks for sharing ... I kinda wondered about your handle too ... five letters ... I wonder ... What mutual fund ticker bears that? So I ran it and I came up with T Rowe Price Summit Municipal Income ... A four star fund ... I tought you might have been connected with the fund someway?
PRINX Morningstar Report ...http://quotes.morningstar.com/fund/f?t=prinx®ion=USA
Skeeter