What do you use as a core bond fund? I'm looking for options that help serve as ballast against equity downturns, not something that has big exposure to high yield. Many multi-sector and core plus bond funds ramp up their exposure to high yield (10-20%) as a means of boosting returns and yield. Other funds seems to use the mortgage sector as a way of sidestepping interest rate hikes, but what happens when those sectors go south? I guess I'm looking for something that successfully spreads its bets between corporates, treasuries and MBS without dipping heavily into high yield.
Comments
Regards,
Ted
30 corporates
25 agency mbs pass through
16 treasuries
5 agency mbs arm
5 asset-backed.
TTM 2.78%
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@Willmatt72 nailed the questions re bonds pretty well. Who knows? Here the questions come a lot easier than the answers. Downside protection comes at a price. The “downier” the degree of protection, the more you give up in yield.
I think Price’s RPSIX is grossly underrated. M* and the others rate it generally “fair-middling”.
But it’s a nice diversified one-stop income fund (not strictly a bond fund). You won’t get rich with it and you won’t go broke either. Pulls from a stable of nearly a dozen TRP funds and is run by forks who are generally ahead of the allocation game - sometimes so far out in front they look stupid. The generally 10-15% dose of an income producing equity fund (PRFDX) will boost returns longer term.
The above would constitute my largest fixed income holding at present (excluding cash). And DODLX would be my second largest hold.
MAINX. Not a domestic core bond fund at all. I mention this one in response to @hank, who mentioned DODLX.
I’d agree with you about their New Income Fund (PRCIX). Never could figure out what they were trying to do with it and never owned it.
I’d also admit that fixed income generally hasn’t been Price’s strong suit. I think they made a lot of progress under Mary Miller who served as their head of fixed income from 2004 until 2009 when Obama tapped her to work for Treasury. Backslid perhaps since than - though their more aggressive offerings like EM and high yield have prospered. In digging up what I could tonight I stumbled across a blurb from Price that their current head of fixed income will retire at year’s end. I thought it was worth posting as a separate thread.
RPSIX, which I mentioned in the earlier post, isn’t a bond fund per se. Price classifies it as an asset allocation fund. While bonds are not their forte, Price has proven itself through its wise allocation decisions over the years. Here’s the funds in which RPSIX may invest. Generally, it has a stake in most, but not all of these, at any given time. Sorry I couldn’t find a way to copy the exact percentages.
Corporate Income Fund
Emerging Markets Bond Fund
Emerging Markets Local Currency Bond Fund
Equity Income Fund
Floating Rate Fund
GNMA Fund
High Yield Fund
Inflation Protected Bond Fund
International Bond Fund
Limited Duration Inflation Focused Bond Fund
New Income Fund
Short-Term Bond Fund
U.S. Treasury Intermediate Fund
U.S. Treasury Long-Term Fund
U.S. Treasury Money Fund
GRSPX, AUXFX, OAKBX, GLRBX, LCORX, VWELX, FPACX, ICMBX, APPLX
Funds I'm building positions in GBLEX, IFAFX, BTBFX, VGWLX, CETAX, WHGIX, FEBAX
Funds I'm looking to buy TILDX
This way you'll always have performance matching the index performance and everything good and bad that comes with this.
This could complement ur PIMIX and other active bond positions that are more credit sensitive.
My largest position in a core bond fund is NEFZX. Over the past ten years it has served me well.
Another core bond fund that I'm happy with is LBNDX.
And, yet another one is TSIAX.
These three funds combined make up about 50% of my income sleeve. The other three funds held within this sleeve are BAICX, CTFAX & GIFAX.
I've been thinking of adding to NEFZX & CTFAX.
I like CTFAX and I've owned it for a good number of years. Most times it's bond allocation is North of 80% and during stock market pullbacks it loads equities. Currently, it is about 90% fixed & 10% equity. However, it only makes distribution two times per year (June and December). It will be after the June distribution before I cut any new money into it. With sizeable distributions comes a high draw down percent (DD).
A chart of a few of the funds mentioned recently with SPY for reference.
Mid Dec. 2017 to date.
http://stockcharts.com/freecharts/perf.php?NEFZX,LBNDX,TSIAX,CTFAX,SPY&p=6&O=011000