Just for the heck of it.....being curious.
MINT, (Pimco Enhanced Short Maturity Active Mg'd) bond etf had a better return in 2023, versus CD's and MMK'Ts; and appears to be on course for 2024 with similar performance results. No, it's not FDIC insured; but is readily bought/sold.
Distributions are monthly.
This etf is best suited inside a tax deferred acct, unless one doesn't mind the taxation at year's end tax time; not unlike CD and MMKT distributions.
--- 2023 return = 6.25%
Well, anyway; one may take a peek and find whether this etf may be a suitable add to a portfolio.
MINT etf M* data. This link is for 'quote' page with various data. Next 'select' performance and then 'portfolio'.
VettaFi profile.MINT etf at Stock Chart and technical RSI. The RSI at 99.66 for an extended period is one I've not seen before, period. But, this represents the continued strength of investor demand.
PIMCO site.
Comments
VRIG is actively managed, as is PULS, IIRC.
Happy hunting.
Edit> Here's a plug for the free quicksearch feature to compare up to five funds.
@yogibearbull Any particular reason you use two different funds?
- short term (12 mo or less) zeros are taxed only at maturity, so a 9 month instrument purchased in May 2024 will not be taxed until the 2025 tax year. This goes for T-bills and short term CDs that pay interest at maturity.
- if an ETF or fund (other than a MMF) pays interest periodically, one might choose not to reinvest divs. Otherwise, one could be facing an accounting nightmare when withdrawing cash. There's a significant risk of generating wash sales - sell shares at $10.02 that were purchased at $10.05 (a small loss); then the divs reinvested that month will "wash out" that loss.
- Treasury funds like USFR are (mostly) state tax-exempt.
Why multiple funds:
Floating rate and fixed rate markets (yields) don't move in sync and hard to predict. Likewise treasuries and commercial paper.
Personally I like RPHIX and FLRN, though FLOT is very close to FLRN. I agree with Yogi that Pimco seems to have higher expense funds. In the past JPST (another fund of this ilk) was more aggressive than ICSH and had done better. Not so since roughly the beginning of 2021 when volatilities were comparable and ICSH returned more.
Here's Fidelity's comparison of RPHIX, USFR, FLRN, ICSH, and MINT. As conditions shift, the cumulative (e.g. three-year) figures could change significantly. IMHO that's the argument for using multiple types of these funds.
These are genuine inv-grade funds. I don't use ST-HY for this purpose, but have IT-HY and multisector bond funds (that have HY).
Bingo. And you don't have to hold the same ones forever. Re: MINT, this is 2024, not 2022, and it's been steadily outpacing funds like JPST and ICSH. The funds with more corporate holdings have been even better, like FLOT and the often-mentioned VRIG.
Will the same ultrashort funds be the best in the next three months, the next six months? I doubt it. Who knows; maybe even intermediate core funds will be working by then.
In the OEF department, SEMRX is more or less in the same vein as the ultrashort etf's. It's the IG offering from the SEMPX gang.
Let us start with Covid period. I'll use Fidelity's core MMKT of SPAXX for notation, but this applies to other fund houses and some of their MMKT's, too.
During this beginning period, MMKT's and CD's were paying next to nothing in yields/interest, as the Fed. was supporting the economy with low rates. One should probably include the beginning of the Russia invasion of Ukraine in February, 2022 for other disruptive circumstances. As the Covid upwind took place and inflation became a large concern for the Fed.; they/it began rate increases with the goal of chasing the 'dubious' goal of obtaining a 2% inflation rate.
--- April 2020 - April 2022 nominal interest rates/yields were .1%.
--- July 2022 found rates near 1%
--- December 2022 found rates near 2.6%
--- May 2023 found rates near 4.7%
--- October 2023 - April 26, 2024 4.96%, + or - .05%
MINT etf distributions, which are paid monthly; reflect the above changes in interest rates/yields.
--- April 2020 - April 2022 $.05-$.05 Fully range bound and LOW
--- As with the above for May 2023 - April 2024, MINT distributions have ranged from $.41 - $.45 (current, April 2024). The yield increase from April, 2022- April, 2024 is a full 800%.
What do all of these numbers mean??? For conservative investors or investors who desire a portion of their portfolio to be relatively uneventful and still make some decent money, are those who chose to follow the CD's path find yields worth pursuing. MMKT's are worth keeping at the current yields. MINT, IMHO; is worth keeping at this time; as well as other etf's mentioned by others.
The rotation away from the above areas will 'show' it's face when the Fed. chooses to change it's policy on rates.
NEXT: Late October of 2023 was the beginning of another 'phase', post Covid and Fed. actions. LQD (IG corp. bonds) does look like much against the other listings in the chart. But, it has tried to perform, now and then. It's included, only for reference of a few other etf total returns for the period. Yes, I'm a growth fan.
CHART of SPY, QQQ, SMH (semi conductors etf) and LQD (investment grade bonds).
NOTE: Please make me aware of mistakes or contradictions, as I write this while under the influence of meds. TIS big pollen time in Michigan.
Remain curious,
Catch
One always needs to check the supporting figures that a fund family publishes at tax time. Once upon a time, VUSXX was 100% (exactly) state-tax-exempt. Vanguard changed the way it managed the fund a couple of years ago. With its wiggle room, only about 80% of the income from that fund was state-exempt last year.
Boglehead post:
https://www.bogleheads.org/forum/viewtopic.php?p=7710372&sid=b5b46754ca9e296f26c5f65246618ac5#p7710372
WisdomTree spreadsheet:
https://view.officeapps.live.com/op/view.aspx?src=https://www.wisdomtree.com/investments/-/media/us-media-files/documents/resource-library/fund-reports-schedules/tax-reporting/2023-tax-supplement-report.xlsx&wdOrigin=BROWSELINK
Currently, only a 20 month rate bump CD is offered. How is the rate increase implemented?
https://www.marcus.com/us/en/savings/ratebumpcd
P.S.: The APY currently offered on it is the same as that of their savings account. So, may not be particularly attractive, unless rate bump is obtained. I tried to understand by chatting with a Marcus agent. After 30 minutes of going round and round and unable to get a straight answer, I gave up. On earlier occasions, Marcus agents gave me wrong answers over the telephone.
Thanks for your help.
The rate offered on a 20 month bump CD is currently 4.4%. Suppose that come July 2, Marcus changes the rate offered on a new 20 month bump CD to 4.8%. You could request a bump up on that day and receive 4.8% for the remainder of your term.
This is the way virtually all bump CDs work. https://www.nerdwallet.com/article/banking/bump-up-cd-step-up-cd
The more I think about it the less likely this is going to work because this requires one to keep checking for higher rates and the current rate is too low.
Unfortunately this is not for my account. In a brokerage account, there are more choices. Call protected brokered CDs from GS have much higher yields.
You wrote: "'Prior to maturity, you may request a one-time rate increase to the highest APY and interest rate we offer for the same Rate Bump CD term as of the day of your request.' [bold added]"
I think you answered your own question.
If in doubt, read the terms of the account. Especially section IV paragraph 5.
https://www.marcus.com/content/dam/marcus/us/en/pdfs/Marcus_Deposit_Account_Agreement.pdf
It looks like this particular product has a relatively uncommon feature - the ability to add to the CD at the time you increase the rate.
In a brokerage account, there are more choices. Call protected brokered CDs from GS have much higher yields
Rate bump CDs nearly always have lower starting rates than fixed rate CDs of the same term. It couldn't be otherwise, else the rate bump option would be free, and no one would choose the fixed rate CD. A better comparison would be between a GS brokered CD and a Marcus Bank fixed rate CD of the same term.
For brokered, non-callable GS CDs, I see a 1 year offered at 5.1%, slightly better than the 1 year Marcus Bank CD offered at 5.0%. Not quite an apples-to-apples comparison, but close. One difference is that one risks a substantial haircut in taking an early withdrawal from a brokered CD, while the Marcus CD has a predetermined penalty of 1.25% (90 days simple interest).
If you are intrigued by bump up CDs, Flatwater Bank in Nebraska offers a 15 month product with an initial fixed rate (APY) of 5.3%. Its bump rate is calculated as the starting rate (here 5.3%) plus "the difference of the Federal Funds Rate on the date of purchase of your CD and the current Federal Funds Rate on the date of bump up".
https://flatwater.bank/personal/bumpup
P.S.: 2 yr GS CD: CP brokered CD at Fidelity is at 4.9% vs at Marcus it is 4.2% - no judgement on my part. It is true that reading agreements is essential (rather than rely on customer service reps and marketing notes from companies); E.g., I have been making sure to keep a higher minimum balance in my regular bank account to avoid monthly fees until I read the agreement over the weekend and realized I could just set up a recurring $1 per month ACH transfer from my brokerage to my bank account and have no minimum balance requirement.