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.
@MikeM- not at all. Thanks much for all of your info. I'm familiar with the Schwab fixed income pages, but I never thought of looking for a call date of two years instead of a two-year maturity. Good thinking!
@MikeM, Thanks for sharing your research process. I agree with it. BTW, I owned DB equity until recently. Going forward, I will try to note each different thought distinctly.
"I do not currently have a single Agency bond as every one of them I bought got called." "[A]gree, agency bonds never seem to get past the first call date for me . . ."
While that has been our collective experience, there is a non-zero probability that Agencies may not be called sometime in the future. I say this because some investors outside this forum have bet $Bs against long term bonds (or they are long interest rates).
I am asking myself, "if I would be OK if the bonds I am buying never get called?"
A corollary thought is, "Am I better off with an Agency that presumably gives me only a six month call protection than a corporate bond that might give me a longer period of call protection but of lower credit quality?"
Many factors go into answering these questions and every investor's situation is different from the next one.
In the few times I looked in the past couple of years, I have not seen a new issue Agency with a year or more call date. What is your experience? May be share when you see one.
Edit: Currently, there is a new issue single "A" corporate (Prudential Financial), non-callable, 5Yr, yielding 10 bps more than Treasuries. That is a scary spread.
"I have found when reviewing the available lists on Schwab, you need to 1) look at the 'yield to worst and the 'yield to call'. Those can be different than the advertised 'yield to maturity'. 2) when reviewing Schwab's lists, the longest 'next call date' isn't always the highest yield choice shown at the top of the lists."
I have only ever bought Treasuries at Schwab and I do not tend to buy bonds there because of some frictions surrounding when they deposit funds from maturing bonds and MM sweep feature. But not every bond is available at every brokerage (participation / allocation / inventory issues) and so it is useful for me to learn about the Schwab fixed income site.
Could you please help me locate "yield to call" and "next call date" headers in the Schwab's list for new issue corporate bonds? Neither I nor the Schwab broker that tried to help me was able to locate these in the lists. (Fixed income desk does not work on the weekends.) I was able to find the yield to call and next call date for each bond by going to the detail page of each bond. But it is not very efficient to do so for every issue.
(I can presume for the most part that Yield to call is the same as Yield to Worst, which is a header in the list.)
@BaluBalu- On Friday I placed an order for the Deutsche Bank bond that @MkeM found. As of today the order is shown as open... this is the first time that I've tried to buy a corporate bond at Schwab, and I have no idea how the corporate bond order-filling process works. I don't recall any significant delay in buying either CDs or government paper, but the market procedures may be different for corporate. I'll let you know how this all works out.
Bought two new issue Agencies at Fidelity (they do not settle for a few days).
3133ERF22 - FYI, No inventory left at Fidelity (sorry I took whatever was available) but it is available in Schwab inventory; however, Shwab is charging a transaction fees because the quoted price is 100.1.
3130B3W82 - Inventory at Fidelity and not at Schwab.
Edit: Schwab does not have a separate New Issue tab for Agencies. One has to pull up the list of Agencies and look for "Recently Issued" under Description. In the Price column, if the price is $100, one knows they are potentially new issue. If the price is different from $100, then you are buying in the secondary market (even if recently issued). Schwab's price quotes for bonds includes transaction cost.
@Old_Joe, I believe we need to wait until the stated "settlement Date" listed in the description, 11/29/2024. My status for that bond is also still listed as open. As I mentioned before, I have waited a few days on other bonds like this but never had one did not go through.
I sold out of GSIHX within my IRA, and with the proceeds I bumped up NEAR, BTO, HTD and plugged the balance into SWVXX. With impending tariffs, I'm a bit unclear what the near term future holds for areas in which Rajiv Jain operates internationally.
I guess one could buy DB bond until 2PM Wednesday if DB does not close the offering sooner. DB might close the offering before fully subscribed. If your trade does not execute on Wednesday, I would presume DB cancelled the offering which is unlikely (bad PR) but DB has the right to do so. If the subscription does not meet DB's thresholds, I can see them cancelling.
The settlement on this is Friday which means I will have to sell MM by Wednesday (4PM EST) and if DB cancels the offering and I come to know only after market close on Wednesday, then I will have to remember to buy back MM on Friday. SWVXX trades on Friday but the cut off time is 1PM EST.
Let me know if they accept the order before market close (4PM) on Wednesday and I will place the order then.
P.S.: Bond market closes early (2PM EST) on Friday.
Yesterday's post -"3130B3W82 - Inventory at Fidelity and not at Schwab."
Today, I bought more of and whatever was left of this new issue. Currently, at Fidelity the highest yield of new issue Agencies maturing in 2034 is 5.5% (only one issue). If you would like a higher yield from a new issue Agency, you have to go to 2044 maturity.
I am inclined to wait until after Thanksgiving for more new issue Agency offerings.
@BaluBalu: I spoke with J. Cooper, ETF specialist at VanEck, who invited me to submit ideas about a wide-moat index fund to the company. He was not particularly interested or tempted by my idea, but he was knowledgeable on the current MOAT and their other M* index etfs. He said that the current fund is entirely rules-based and that the managers do not trade the constituent stocks during the quarters following reconstitutions. New money that comes in is spread equally across the holdings. If you have any ideas I might in include in my submission, please let me know.
Thank you, Ben. MOAT attempts to track 100% of the underlying index, unlike some other index based ETFs. The subjectivity is in the index at M* level (not at VanEck level). The ETF is purely mechanical but the index is not.
I think your idea was very good and I am surprised that Cooper blew you off on that. IMO, if you are inclined to submit ideas to VanEck, I do not think Cooper is the right person, as he did not have the appreciation for the idea. After MOAT, VanEck spent a lot of resources launching a bunch of Moat based ETFs which turned out the market place did not care for. So, I am guessing VanEck exhausted their budget w/r/t M*.
Selling PRPFX. Good long term hold, but the pace of the last year (+28%) cannot be sustained IMHO. Not a prediction of imminent doom. Just a “step-back-and-look” at its historical patterns. Two big contributors recently have been precious metals, which tend to run in cycles, and NVDA …
Owned this one over 20 years. Tough decision.
Generally I think valuations in risk assets - especially equities - are very rich. There will be better days ahead to dive into them I believe. Will bump up cash a bit and spread remainder among several existing holdings.
I hasten to add that I don’t think the excesses in the markets are limited to just the one fund I sold. I tried to select for off-loading something I own that I felt was most likely to underperform if the markets fall across the board, There were a couple others I might have selected. Just trimming risk. Probably way early.
As I noted, most of the proceeds from the sale are simply being put to work (spread out) across the remaining 5 funds plus a slight bump-up in cash from 7.5% to around 12%. A normal cash weighting for me is around 10% - but not uncommon to jigger it up or down a bit depending on many factors.
Can't bring myself to do it just quite yet. waiting for end-of-year pay-outs. do some rearranging, after. reduce risk, hopefully, by such moves. mostly i do a lotta NUTHIN' all the time.
Sold JAAA from the IRA. After about a month of ownership I got tired of looking at names like Uncle Billy's Triple A Tranche and Aunt Martha's Well-Endowed CLO's.
I have taken the proceeds, along with some cash, and added to CBLDX and started a position in CBRDX. That will get me closer to 50% bonds. At the present time I am not buying bonds that ended 2022 in the red.
Equities are about 43%. I'm in no hurry to get to 50%.
Nothing shaking in the taxable but the leaves on trees.
I’ve toyed with the idea of including smaller amounts of JAAA in my cash balance, but agree it seems a bit dicy. Barron’s has published several articles over past year or two that mention JAAA favorably, including one by regular columnist Jack Hough. I’d link some if I could. But a search of Barron’s (JAAA ) will pull them up.
Comments
D@Old_Joe & @rforno, Thanks.
"[A]gree, agency bonds never seem to get past the first call date for me . . ."
While that has been our collective experience, there is a non-zero probability that Agencies may not be called sometime in the future. I say this because some investors outside this forum have bet $Bs against long term bonds (or they are long interest rates).
I am asking myself, "if I would be OK if the bonds I am buying never get called?"
A corollary thought is, "Am I better off with an Agency that presumably gives me only a six month call protection than a corporate bond that might give me a longer period of call protection but of lower credit quality?"
Many factors go into answering these questions and every investor's situation is different from the next one.
In the few times I looked in the past couple of years, I have not seen a new issue Agency with a year or more call date. What is your experience? May be share when you see one.
Edit: Currently, there is a new issue single "A" corporate (Prudential Financial), non-callable, 5Yr, yielding 10 bps more than Treasuries. That is a scary spread.
Hi @MikeM,
I have only ever bought Treasuries at Schwab and I do not tend to buy bonds there because of some frictions surrounding when they deposit funds from maturing bonds and MM sweep feature. But not every bond is available at every brokerage (participation / allocation / inventory issues) and so it is useful for me to learn about the Schwab fixed income site.
Could you please help me locate "yield to call" and "next call date" headers in the Schwab's list for new issue corporate bonds? Neither I nor the Schwab broker that tried to help me was able to locate these in the lists. (Fixed income desk does not work on the weekends.) I was able to find the yield to call and next call date for each bond by going to the detail page of each bond. But it is not very efficient to do so for every issue.
(I can presume for the most part that Yield to call is the same as Yield to Worst, which is a header in the list.)
Thanks for your help.
3133ERF22 - FYI, No inventory left at Fidelity (sorry I took whatever was available) but it is available in Schwab inventory; however, Shwab is charging a transaction fees because the quoted price is 100.1.
3130B3W82 - Inventory at Fidelity and not at Schwab.
Edit: Schwab does not have a separate New Issue tab for Agencies. One has to pull up the list of Agencies and look for "Recently Issued" under Description. In the Price column, if the price is $100, one knows they are potentially new issue. If the price is different from $100, then you are buying in the secondary market (even if recently issued). Schwab's price quotes for bonds includes transaction cost.
I guess one could buy DB bond until 2PM Wednesday if DB does not close the offering sooner.
DB might close the offering before fully subscribed. If your trade does not execute on Wednesday, I would presume DB cancelled the offering which is unlikely (bad PR) but DB has the right to do so. If the subscription does not meet DB's thresholds, I can see them cancelling.
The settlement on this is Friday which means I will have to sell MM by Wednesday (4PM EST) and if DB cancels the offering and I come to know only after market close on Wednesday, then I will have to remember to buy back MM on Friday. SWVXX trades on Friday but the cut off time is 1PM EST.
Let me know if they accept the order before market close (4PM) on Wednesday and I will place the order then.
P.S.: Bond market closes early (2PM EST) on Friday.
Today, I bought more of and whatever was left of this new issue. Currently, at Fidelity the highest yield of new issue Agencies maturing in 2034 is 5.5% (only one issue). If you would like a higher yield from a new issue Agency, you have to go to 2044 maturity.
I am inclined to wait until after Thanksgiving for more new issue Agency offerings.
Not yet available at Fidelity
It turns out my selling FNMA was right, at least for today when a lot of Trump trades are giving back some of the gains. And back to MAGS!
I think your idea was very good and I am surprised that Cooper blew you off on that. IMO, if you are inclined to submit ideas to VanEck, I do not think Cooper is the right person, as he did not have the appreciation for the idea. After MOAT, VanEck spent a lot of resources launching a bunch of Moat based ETFs which turned out the market place did not care for. So, I am guessing VanEck exhausted their budget w/r/t M*.
Intend to trim CEDIX at next opening and considering adds to CBLDX, CBUDX.
Owned this one over 20 years. Tough decision.
Generally I think valuations in risk assets - especially equities - are very rich. There will be better days ahead to dive into them I believe. Will bump up cash a bit and spread remainder among several existing holdings.
As I noted, most of the proceeds from the sale are simply being put to work (spread out) across the remaining 5 funds plus a slight bump-up in cash from 7.5% to around 12%. A normal cash weighting for me is around 10% - but not uncommon to jigger it up or down a bit depending on many factors.
I have taken the proceeds, along with some cash, and added to CBLDX and started a position in CBRDX. That will get me closer to 50% bonds. At the present time I am not buying bonds that ended 2022 in the red.
Equities are about 43%. I'm in no hurry to get to 50%.
Nothing shaking in the taxable but the leaves on trees.
Hey - That has a nice ring to it.
I’ve toyed with the idea of including smaller amounts of JAAA in my cash balance, but agree it seems a bit dicy. Barron’s has published several articles over past year or two that mention JAAA favorably, including one by regular columnist Jack Hough. I’d link some if I could. But a search of Barron’s (JAAA ) will pull them up.