Hi, my name is Mike and i'm a fundaholic ; )
At the risk of flames, i'm venturing in here again and reposting a variation of a question in another
(first) post.
I originally came here in the process of doing 'due dilligence' about RSIVX - and similar funds - because
i am interested in adding it and maybe revising the allocation set up by my FA. I think the fixed-income
portion of my portfolio - which is higher than many feel it should be for age 55 - (approx. 60/40 bond-equity).
I am repasting the bond sleeve list below.
What i would really benefit from would be some help in mapping a hypothetical strategy for consolidating some
of the small positions - and taking out vulnerability NAV losses in the rising interest rate scenario. I see
RSIVX as a good candidate to serve as a more stable alternative to riskier funds/ETFs in the mix.
I realize this is subjective and i will build in the disclaimer myself that any thoughts or opinions here are not
presented as a 'directive' or 'endorsement.'
The list shows each position's percentage of my total Portfolio right now. My research so far suggests that out of these, I might consider replacing BTZ, and reducing or dropping TIPS ETF: SCHP , and possibly PGX.
BABS has had a nice run up and i could perhaps take some profit there.
I'm looking at these in particular based on interest-rate-sensitivity and longer-duration of holdings.
As mentioned the holdings in this mix were intended to serve as diversifiers and being low-expense,
my FA doesn't feel overall quantity is necessarily a problem.
All this said since i really am averse to bond mkt volatility which seems inevitable, I like RSIVX but am trying to
figure out how to 'deploy' it wisely in the context of my existing blend.
I did bring up a fund like RSIVX or OSTIX to my FA and he felt i'm already sort of accomplishing what RSIVX
is designed to do.
I wonder if others here would agree with that notion in looking at the specific holdings i have.
Thanks again!
Mike
14% Vanguard Short Term/VFSUX
8.9% Vanguard Interm-Term /VFIDX
(7.7% Cash)
3.9% SPDR Nuveen Barclays Build America Bond ETF(BABS)
3.5% Vanguard Short Term Bond VCSH (ETF)
3.3% Vanguard High-Yield Bond VWEHX
3.3% Blackrock Credit Allocation Income BTZ (ETF)
2.7% Vanguard TIPS VIPSX
3.2% Alliance Bernstein Income ETF (ACG)
2.8% RidgeWorth Seix Floating RT Hi Inc. SAMBX
2.2% Eaton Vance Short Duration DIversified EVF
1.9% Fidelity Floating Rate Hi Income FFRHX
1.8% Schwab TIPS ETF(SCHP)
1.7% PowerShares Preferred Stock PGX (ETF)
1.7% MS Emerging Mkts Debt MSD (ETF)
1.5% Nuveen Div.Advantage -(Muni Nat'l Long) NZF (ETF)
0.9% SPDR Barclays Cap Convertible Secs CWB
Comments
Regards,
Ted
14% Vanguard Short Term/VFSUX- Sell
8.9% Vanguard Interm-Term /VFIDX- Sell
(7.7% Cash)
3.9% SPDR Nuveen Barclays Build America Bond ETF(BABS)-Sell
3.5% Vanguard Short Term Bond VCSH (ETF)Keep
3.3% Vanguard High-Yield Bond VWEHX Keep
3.3% Blackrock Credit Allocation Income BTZ (ETF)-Sell
2.7% Vanguard TIPS VIPSX -Sell
3.2% Alliance Bernstein Income ETF (ACG)-Keep
2.8% RidgeWorth Seix Floating RT Hi Inc. SAMBX-Sell
2.2% Eaton Vance Short Duration DIversified EVF-Sell
1.9% Fidelity Floating Rate Hi Income FFRHX-Keep
1.8% Schwab TIPS ETF(SCHP)-Sell
1.7% PowerShares Preferred Stock PGX (ETF)-Keep But Switch To PFF
1.7% MS Emerging Mkts Debt MSD (ETF)-Sell
1.5% Nuveen Div.Advantage -(Muni Nat'l Long) NZF (ETF)-Sell
0.9% SPDR Barclays Cap Convertible Secs CWB-Keep
but that's a logistics thing i could certainly get some help with locally if i go through with overhauling this. Some of these are longstanding holdings... others relatively recent 'adds' to the mix - but i gather the strategy would be more productive than the rather flat overall performance i've seen in the last couple years - and again i am not (probably mercifully...) showing the equity side of the portfolio - which more than likely could be similarly pared down - but as i say, my total ratio right now is right around 62% fixed income/bond, abt. 35% in equity funds...
with a moderate-conservative allocation spread across large to small-cap spectrum - nothing too crazy but probably some stuff that could well be consolidated on that side too.
Will definitely give this all some thought. Thanks again!
questions - or moreso reinforced those i've had of my own. I do want to reformat as needed to get this straightened out but must admit that i feel more comfortable with some sort of guidance to help me carry it all out because i prefer to delegate -or work with someone to make sure such a major revamping is done carefully and - as i say, with tax implications taken into account.
I am a performer/freelancer so it makes me feel a little more at ease working with someone with some financial expertise to assist in trading decisions. I have all assets held in a brokerage account (three non-taxable and one (largest) taxable account.
Perhaps it's time to take this discussion to my local branch manager for some help in turning this around - that is, bringing the points discussed here to the table and having the brokerage at least help execute a plan of action. I have let this slide for a few years too long, largely out of a complacency and i guess - believing in the FA and feeling he has been more objective than commission-types - in working on an hourly basis with me.
This all amounts to a pretty major life decision that i can't afford to rush or take without careful forethought but the 'consensus' about my situation here and on another forum seems to dictate i need to make some significant changes, and again i appreciate the sensibility of what has been pointed out here.
I recognize this is not designed to be a place for one to ask for - nor should i expect someone to take the time to provide a specific personal investment 'plan' per se, so i really appreciate everyone's generosity in being as detailed as you have been.
With this said, though ideally i'd like to begin a DIY management approach - if anyone does have recommendation of where i might find an FA or 'facilitator' to work with on a one-time or occasional, hourly basis (uncommon as that type of advisor is) - who might share the 'simple' philosophy you've suggested, i would welcome any suggestions on that as well.
Thanks again,
Mike
One final point, since you seem a useful combination of brave, self-aware, OCD, anxious, experienced, articulate, and savvy: At some point of distilling, reduction, shrinkage etc., you can take this all over yourself and save a bundle. As you know. (The pushback may be fierce, of course.) The reason will be not just your increased relaxation and savviness, but the mere ability to manage so few holdings on your own, being so few. You indicate you are so inclined. I am sure your FA is good and might even be up for a more, perhaps rarer, ad-hoc arrangement. But I just went through this exact same thing twice, with a cousin and a sibling, and neither was as savvy and confident and experienced as you. Both of them wound up with idiot-simple holdings of a very very few Vanguard index ETFs, supercheap, down from a dozen or four dozen individual mfunds and much else. You could go the DFA route with low fees and good few indexes, of course. And I and others here would be glad to advise and kibitz you for free. I preach simplicity like so many here, though I do not always follow it myself (still being a believer in active management); I might first of all advise you to closely examine over time AOR and AOM and see how they fared vs your vast constellation of funds, also how they compared in holdings and allocation balances. One retired friend I even talked into half AOA and half AOK --- selling, quarterly, whichever one was higher. Anyway, that would be way too simple for many.
If you're worried about volatility, I should think that your closed end funds would be the most volatile. You probably would keep the cash, and I don't see much reason not to consolidate the two vanguard short-term funds. I'm not sure why something like RSIVX or OSTIX couldn't replace everything else. Of course, I'm a rank amateur at these things.
What's been said here all makes sense and it's just a matter of trying to act on this in some strategically sensible way. Re: consolidation of the two VG short term funds - would you be referring to merging the entire intermediate fund into the short-term (VFIDX)? Wasn't quite clear on that. To sell out of some of the ETFs that Ted mentions - if not done in one 'wholesale move' - i'd be curious as to which might take priority to be liquidating out of the soonest to avoid further principal losses going forward...in other words, which are the biggest 'red flag/dump-it-now' candidates that essentially serve no good purpose and are only likely to decline if held for months to come.... Thanks for putting up with me - i only check in here periodically due to work demands ... but i'm trying to 'start somewhere' and
begin taking some steps even if it is on a gradual basis.
Or here is an alternative idea. Go to wealthfront.com and open a small account which would be free of any fees and create a portfolio there after entering your particular goals and risk tolerance. You can then duplicate that idea for the rest of your money and go to the beach and stop over thinking this. At least, it will force you to think about your goals and risk tolerance than wave your hands that makes any suggestion here inappropriate and likely to make you regret a year later.
Hahaa! maybe i just need to find a good Therapist. Yes, you- and David i think zeroed in on the crux of the issue. Indecision and A.D.D. (or is it OCD? - hmm - can't decide; ) = not strong character traits for self-managing anything.
Ah, I meant VCSH and VFSUX might as well be consolidated. Slipped my mind that VCXH is an etf. VFIDX is certainly more sensitive to interest rate changes and you could move that to short-term if you wish. The likes of OSTIX and RSIVX would fall in between VFSUX and VFIDX (most probably) on their sensitivity to interest rate changes. They'd probably also fall in between VFIDX and your hi yield holdings on the quality scale hence the possibility of substituting one or both of those for most of what you're holding now.
You noted: "It's painful to watch bond funds mute any returns on the equity side. Hype or not as far as the near-term financial noise - it is impacting me daily in the NAV losses on positions like the BTZ - and anything with the long-duration components - seems these instruments that are supposed to be offsetting volatility have become the 'most' volatile in the second half of 2013 and YTD."
In December, 2008 the reverse statement would have applied; "It's painful to watch my equity funds mute returns on my bond funds." Yes, things change; sometimes very fast and deep. But, not unlike today, the past year; the changes are slower and sometimes more difficult to "notice". Equities rode a high horse in 2013, that few knew would happen; and some bonds got a face slap.
Example: 2008
VITPX = - 36.9%
VBMPX = +5.1%
------- 2013
VITPX = + 33.6%
VBMPX = - 2.1%
I have not studied BTZ, so I do not know what the investment is supposed to provide and/or protect for or against. However, is it your understanding for yourself and/or via your FA that bonds with a long duration are not going to be volatile during a potential rise in interest rates?
As to bonds and equities; well, there are so many types and styles suited for various uses that it is difficult to comment broadly.
At one point after the market melt 5 years ago; we had a dedicated investment in a long duration bond fund for 1 year. This was an okay place to invest at the time; and our house made good money, but I would not travel there today.
Two other bond sectors we had held for several years; FINPX, ACITX and FNMIX had provided decent returns. All of these funds were terminated in May of 2013. All of them started to show weakness and it was time for them to go. Note: TIPS return have been decent for the start of this year.
Our house has had its share of "butt kickings" from investments and some lucky periods, too. Tis a varied and complex process to attempt to maintain a decent average return over a long time frame.
In June, 2008 our house was 90% equity among about 13 funds and had been so since the late 1970's. By the middle of June, 2008 we were 87% bonds. Got lucky with the charts and intuition. Mid 2009 found a mix of equity and bonds, with the majority of bonds being in the high yield sector. We still have several of the high yield bond funds today.
As to your portfolio mix in either the equity or bond areas; the most direct notation I can provide is to look for overlap among funds that would enable you to reduce the holdings. As to the TIPS fund holdings; these are likely already held in some other active managed bond fund. Although TIPS are doing okay this year, so far. For bond funds, I would likely stay with an active managed fund and pay the added expense, unless you or someone knows exactly what type of bonds are traveling a given path based upon expectations by someone. Equity sectors can be covered in a broad fashion with any number of indexes for U.S. or foreign exposure.
Take your time, a deep breath at least 10 times a day; and you should be able to sort your holdings to your satisfaction and benefit.
Regards,
Catch
(they're going nowhere as it is). Just sold my SCHP/Schwab Tips ETF - which has
been a losing fund and invested the proceeds in AOA. Thanks for the inspiration!
Mike