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Improvements to Bond Portfolio

willmatt72
in Fund Discussions
This it the current makeup of my bond portfolio, but I think it may be leaning a bit too heavily in the direction of low credit and high yield rather than higher quality bonds. I just want to cover all my bases regardless of rate hikes. Thoughts on consolidation of funds or the absence of higher quality credit bonds? The percentages are approximates. Thanks in advance.

PIMIX (PIMCO Income) - 15%
EVBAX - (Eaton Vance Bond - lw) -15%
DODIX - (Dodge and Cox Income) - 12%
BSBIX (Baird Short-term Bond) - 12%
MWTRX - (Met West Total Return) -10%
MITFX - (BMO Intermediate Tax Free) -8%
RSIVX - (Riverpark Strat Income) 5%
THOPX - (Thompson Bond) - 5%
FPNIX - (FPA New Income) 5%
PRFHX - (TRowe Price Tax Free HY) - 5%
BHYAX - (Blackrock High Yield) - 5%

Comments

  • CrashCrash
    DODIX is a keeper, through thick and thin. Intermediate-term bond fund category, but they know how to manage it, make changes, shorten duration..... I use DLFNX, labeled as "core-plus."
  • Sven
    Going forward interest rates will likely be higher, and bond returns will nowhere near what they have been delivering. I would pick EVBAX (multi-sectors) and MWTRX (intermediate term), and keep the total bond/cash allocation in the range 30-40%. Another candidate is Vanguard Wellesley Income, VWINX (40/60 stock/bond). Low expense ratio and solid management team.
  • CrashCrash
    Can't argue with that, either.
  • varmint
    any bond fund I have is vanguard; cannot justify any expense ratio higher than vanguard in a bond fund
  • AndyJ
    Are you 100% in bonds, or are the percentages of the bond side of your portfolio only? If the latter, it's impossible for anyone to comment intelligently on the bond breakdown without knowing how much and how risky your stock sleeve is. In other words, what are you trying to do with your bond portfolio?
  • willmatt72
    I do have a large cash stake (approx 18%) because I inherited more than a million dollars and there is no need to be aggressive. I tend to err on the side of being conservative with my holdings. My overall portfolio is 40% equities, 40% bonds and 18% cash.
  • AndyJ
    edited September 2014
    If I'm doing the math right, then, 50% of the total portfolio is in assets that have significant equity/credit risk (40% stock plus 10% in bond funds that are totally on the credit-risk side - EVBAX, PRHYX, BHYAX).

    If you're a conservative investor in the way I think of that term, you might consider reducing that 50% figure to ~ 40% or so, in whichever way makes sense to you -- by reducing either equities or the purely credit-risky bond funds. (That's using the 'conservative allocation' fund category percentages - like say the fund VWINX - as a proxy for a 'conservative investor.')

    I won't comment on the other funds other than to say that some of those are really small portfolio percentages for bond funds, and there appear to be opportunities to consolidate.
  • Old_Skeet
    edited September 2014
    High Willmatt72,

    Thanks for posting your bond portfolio.

    Although, I am not an investment advisor I am a somewhat of a knowledgeable individual retail investor who enjoys analyzing other interesting portfolios from time-to-time. With this, I started on yours.

    I took the tickers and percentages (92%) you listed (converted to dollars 1% to $1,000) and I inputted into Morningstar’s Instant Xray. I stopped at this point after first viewing and thought I’d inquire about the other 8% not disclosed.

    With this unknown, I have a question … What is the other 8% invested in? By knowing this I will be able to conduct a better analysis and will proceed with my analysis once more is known. Another question I have is this bond (income) part of your overall portfolio or is this a whole portfolio in itself? And, if this is part, would you please detail the rest (equity side)?

    Cordially,
    Old_Skeet

    Without receiving the requested information, my window of time has now elapsed. With this, my offer is now withdrawn. 09/06/2014 7:00 ESDT.
  • beebee
    edited September 2014
    Slightly off topic, but if you segregate out what you will need in your lifetime why not consider thinking more long term with the remaining dollars. Someone blessed you; why not continue the blessing to your next of kin.

    For example, by setting up a Roth account in your name with beneficiaries you would have control and use of this account if needed. If not, it passes tax free to your beneficiaries.

    If invested with a long term risk profile your gift will be the gift that keeps on giving.
  • willmatt72
    Old_Skeet said:

    High Willmatt72,

    Thanks for posting your bond portfolio.

    Although, I am not an investment advisor I am a somewhat of a knowledgeable individual retail investor who enjoys analyzing other interesting portfolios from time-to-time. With this, I started on yours.

    I took the tickers and percentages (92%) you listed (converted to dollars 1% to $1,000) and I inputted into Morningstar’s Instant Xray. I stopped at this point after first viewing and thought I’d inquire about the other 8% not disclosed.

    With this unknown, I have a question … What is the other 8% invested in? By knowing this I will be able to conduct a better analysis and will proceed with my analysis once more is known. Another question I have is this bond (income) part of your overall portfolio or is this a whole portfolio in itself? And, if this is part, would you please detail the rest (equity side)?

    Cordially,
    Old_Skeet

    Without receiving the requested information, my window of time has now elapsed. With this, my offer is now withdrawn. 09/06/2014 7:00 ESDT.

    Thank you for the insight and offer, Old Skeet. Always a pleasure to read your posts. Unfortunately, I was not able to reply as quickly as you would like. Since it is the weekend and I had other commitments, I did my best to respond as quickly as possible. If you would like to continue this thread at another time, I will do my best to respond as soon as possible.

    Regards,

    Will


  • willmatt72
    AndyJ said:

    If I'm doing the math right, then, 50% of the total portfolio is in assets that have significant equity/credit risk (40% stock plus 10% in bond funds that are totally on the credit-risk side - EVBAX, PRHYX, BHYAX).

    If you're a conservative investor in the way I think of that term, you might consider reducing that 50% figure to ~ 40% or so, in whichever way makes sense to you -- by reducing either equities or the purely credit-risky bond funds. (That's using the 'conservative allocation' fund category percentages - like say the fund VWINX - as a proxy for a 'conservative investor.')

    I won't comment on the other funds other than to say that some of those are really small portfolio percentages for bond funds, and there appear to be opportunities to consolidate.

    I agree with your sentiment about having a little too much risk on the credit side, hence, my original post. Do you have any recommendations for a short-term, high quality bond fund with low risk? I don't consider THOPX as fitting that criteria. What do you think about GNMA funds?
  • AndyJ
    edited September 2014
    Hi Will, on the "short-term, high quality bond fund with low risk," I'm not a big fan of THOPX either, but don't you already have something like that in the Baird fund? Also, keep in mind that Fed rates have the most influence on the short end of the curve, so short term, higher quality bonds do come with some Fed rate risk.

    If you want to go short duration, I'd look for a fund that has some balance of credit and rate risk - RSIVX is in that ballpark - or you could look at DFLEX or maybe a short, high-yield muni fund. Or, maybe look at a multi-sector that barbells credit and rate risk, like PTIAX, or a mild 'non-traditional' fund that can shift rate exposure within a wide range, like say PMZIX.

    I think in your situation I'd probably consolidate rather than take on a new fund, concentrating in PIMIX and RSIVX (RSIIX if you can comfortably get your stake up to $100k) and consolidating into just a couple of your several higher quality funds.

    The only thing on rates I'm comfortable projecting for myself and my investments is that the Fed is highly likely to raise its key rate a smidgen sometime next year. Nothing else, imho, is sure enough to make a significant bet on.

    FWIW, AJ

    Edit: forgot to mention GNMA funds, but I see that you asked on M* and Yogi gave you a good answer.
  • willmatt72
    edited September 2014
    AndyJ said:

    Hi Will, on the "short-term, high quality bond fund with low risk," I'm not a big fan of THOPX either, but don't you already have something like that in the Baird fund? Also, keep in mind that Fed rates have the most influence on the short end of the curve, so short term, higher quality bonds do come with some Fed rate risk.

    If you want to go short duration, I'd look for a fund that has some balance of credit and rate risk - RSIVX is in that ballpark - or you could look at DFLEX or maybe a short, high-yield muni fund. Or, maybe look at a multi-sector that barbells credit and rate risk, like PTIAX, or a mild 'non-traditional' fund that can shift rate exposure within a wide range, like say PMZIX.

    I think in your situation I'd probably consolidate rather than take on a new fund, concentrating in PIMIX and RSIVX (RSIIX if you can comfortably get your stake up to $100k) and consolidating into just a couple of your several higher quality funds.

    The only thing on rates I'm comfortable projecting for myself and my investments is that the Fed is highly likely to raise its key rate a smidgen sometime next year. Nothing else, imho, is sure enough to make a significant bet on.

    FWIW, AJ

    Edit: forgot to mention GNMA funds, but I see that you asked on M* and Yogi gave you a good answer.

    Yes, I was looking at something like SNGVX, which isn't a pure GNMA fund but has higher quality bonds than BSBIX. Also, I'm looking at your suggestions PMZIX and DFLEX. Much appreciated !
  • MikeMMikeM
    I would consolidate in the same way AndyJ suggested. I'd choose PIMIX as my moderate risk multisector fund and RSIVX as my 'more' conservative multisector fund. Just don't see the need for all those funds.

    Actually, that is exactly what I did - those 2 funds plus a short term (conservative) HY fund. I'm looking at bonds more for protection against equity swings with a little growth if possible down the road. Hopefully choosing good management that can go most anywhere in the bond universe will decide what to be in.
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