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Just curious what investors are doing with their bond funds given the current environment. Most of my funds are about even or slightly negative YTD. Are you DCA'ing into bonds, selling, buying any type of fund or standing pat?
P.S. I stand corrected: I have a few bond funds that are up YTD (PIMIX, ZEOIX, ASHDX) but overall you can see the trend isn't very good right now.
Bonds are a part of my overall asset allocation and carry a weighting range of 20% to 40% within my portfolio with a neutral weighting being 30%. Currently, bonds make up about 20% of my portfolio; and, with this, I bubble at the low range. The bond funds that I currently own are GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX. I have representations to bank loans, short term securities, high yield securities and other type of bonds and income generating securities through my multi sector income funds. As from review of my last Instant Xray (June 26th) analysis my fund managers collectively have reduced bonds, within the portfolio, by a couple percent and raised stocks by a like amount while keeping cash and the other asset classification the same. However, short positions within the portfolio were increased form 6% to 8%.
As I write, my fixed income sleeve year-to-date is up 0.6% while a bond index fund that I track is down 0.5%. My hybrid income sleeve which consists of AZNAX, ISFAX, CAPAX, FKINX, PASAX & PGBAX is up year-to-date 0.9%. Both sleeve's total return have not been able to keep pace, thus far this year, with their distributions made resulting in a decline in sleeve valuation. However, other sleeves within the portfolio are showing net positive total returns resulting in positive results for the portfolio as a whole after accounting for all gains and distributions taken.
I own a few muni bond funds (SXFIX, MITFX) and higher quality funds (DODIX) that are struggling this year. The fund that has disappointed me thus far is RNDLX. I guess I expected more given the management experience.
My bond fund is SUBFX, up 0.89% for the year, but since it fell 4.07% last year, and it was positioned for rising rates (negative effective duration), I really expected better.
I'm holding for now, since I think they're just early (they started buying energy sector bonds this year) not wrong. But if they don't start doing better in another year or two, I'll probably cut bait. I'm more patient with my equity funds than my bond funds,
My bond fund is SUBFX, up 0.89% for the year, but since it fell 4.07% last year, and it was positioned for rising rates (negative effective duration), I really expected better.
I'm holding for now, since I think they're just early (they started buying energy sector bonds this year) not wrong. But if they don't start doing better in another year or two, I'll probably cut bait. I'm more patient with my equity funds than my bond funds,
I'm in the same boat expatsp....my thinking is that if I rode them this far, I will at least wait until year end when rates should scoot up incrementally.
With the part of my portfolio that I still self manage, I sold my 2 bond funds a few months ago, RSIVX and PONDX. I put most of the money into RSAFX. I figured with rising rates in the future, having a bond fund that treads water at best didn't seem productive. An alternitive fund like RSAFX isn't for everyone but David's write up on this fund sold me.
Your post made me look at the comparative results of my decision, and so far so good.
Many of the bank loan funds are having decent years over 3% YTD ala LSFYX and DBFRX. Same with many of the junk funds ala JAHYX.
A year ago I bailed from Price's floating rate (bank loan) fund, PRFRX, after enduring about 3 years of very poor performance. Guess what? It's up around 3.5% YTD. Meanwhile, RPSIX, where I put the $$, is flat YTD. Another case of being "a day late and a dollar short."
Buying and selling rarely pays. Maybe a lesson in there for others.
davidrmoran, the only reason I sold PONDX was to get out of bond funds all together in the part of my IRA that I self manage. I still believe PONDX is one of the best bond funds out there. But I'm guessing when rates start to rise, all strategic bond funds will loose money, or at best tread water. I'm hoping RSAFX acts as a low volatility bond alternative. Per David's write up, the manager believes rising rates may be helpful to this fund.
There is a caveat though. My IRA distribution is likely different then most. I've actually broken it into 3 accounts where 2 of the accounts are managed, Shwab's robo-portfolio and Schwab's team managed Windhaven portfolio. Both those portfolio's contain bond ETF's. It's only the self managed 3rd that I removed all bond funds.
@Catch: Thanks for the thoughts. The 2 funds I referenced above were/are part of my 75% "hold forever" position. Essentially, no changes are ever made in that "bucketed" group of half dozen or so funds except for very occasional rebalancing. The only caveat: With increasing age, I've gradually shaded that entire group more and more to the conservative side (and may continue doing so). So the move I noted above (from PRFRX into RPSIX) was in keeping with that risk reduction. Still, it hurts to sell a deadbeat and have it turn around on you.
Hi, Mike M -- How do you like the Windhaven portfolio? Last year, I played golf with a financial advisor who highly recommended them. Do you get to see the actual portfolio, or is it structured like a mutual fund?
Hi little5bee. Windhaven portfolio is an actual portfolio of ETFs. There are 2 portfolio options, aggressive and moderate. The 2 portfolios are managed by a team of managers. The difference in the 2 seems to be the range of equities each may hold. Off the top of my head, the aggressive portfolio can range from about 25-75% equities, depending on how management perceives the world economic futures. The moderate portfolio has a lesser range of movement. Per my Schwab adviser, these portfolios have never been near the max or min of their ranges. One selling point for me was even the aggressive portfolio held up as well as a moderate balance mutual fund during the last recession.
The fee for the Windhaven portfolio is 1%. Really no different then the fee you pay for a typical mutual fund portfolio. The portfolio is always up to date (daily) and view-able. You actually get an email every time management makes a buy or sell plus managements reasoning for the buy or sell.
Don't know if the financial adviser you golfed with is a Schwab advisor, but I do know the adviser gets a referral fee paid to them by Schwab. So, yes they have an intensive to sell.
Don't hold FAGIX right now; but probably should....., but it was traded in for the time being
Although rightfully classified as a high yield bond fund, this fund has always been one of the hybrid funds that doesn't fit into a complete category. The name Capital and Income is likely an appropriate name for this fund. The fund mix has always held about 80% true high yield corp. bonds, with the remainder in equity. Some of the HY bonds is/was foreign and some of the equity is generally foreign, too. Current management has been in place for more than 12 years; but the prior team always performed well, too.
If one has access to this fund through whatever type of account they hold, I would always recommend this fund for a portion of bonds, although being HY with the equity mix causes this fund to be more equity directed for/with market movements.
Current YTD is about +4.6%.
We have held this fund at various periods beginning in the early 1980's.
The reason this fund is not in our portfolio at this time is that the monies from the sale were placed into healthcare/bio/pharma holdings for a direct path into equities. This fund is always on our monitored list of funds. For those reading this, don't confuse this fund with Fidelity's HY fund of SPHIX. This fund, as well as other vendor's offerings of high yield bond funds with not likely fit the same mold as FAGIX. I don't consider the E.R. of .72% to be out of line for the performance of this fund relative to others of this category. FAGIX has remained high on the list of HY bond funds.
As with any market sector, this fund is subject to market conditions and will have its "off" periods.
@bee, I know you may or have probably already formed some graphs for this fund; sadly I can't offer your well designed graphic layouts you post here.
Just for the heck of it............... a 5 year combo return for a mostly U.S. centric portfolio of these 3 funds:
---VTI, u.s. blend, leaning towards lg. cap. ---PONDX / PIMIX , mixed bonds, depending on the markets (excellent management) ---FAGIX, as noted above
5 year average = 12% annual
Not too bad for such a "Strange Brew" (Bruce,Baker,Clapton)
Take care and thank for all of your fine offerings here, Catch
No, the advisor I golfed with was an independent advisor who was down here (FL) to pick up an award he won for his work and visit wealthy clients. Of course, I tried to get some free advice! I thought he was going to try to sell me an annuity...instead, he recommended Windhaven.
I checked it out at the time and I was concerned it might be too volatile a strategy for me. Guess I will have to re-check...I like the transparency.
Comments
Bonds are a part of my overall asset allocation and carry a weighting range of 20% to 40% within my portfolio with a neutral weighting being 30%. Currently, bonds make up about 20% of my portfolio; and, with this, I bubble at the low range. The bond funds that I currently own are GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX. I have representations to bank loans, short term securities, high yield securities and other type of bonds and income generating securities through my multi sector income funds. As from review of my last Instant Xray (June 26th) analysis my fund managers collectively have reduced bonds, within the portfolio, by a couple percent and raised stocks by a like amount while keeping cash and the other asset classification the same. However, short positions within the portfolio were increased form 6% to 8%.
As I write, my fixed income sleeve year-to-date is up 0.6% while a bond index fund that I track is down 0.5%. My hybrid income sleeve which consists of AZNAX, ISFAX, CAPAX, FKINX, PASAX & PGBAX is up year-to-date 0.9%. Both sleeve's total return have not been able to keep pace, thus far this year, with their distributions made resulting in a decline in sleeve valuation. However, other sleeves within the portfolio are showing net positive total returns resulting in positive results for the portfolio as a whole after accounting for all gains and distributions taken.
Hope this information is helpful.
Old_Skeet
ABNDX ... 0.2% ... -0.5%
AIBAX ... 0.5% ... 0.6%
AHITX ... 1.1% ... 1.9%
TAFTX ... 5.7% ... 0.1%
AMHIX ... 5.7% ... 0.5%
ABHIX ... 0.3% ... 1.4%
RPHYX ... 17.4% ... 1.2%
LSBRX ... 1.4% ... -2.6%
The whole mess is up 0.6%, same as Skeet.
DLFNX up +0.72%, ytd.
PREMX up +1.79% ytd.
PRSNX up +0.83% ytd.
PRWCX and MAPOX also own bonds, but I'm not counting that for this particular response. Those three dedicated bond funds = 28.02% of total portfolio.
Regards,
Ted
I'm holding for now, since I think they're just early (they started buying energy sector bonds this year) not wrong. But if they don't start doing better in another year or two, I'll probably cut bait. I'm more patient with my equity funds than my bond funds,
Your post made me look at the comparative results of my decision, and so far so good.
Buying and selling rarely pays. Maybe a lesson in there for others.
You noted: "Buying and selling rarely pays. Maybe a lesson in there for others."
>>>Hell, this statement would take this house right out of the investment game, period.
Everyone's buy and hold and/or rebalance period has various conditions, eh?
Best case scenario, I suppose, would be a buy/hold of VTI and PIMIX 50/50% mix. Stir the pot once and let simmer.....
Take care,
Catch
There is a caveat though. My IRA distribution is likely different then most. I've actually broken it into 3 accounts where 2 of the accounts are managed, Shwab's robo-portfolio and Schwab's team managed Windhaven portfolio. Both those portfolio's contain bond ETF's. It's only the self managed 3rd that I removed all bond funds.
Hope I made a little sense. Regards
Windhaven portfolio is an actual portfolio of ETFs. There are 2 portfolio options, aggressive and moderate. The 2 portfolios are managed by a team of managers. The difference in the 2 seems to be the range of equities each may hold. Off the top of my head, the aggressive portfolio can range from about 25-75% equities, depending on how management perceives the world economic futures. The moderate portfolio has a lesser range of movement. Per my Schwab adviser, these portfolios have never been near the max or min of their ranges. One selling point for me was even the aggressive portfolio held up as well as a moderate balance mutual fund during the last recession.
The fee for the Windhaven portfolio is 1%. Really no different then the fee you pay for a typical mutual fund portfolio. The portfolio is always up to date (daily) and view-able. You actually get an email every time management makes a buy or sell plus managements reasoning for the buy or sell.
Don't know if the financial adviser you golfed with is a Schwab advisor, but I do know the adviser gets a referral fee paid to them by Schwab. So, yes they have an intensive to sell.
Then the moment passed...
What are thoughts on FAGIX?
Don't hold FAGIX right now; but probably should....., but it was traded in for the time being
Although rightfully classified as a high yield bond fund, this fund has always been one of the hybrid funds that doesn't fit into a complete category. The name Capital and Income is likely an appropriate name for this fund.
The fund mix has always held about 80% true high yield corp. bonds, with the remainder in equity. Some of the HY bonds is/was foreign and some of the equity is generally foreign, too. Current management has been in place for more than 12 years; but the prior team always performed well, too.
If one has access to this fund through whatever type of account they hold, I would always recommend this fund for a portion of bonds, although being HY with the equity mix causes this fund to be more equity directed for/with market movements.
Current YTD is about +4.6%.
We have held this fund at various periods beginning in the early 1980's.
Fidelity view, composition
The reason this fund is not in our portfolio at this time is that the monies from the sale were placed into healthcare/bio/pharma holdings for a direct path into equities. This fund is always on our monitored list of funds. For those reading this, don't confuse this fund with Fidelity's HY fund of SPHIX. This fund, as well as other vendor's offerings of high yield bond funds with not likely fit the same mold as FAGIX. I don't consider the E.R. of .72% to be out of line for the performance of this fund relative to others of this category. FAGIX has remained high on the list of HY bond funds.
As with any market sector, this fund is subject to market conditions and will have its "off" periods.
@bee, I know you may or have probably already formed some graphs for this fund; sadly I can't offer your well designed graphic layouts you post here.
Just for the heck of it............... a 5 year combo return for a mostly U.S. centric portfolio of these 3 funds:
---VTI, u.s. blend, leaning towards lg. cap.
---PONDX / PIMIX , mixed bonds, depending on the markets (excellent management)
---FAGIX, as noted above
5 year average = 12% annual
Not too bad for such a "Strange Brew" (Bruce,Baker,Clapton)
Take care and thank for all of your fine offerings here,
Catch
No, the advisor I golfed with was an independent advisor who was down here (FL) to pick up an award he won for his work and visit wealthy clients. Of course, I tried to get some free advice! I thought he was going to try to sell me an annuity...instead, he recommended Windhaven.
I checked it out at the time and I was concerned it might be too volatile a strategy for me. Guess I will have to re-check...I like the transparency.
Regards,
Ted
http://www.schwab.com/public/schwab/investing/accounts_products/portfolio_solutions/windhaven