Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

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.

    Support MFO

  • Donate through PayPal

Intermediate Term Bond Fund

I hold 2 bond funds PIMIX (multi sector) and MWTRX (intermediate term) I have an account I want to add a bond fund, so I am inclined to use one of these or looking at TOTL where Gundlach is manager but it's an ETF with very short record. Is there anything else out there comparable?

Comments

  • @ron: I recently added GIBIX (GIBLX is the retail version) as 1/2 of my muni bonds got called and wanted to find a suitable fund with similar income stream. I also like MWTRX, it is generally all higher quality, and I found GIBIX a bit more diversified as 60% are BBB and above, and there are some high yielders. I did also add a bit of DBLTX, but its almost all mortgage bonds, so I put more into the Guggenheim fund for diversity sake. I still have 2 muni bonds that will mature in 4 and 8 years, glad they did not get called, they yield 4% + since they were issued in mid 2000s:)
  • We have re-structured our bond allocation, replacing funds with higher volatility potential, regardless of how long we have held them. For example, we replaced Loomis Bond LSBDX with JPMorgan WOBDX. We wanted a fund that held investment-grade bonds with less emphasis on credit and more agency, which our other funds did not have much of. WOBDX fit the bill for us. We passed on DLTNX because it is almost ALL in agency bonds, below investment grade, and it has higher expenses than WOBDX. This is for tax-deferred accounts. For taxable accounts we stick primarily with Vanguard and Thornburg muni funds.
  • BobC any concerns about the recent manager & analyst departures at JPM?
  • WOBDX available only to existing holders at Schwab
  • msf
    edited June 2016
    You'll find that PGBOX is open through Schwab OneSource™.

    Unless you were planning on investing $2M, it doesn't really matter whether Schwab offers the select class shares (WOBDX) to new investors. All the brokers seem to require that, even in IRAs, unless you invest through an adviser.

    IMHO what's more valuable with BobC's posts is the "why", not the "what". He wrote that he was looking for an investment grade bond fund with less emphasis on credit and more on agency.

    WOBDX is about 27% MBS agency (and another 2.6% US agency), along with a tad under 18% corporate (credit). Another good bond fund, available to retail investors with a similar profile is PRCIX. Also about 27% MBS agency (though just 1/2% US agency), with a bit more corporate - around 26%. It's got a std dev at or below category average, though not as low as WOBDX's, and volatility was another concern given.

    The two funds seem to track pretty closely, and PRCIX's ER of 0.58% is just one basis point above WOBDX's, and well below that of PBGOX.
  • @msf: Schwab says YTD (as of 5/31) return for WOBDX is 3.16% vs -0.78% for PGBOX yet the only difference between the two seems to be an ER of 0.59% for WOBDX vs 0.76% for PGBOX.

    Can that be right? The historic ratings summary for WOBDX is also significantly better than that of PGBOX. How to account for such a difference between two funds with essentially the same makeup?
  • edited June 2016
    re. JPM Core Bond and @Ace concern:
    Swanson’s announcement in September that he was taking a leave was the first public sign of tension in the Columbus operations. It followed the departure of three members of his team for outside opportunities or other areas within the bank. [...] Then, two months ago, senior money managers, Henry Song and Mark Jackson, quit. Chris Nauseda, who was part of the Core Bond fund and was with the firm for 35 years, plans to retire by July 1
    http://www.bloomberg.com/news/articles/2016-06-03/jpmorgan-exits-mount-from-a-star-bond-team-said-to-feel-slighted

    @BobC With due respect to our newest BD member, can you really say what you have with WOBDX/PGBOX anymore? Frankly, if Doug Swanson and top team managers were to walk on me, my money would leave the fund on the following day. I certainly wouldn't be putting money into it. Just as if Dan Fuss announced his retirement (effective immediately), and Elaine Stokes went on leave the month following ("to spend more time with her family"), and Matt Egan resigned (for a professional opportunity at another firm), leaving money in LSBDX would seem to be uninformed by history.
  • edited June 2016
    @ron Do you believe in the asset bloat effect? If so, then why MWTRX? You know it's just a matter of "when" now.
    http://www.mutualfundobserver.com/discuss/discussion/27382/mwtrx-the-next-brokeback-mtn-fund-asset-fee-flow-ah-wish-ah-could-quit-yew#latest
  • I like every fund mentioned above but if you don't already own it, its BIV all day every day. Great overall performance over every relevant time frame, up in 2008, only one down year ever, a mere 3.58%. Great solid portfolio, inversely correlated with equities, low ER. Don't over think it.
  • Old_Joe said:

    @msf: Schwab says YTD (as of 5/31) return for WOBDX is 3.16% vs -0.78% for PGBOX yet the only difference between the two seems to be an ER of 0.59% for WOBDX vs 0.76% for PGBOX.

    Can that be right? The historic ratings summary for WOBDX is also significantly better than that of PGBOX. How to account for such a difference between two funds with essentially the same makeup?

    It's just one fund - simply two different share classes (like Vanguard Investor and Admiral shares). I found the retail class by looking at the M* "purchase" page for WOBDX and picking another share class. So even before looking at the Schwab site, the answer must be "no, that cannot be right" assuming both figures are from 5/31, and the figures reported are purely fund performance.

    But they're not. If you look at the Schwab performance page for the A shares, you'll see a little "balloon" to the right of "YTD Return". Mouse over that. It reads:
    YTD Return is adjusted for possible sales charges, and assumes reinvestment of dividends and capital gains
    This points to something I think Schwab (and other brokers) do wrong. They incorporate the impact of loads into funds that they sell load-waived. It makes the funds look worse than they are. You're seeing this in performance figures that are lower than what you'd get with the load waived.

    This problem also shows up in the M* star ratings on their pages. Schwab reports PGBOX's 3 year and 5 year ratings as two-star. But the 3 and 5 year ratings of PGBOX.lw are three-star.
  • @msf- thanks again for your help on this stuff. I did miss the "little balloon", but in going back to take another look they both seem to have the same balloon note, so all things being equal, something still doesn't add up.
  • edited June 2016
    I thought the whole idea of investing in actively-managed bond funds was due to the demonstrable effect good portfolio management can have on performance. If that is still the case, then I do not understand why the accuracy of past performance numbers for PGBOX is really all that relevant here. Past performance does not predict future performance, and apparently the portfolio managers who generated the numbers findable on Schwab, M*, or anywhere else, are all gone, and probably their methodology as well.
  • Old_Joe said:

    @msf- thanks again for your help on this stuff. I did miss the "little balloon", but in going back to take another look they both seem to have the same balloon note, so all things being equal, something still doesn't add up.

    PGBOX has (unless waived) a front-end load of up to 3.75%.

    So $100 invested Jan 1 would have left you with $100 x (1 - 3.75%) x (1 + 3.09%) = $99.22, a loss of 0.78%.

    But WOBDX shares have no load, so $100 would have gotten you $100 x 1 x 3.16% = $103.16.
  • msf
    edited June 2016
    heezsafe said:

    I thought the whole idea of investing in actively-managed bond funds was due to the demonstrable effect good portfolio management can have on performance. If that is still the case, then I do not understand why the accuracy of past performance numbers for PGBOX is really all that relevant here. Past performance does not predict future performance, and apparently the portfolio managers who generated the numbers findable on Schwab, M*, or anywhere else, are all gone, and probably their methodology as well.

    What happens to a fund when a manager, or even a team leaves can vary depending on how the management company deals with the transition.

    For example, when Gundlach left TGLMX and took his team with him, TCW bought MetWest (which did not concentrate especially on MBSs). MetWest managers adapted their style to preserve the continuity (and performance) of TGLMX. On the other hand, if you look at the transition of FMAGX from Lynch to Smith to Vinik to Stansky you see a fund that got buffeted from one style to another, even though the resources of Fidelity were still around.

    FWIW, M* seems to think the WOBDX transition will be more like the former, though I agree that's a gamble.

  • @msf- thanks again. I'm a little dense sometimes.
  • Hey, Hawking says light can get ultimately shine through even a black hole, and you're nowhere near that dense:-)

    Nothing to fret over.
  • @msf- I've been told by fellow technicians that light shines right through my ears, though. On the other hand, they also reassured me that I was smarter than I looked.:)
  • ron
    edited June 2016
    Old_Joe said:

    @msf- I've been told by fellow technicians that light shines right through my ears, though. On the other hand, they also reassured me that I was smarter than I looked.:)

    We have something in common Old Joe, I'm also old. Let me throw a couple other ideas in here that I've researched abit, WATFX, NOFIX, DLTNX (higher ER and lower credit rating.
Sign In or Register to comment.