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Changing environment and year-end eval.

DLFNX is my only core (core-plus) dedicated US bond fund. It's just 2.51% of portfolio. But I think I can make better use of the $3,700.00 that's in there, particularly after the seismic shift following the election. I make few changes to my portfolio along the way because I do a lot of digging before choosing a fund. Originally, I wanted Gundlach's know-how at the helm, and I also did not yet have a domestic bond position at all. But such a fund as DLFNX, though respectable and reliable, will not help to get me where I want to go, in this changed landscape in 2017 and beyond.

Three-quarters of my stuff is with TRP, and if any change resulted in consolidating (and ergo simplifying) by putting more $$$ into TRP, that suits me. PRHYX is closed to new investors. What about RPIHX? I also see a very new fund: PTTFX which charges investors $20.00 above and beyond the ER if the balance is below $10,000.00--- but I could manage to initiate a starting position with $10K. ..... Seems to me that PTTFX is ostensibly the same sort of fund as MWTRX. "Total Return." But I can't even find a portfolio within that fund anywhere, even at the TRP website. ... I don't like RPSIX because it's a fund of funds.
.......Or, shall I just liquidate DLFNX? It's one of just 2 funds I own that are in a regular, taxable, investment account, rather than IRA. I could use the proceeds to step-up the size of my stake in PNM, an electric utility. PNM is in a transition, shedding nuclear and coal-fired plants but everything I look at tells me I should definitely commit more money to it. (It's less than 1% of portf. right now.)

Do I NEED a US domestic core-plus bond fund, after all? I am otherwise very well diversified. No question about THAT. Thanks for your responses. They are always helpful.

Comments

  • 2.51% is not much of your portfolio. Do you have 97.5% in equities?

    I think in general bonds are going to struggle for the foreseeable future. Rising rates are guaranteed per Janet Yellen. With that said, there are some good places to check out in the fixed income arena. EM bonds, inflation adjusted bonds are two to look at.

    It sounds like you might have six figure in TRP. Does that give you any preference or perks?
  • At 2 1/2% of total portfolio, I don't think it will change anything if moving from one Total Return bond fund to another. If Total Return funds drop say 10% next year, that only moves your portfolio 0.25%. Do you need a domestic core bond fund. Certainly not for growth, but it probably adds stability to the portfolio. But your portfolio may already have a good mix of bonds since I believe you own a couple good balanced funds.

    For myself, I've been following the trends, both real and speculative. As you said, the changing environment is predicted interest rate increases. I've moved more into TIPS which so far have dragged and into Floating Rate Bank Loan funds which are doing great. PFIDX is a Pimco fund I'm using in this environment.
  • @Crash: I recommend 5% for any single investment to be meaningful.
    Regards,
    Ted
  • edited December 2016
    Thanks, guys. The portf. is spread out like this: 44% US equities, 8% foreign equities. 39% bonds, and 2% "other", probably convertibles and shorts.
    > Yes, there's a big amount in my two balanced funds: 35.48% in PRWCX and 16.02% in MAPOX, which I'm deliberately growing.

    >Among equities: 14% small-cap. 23% mid-cap. 62% large-cap.

    >PREMX is 14.14% of portfolio. The monthly dividend is over $100.00, now. Being re-invested.

    PRSNX: 10.54% of portf. Divs are re-invested.
    DLFNX = 2.51%, as mentioned above. Divs reinvested, but it's just $8.00/month or so. And the share price is up against a wall.

    I'm already at my own personal limit in terms of the number of funds owned. I must shed one if I'm going to add one. Here are the others: MSCFX SFGIX TRGRX PRIDX and PRDSX. My wife's 403b fund is in the overall mix, too: VSCIX. Still just 1.94% of the Big Picture. I do not like to make frequent TACTICAL movements. I want to keep it stodgy, but PRODUCTIVE. ...@Ted mentioned that 5% is his lower limit. I could simply add to DLFNX to get to 5%, and that's not a radical decision.

    But bonds will only be paying me to "wait for the next time it comes around on the guitar." (Arlo Guthrie.) We are in for a protracted cold-spell for bonds.
    @JohnChisum: yes, I've crossed a threshold with TRP and can use PREMIUM tools at Morningstar. They also tell me I can use a dedicated phone line for those who hold more than X dollars with them.

    @MikeM: If I grow DLFNX for stability, then 5% of portf. would be more stable, I suppose, than 2.51%, eh? Glad for the replies. But why would EM bonds be advantageous, right now, JohnChisum? I won't be adding any more to my current EM stake. And PRSNX has not been bad to me. It's "global" bonds, but does not include EM.
  • edited December 2016
    Hi Crash. This is a stimulating topic which I find very interesting. But rarely if ever do I attempt to forecast where markets will go. I've been surprised too many times in the past to trust my instincts in that regard. What I do try to do (sometimes successfully) is add or remove risk in the portfolio by raising or lowering my cash and short duration bond position. On that score, I'm not bullish now - but not bearish either. Have been pretty much sitting on my hands with a slightly elevated cash/short bond position for several months. (It wouldn't take much more of this market rally to convince me to raise that a bit higher).

    Re: RPIHX - Like you I'm locked out of PRHYX. But I'm not eager to own high yield now anyway. Mark Vaselkiv who has run the very successful RPHYX for many years is co-manager of RPIHX. So that's good. If I wanted a substitute for PRHYX, I'd probably buy it trusting in Vaselkiv and T. Rowe's management in general. But I think everyone looking at high yield now needs to realize that these securities tend to have risk characteristics typical of both bonds and equities. In the case of very low grade junk bonds, the risks are even more closely aligned with equities. Be very worried about these if the stock market takes a deep dive. They're not imune to carnage.

    Re RPSIX (which you don't like): I like it as a stabilizing influence in my portfolio. You are correct that it's not a bond fund. It's multi-sector Income, even holding 12% + - in their Equity Income stock fund.

    "Do I need a U.S. domestic core-plus bond fund, after all?" - Heavens no. I've never felt that need. That's been especially true the past 5 or 10 years with 10-year Treasuries yielding under 5%. That's not to say bonds can't serve a purpose in many portfolios. But it depends on your other holdings and your style. Does everyone need a dedicated bond fund? No.
  • @hank: Thanks a lot. Good stuff to chew on.
  • ...And I just worked the numbers. I'm quite satisfied with the performance of DLFNX for as long as I've owned it. I will re-deploy that $$ elsewhere, after the New Year.:) We can close this thread, if y'like.
  • @Crash said If I grow DLFNX for stability
    Little research got me here this eve.AFLIX
    Interest rates may rise which is precisely what our fund seeks to exploit. We had anticipated that the Federal Reserve would have pulled the trigger sooner and more aggressively by now as a way of pre-empting another round of asset bubbles which are forming as a result of all this easy money and creating real damage to the real economy. But they’re still skittish. So as a bond manager you maintain a portfolio with relatively low maturity length and a strategy that has limited interest-rate sensitivity and is yield-centric rather than price-return oriented. It’s a hunkered-down posture and we’ve actually left money on the table relative to more aggressive funds. But we’ve done pretty well given market conditions and we’ll stick with it because once rising interest rates and inflation gain traction they could bite quickly and meaningfully
    http://anfieldcapital.com/special-communication-ceo-david-young-reflects-on-anfields-flagship-as-it-begins-a-redemptive-third-year/
    How is AFLIX used in an investment portfolio?
    The 3 most common uses of this “flexible core” style fund are:
     Combine AFLIX with the existing traditional core bond funds in the ratio of 1:2 or 33%, thereby complementing the constrained core with a flexible opportunistic component
     Where strategic income / opportunistic / tactical funds or unconstrained bond funds have already been adopted, AFLIX is usually added as the low volatility, more diversified “glue” to dampen the typically higher risk of these other Funds
     We also see AFLIX used as a one-stop satellite allocation because of its current positioning

    http://anfieldcapital.com/wp-content/uploads/2016/11/UFIF-Fact-Sheet-October-2016-1.pdf
  • @TSP_Transfer. Great information. Let me chew on that.
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