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I suspect Price would prefer folks invest directly with them and that the fees being charged at Schwab somehow allow Price to keep costs lower for their own clients.
I'm bumping up this thread, because there's great info in it, and I'm not the only one looking for cash alternatives right now.
Here's a new question: anyone know cash-alternative funds which have a track record that extends back through the 2008 global financial crisis? A whole lot of ultra-short bond funds crashed and burned then. I'd feel better parking my money with a manager who successfully navigated that crisis.
Of course PIMIX/PONDX did well, and Ivascyn is maybe the best bond manager around, but I don't really consider that a cash alternative. It takes lots of risks, and even if so far it has managed them brilliantly, I want something more conservative for this bucket.
Right now I am using RPHYX and SUBFX, and I'm happy with both, but neither has a record back to 2008.
expatsp said: “A whole lot of ultra-short bond funds crashed and burned then.” Absolutely correct. That’s where I think we sometimes miss the boat in not appreciating the culture of the fund family behind a fund. I don’t worry about TRP running an ultra-short. They consistently err on the side of caution in their lower risk offerings. Their in house research is tops. Were such a fund run by just about anyone else, I’d worry more. -
Not sure why this old post was resurrected. My prophesy a year ago that TRBUX would soon be yielding over 2% proved wrong. TRP puts its current 30-day annualized dividend yield at 1.73%. But the NAV has gained a penny to $5.02. As I may have mentioned back than, for purposes of exchanges Price allows the same flexibility with TRBUX they do with their money market funds. That’s the only reason I’m not using their short term bond fund, PRWBX instead for cash. Want to be able to take advantage of compelling buying opportunities if / when they arise without the frequent trading restrictions.
As one of the older and more conservative here, I’m probably higher on cash than most. No problem. Am comfortable sacrificing a couple percentage points return over shorter periods for the added stability and downside protection cash affords. My allocation model is 75% “Core” and 25% “Flexible.” The Core (largely set in stone) consists of various types of conservative / moderate allocation funds and smaller allocations to a global bond fund and some real asset funds. The flexible portion contains both equity funds and cash. It allows me to add or take risk off the table as I wish. Currently, the Flex portion is heavily weighted towards cash, which consists of insured bank deposits, TRBUX, and a smaller slug of DODIX.
Fortunate to have a good pension and Social Security. Don’t keep any separate cash reserve as most do. I feel I’m conservatively enough positioned to continue withdrawing distributions no matter where the market runs. And, it occurs to me that this must be the type of approach the “new” income funds at Price and elsewhere adhere to.
Interest rates and yields have climbed enough to take another look at where to put cash, even if the answers haven't changed. For example, VMMXX now sports an APY of 1.14%, and FZDXX ($10K min in IRA) has an APY of 1.11%. Those are comparable to FDIC-insured savings accounts, but not quite high enough to justify the added risk of MMFs. Nevertheless, high enough to consider in brokerage accounts such as IRAs where moving cash isn't easy.
It still depends on why you're holding cash, where (e.g. IRA or taxable) you're holding it, and what your time horizon is. I still think I-bonds are great if you're holding for more than a year and you can live with their coarse granularity (you can only cash out a complete savings bond, not a partial amount of a few dollars).
If you've got a time horizon comfortably longer than a year, and are looking to invest cash in a taxable account, I'm still fond of short to short/intermediate funds. VMLUX goes way back, and is one of the more conservatively managed funds of that breed.
The team (well, two of the three) managing BTMIX (started in 2015) goes back to BMO muni funds. Duane McAllister goes back the furthest, co-managing MUISX (ultra-short) from inception (2009) until moving to Baird, and MTFIX (short term) from inception (2012) until moving to Baird. Those would be the closest match funds. To get an idea of his 2008 success, you can also look at MITFX, that he co-managed from 2007 until moving to Baird. Not quite what expatsp asked for (a fund history back through 2008), but still something to hang your hat on.
For me cash is cash ... and, there are few subsitutes for it. I also consider CD's as a form of cash and pehaps some short term treasuries as well. In a low interest rate environment I have barbelled an equal amount of cash on one side and growth funds on the other. When the two are averaged my return year-to-date on the barbell is about 13%. So as a stand alone asset, not counting what my mutual funds hold in cash, my cash position is about 15% of my overall portfolio ... and, like wise my growth area is about the same. For 2017 it is estimated that capital gain distributions on the growth side of the barbell will be somewhere between four to seven percent while the cash side will yield a little better than one percent. With this, form my perspective, this makes the barbell a good income generator with an anticipated payout of somewhere between 2.5% to 4% range. And, a thirteen percent year-to-date return is not too shabby on a 50/50 mix. In addition, this return (and yield) compares favorablely to some of my better performing hybrid funds found in the income and growth & income areas of my portfolio. Year-to-date my mutual fund portfolio (as a whole) has returned about 12% according to Morningstar's Portfolio Manager.
Morningstar's Instant Xray analysis reflects overall that I am currently at about 19% cash including what my mutual funds hold.
I agree with old skeet here. Not sure where this term 'cash alternative' came from. Most of the investments being disused in this thread are more accurately "equity alternatives" if you think about it. They're bonds. Calling any type of bond 'cash alternative' is a misnomer imho.
Ive been using VCSH for 2 year or less money. Not exciting, but fairly stable and pays monthly. My main 2 year or more bond funds are CPXAX, PYACX, GIBLX and PONDX. They seem to work together well.
You guys are a hard lot. Most terms in the English language are open to definition. But it sounds like both of you are pretty much in agreement with Collins Dictionary‘s narrow definition that cash means hard currency.
I might hide away a couple $50 bills when traveling, and maybe carry $150 cash in my wallet. I’d shudder to think, however, that the paper currency in my immediate possession was the only true cash I possessed.
Anytime you go beyond a U.S. minted coin or government issued paper certificate you’re introducing some degree of uncertainty. Will the bank that issued your CD remain solvent? Will the FDIC be willing and able to honor its guarantee? Will your money market fund remain solvent? Some have failed (broken the buck) in the past.
So, the question posed was Cash Alternatives. Yep - Anything beyond the actual currency (or T-Bill) entails some additional risk. I don’t think the folks responding to the thread are blind to that fact.
I've got to go along with hank here. If you want to say that "For me cash is cash", and "Calling any type of bond 'cash alternative' is a misnomer imho", then you have to go whole hog.
Those CDs that Skeet likes? Aside from a lack of instant liquidity, they're bank accounts - IOUs of a corporation. Sure they're insured, but at their core, they're nothing but promises to pay. You can't use a bank account as legal tender - you have to withdraw the cash first (or direct the bank to send the cash to your creditor).
T-bills are bonds, just very short ones, unlike multi-year T-bonds. Who knows if the US government will honor them after December, or next March, or whenever the Treasury runs out of cash absent Congressional action.
I qualify my "cash alternative" suggestions with the comment that it depends on what you want this for, and by implication how much liquidity you're willing to forsake and/or how much risk you're willing to assume.
Once we start talking about any return on cash, we're into cash alternatives. Whether that's a bank account or a "cash equivalents" like a T-bill or MMF. The question is just a matter of degree - how far one is willing to go with risk, with liquidity.
Basically, RPHYX / RPHIX was originally billed as targeting a return of 3.5% - 4.5% a year, but the actual performance has been closer to 2.5% and declining. I still have a bit of money there but questioning whether it is worth taking risk for this level of return (and they do have risk, as 2015 showed).
You can also read my responses in that thread. RPHYX has not had a single losing year, and only one losing quarter. Theoretically it should be impossible to outperform cash (under your mattress) 100% of the time while maintaining the same liquidity.
Put money at risk, any risk, and sooner or later a bad thing will happen (though perhaps not in your lifetime, let alone within your investment horizon). That includes putting money in banks (which can and do fail, freezing funds for short periods of time) and MMFs (which can break a buck and/or put a hold on your cash).
It's not a question of whether it is "worth taking risk" to outperform cash - if you want to generate any income from cash you have to take on risk. It's a question of characterizing the risks (lower return/loss of principal, volatility, liquidity), quantifying them, and then seeing if you're satisfied with the returns given the estimated levels of risk.
Actual performance of RPHYX does not appear to have been declining over the past three years. Its three year performance (as of Sept. 30th) was 2.20%, its one year performance was 2.32%, and its nine month YTD performance is 1.72% (which annualizes to 2.30%, though based on its October month-to-date performance is a figure that likely won't be achieved).
Comments
CULAX: Net ER 0.77, YTD (from M*) = 0.23%
PONDX: Net ER 0.79, YTD (from M*) = 1.25%
Both w/ 90 day redemption fee.
I suspect Price would prefer folks invest directly with them and that the fees being charged at Schwab somehow allow Price to keep costs lower for their own clients.
Here's a new question: anyone know cash-alternative funds which have a track record that extends back through the 2008 global financial crisis? A whole lot of ultra-short bond funds crashed and burned then. I'd feel better parking my money with a manager who successfully navigated that crisis.
Of course PIMIX/PONDX did well, and Ivascyn is maybe the best bond manager around, but I don't really consider that a cash alternative. It takes lots of risks, and even if so far it has managed them brilliantly, I want something more conservative for this bucket.
Right now I am using RPHYX and SUBFX, and I'm happy with both, but neither has a record back to 2008.
-
Not sure why this old post was resurrected. My prophesy a year ago that TRBUX would soon be yielding over 2% proved wrong. TRP puts its current 30-day annualized dividend yield at 1.73%. But the NAV has gained a penny to $5.02. As I may have mentioned back than, for purposes of exchanges Price allows the same flexibility with TRBUX they do with their money market funds. That’s the only reason I’m not using their short term bond fund, PRWBX instead for cash. Want to be able to take advantage of compelling buying opportunities if / when they arise without the frequent trading restrictions.
As one of the older and more conservative here, I’m probably higher on cash than most. No problem. Am comfortable sacrificing a couple percentage points return over shorter periods for the added stability and downside protection cash affords. My allocation model is 75% “Core” and 25% “Flexible.” The Core (largely set in stone) consists of various types of conservative / moderate allocation funds and smaller allocations to a global bond fund and some real asset funds. The flexible portion contains both equity funds and cash. It allows me to add or take risk off the table as I wish. Currently, the Flex portion is heavily weighted towards cash, which consists of insured bank deposits, TRBUX, and a smaller slug of DODIX.
Fortunate to have a good pension and Social Security. Don’t keep any separate cash reserve as most do. I feel I’m conservatively enough positioned to continue withdrawing distributions no matter where the market runs. And, it occurs to me that this must be the type of approach the “new” income funds at Price and elsewhere adhere to.
It still depends on why you're holding cash, where (e.g. IRA or taxable) you're holding it, and what your time horizon is. I still think I-bonds are great if you're holding for more than a year and you can live with their coarse granularity (you can only cash out a complete savings bond, not a partial amount of a few dollars).
If you've got a time horizon comfortably longer than a year, and are looking to invest cash in a taxable account, I'm still fond of short to short/intermediate funds. VMLUX goes way back, and is one of the more conservatively managed funds of that breed.
The team (well, two of the three) managing BTMIX (started in 2015) goes back to BMO muni funds. Duane McAllister goes back the furthest, co-managing MUISX (ultra-short) from inception (2009) until moving to Baird, and MTFIX (short term) from inception (2012) until moving to Baird. Those would be the closest match funds. To get an idea of his 2008 success, you can also look at MITFX, that he co-managed from 2007 until moving to Baird. Not quite what expatsp asked for (a fund history back through 2008), but still something to hang your hat on.
Morningstar's Instant Xray analysis reflects overall that I am currently at about 19% cash including what my mutual funds hold.
Here’s a couple strict definitions for the noun cash.
- “ Cash is money in the form of bills and coins rather than checks.
... two thousand dollars in cash.”
- “Cash means the same as money, especially money which is immediately available.”
Source: https://www.collinsdictionary.com/us/dictionary/english/cash
You guys are a hard lot. Most terms in the English language are open to definition. But it sounds like both of you are pretty much in agreement with Collins Dictionary‘s narrow definition that cash means hard currency.
I might hide away a couple $50 bills when traveling, and maybe carry $150 cash in my wallet. I’d shudder to think, however, that the paper currency in my immediate possession was the only true cash I possessed.
Anytime you go beyond a U.S. minted coin or government issued paper certificate you’re introducing some degree of uncertainty. Will the bank that issued your CD remain solvent? Will the FDIC be willing and able to honor its guarantee? Will your money market fund remain solvent? Some have failed (broken the buck) in the past.
So, the question posed was Cash Alternatives. Yep - Anything beyond the actual currency (or T-Bill) entails some additional risk. I don’t think the folks responding to the thread are blind to that fact.
Those CDs that Skeet likes? Aside from a lack of instant liquidity, they're bank accounts - IOUs of a corporation. Sure they're insured, but at their core, they're nothing but promises to pay. You can't use a bank account as legal tender - you have to withdraw the cash first (or direct the bank to send the cash to your creditor).
T-bills are bonds, just very short ones, unlike multi-year T-bonds. Who knows if the US government will honor them after December, or next March, or whenever the Treasury runs out of cash absent Congressional action.
I qualify my "cash alternative" suggestions with the comment that it depends on what you want this for, and by implication how much liquidity you're willing to forsake and/or how much risk you're willing to assume.
Once we start talking about any return on cash, we're into cash alternatives. Whether that's a bank account or a "cash equivalents" like a T-bill or MMF. The question is just a matter of degree - how far one is willing to go with risk, with liquidity.
Basically, RPHYX / RPHIX was originally billed as targeting a return of 3.5% - 4.5% a year, but the actual performance has been closer to 2.5% and declining. I still have a bit of money there but questioning whether it is worth taking risk for this level of return (and they do have risk, as 2015 showed).
Put money at risk, any risk, and sooner or later a bad thing will happen (though perhaps not in your lifetime, let alone within your investment horizon). That includes putting money in banks (which can and do fail, freezing funds for short periods of time) and MMFs (which can break a buck and/or put a hold on your cash).
It's not a question of whether it is "worth taking risk" to outperform cash - if you want to generate any income from cash you have to take on risk. It's a question of characterizing the risks (lower return/loss of principal, volatility, liquidity), quantifying them, and then seeing if you're satisfied with the returns given the estimated levels of risk.
Actual performance of RPHYX does not appear to have been declining over the past three years. Its three year performance (as of Sept. 30th) was 2.20%, its one year performance was 2.32%, and its nine month YTD performance is 1.72% (which annualizes to 2.30%, though based on its October month-to-date performance is a figure that likely won't be achieved).