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Frequent Contributor

Re: 2020 - bond funds analysis

Christ, now the "Quote" function is broken. That's the old M* we know and love!

Terry: "Chang what do you mean by "IF" and "IG"? I realize they are investing lingo, but what do they stand for? On a related story, what do you think of VMLUX as a substitute for a money market fund in taxable account? Thanks."

Terry: I can't find the post you are referring to. I try to use S/T, I/T and L/T to mean short-, intermediate- and long-term (duration), and IG and HY to mean "investment grade" and "high yield". If I wrote "IF", then that was a typo.

VMLUX: All of Vanguard's IG muni funds yield too little for my taste. I own only VWALX, and plenty of it, too. The absolute best "MM substitute" IMO is JPST (among ETFs) and VUSFX (among OEFs). But,personally speaking, even these are too conservative for me. After too long ignoring FD, I have joined the SEMMX / JMSIX / IISIX / DBLTX / PUCZX / VCFIX / etc. party. (Although in truth I have owned SEMMX for several years.) Not all of those funds ... some of them I like more than others ... but I am invested in two of them, and some of the cash came from JPST.

I can't think of a decent municipal bond "MM substitute" because all muni OEFs have relatively long durations, so they cannot really be "substitutes".

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Follower ○○

Re: 2020 - bond funds analysis

Thanks Chang. If you are familiar with the Morningstar concept of "Buckets" allocation, they suggest two years worth of living expenses in bucket #1 in safe cash equivalents (or, money markets) in VMLUX, hence my question. Sort of an emergency fund in taxable account.

Another question. Do you have any international bond funds? What do you think of Dodge & Cox Global Bond Fund (DODLX)? Nobody seems to talk about it. 

Thanks again.

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Frequent Contributor

Re: 2020 - bond funds analysis


@chang wrote:

After too long ignoring FD, I have joined the SEMMX / JMSIX / IISIX / DBLTX / PUCZX / VCFIX / etc. party. (Although in truth I have owned SEMMX for several years.) Not all of those funds ... some of them I like more than others ... but I am invested in two of them, and some of the cash came from JPST.

 


This is what happens to investors who get older, still want to make more + have higher yield with lower risk/volatility and use these funds instead of some stocks.

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Participant ○

Re: 2020 - bond funds analysis

 FD1001

I am concerned about Novel Coronavirus. I have also increased the High Yield Municipal bond funds in taxable portfolio and High yield Bondfunds in IRA accounts. I am now equity/bonds 30/45 and cash 25 in my portfolio.

I used the updated table you put out on Feb 1. Thanks a lot.

Most of the bondfunds I am planning to keep for atleast for 2 months.

SRT

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Frequent Contributor

Re: 2020 - bond funds analysis

Considering placing some of my cash reserves in PUCZX, or JMUTX. Anyone have an opinion on which is best, or should I invest in both funds in tax sheltered account.

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Frequent Contributor

Re: 2020 - bond funds analysis


@FatKat wrote:

Considering placing some of my cash reserves in PUCZX, or JMUTX. Anyone have an opinion on which is best, or should I invest in both funds in tax sheltered account.


Let's go through several of my favorite funds PIMIX,PUCZX,JMUTX,VCFAX.JMSIX,IOFIX + IISIX,SEMMX  See 3 year analysis from PV(link).  I sorted them by SD

PortfolioInitial BalanceFinal BalanceCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino RatioUS Mkt Correlation
SEMMX$10,000$11,722 5.29% 0.92%6.19%1.33%-0.38% 3.5711.040.2
IISIX$10,000$11,747 5.36% 1.51%8.44%0.70%-0.93% 2.396.180.6
VCFAX$10,000$11,985 6.05% 1.56%8.13%1.36%-0.28% 2.689.880.15
PIMIX$10,000$11,896 5.79% 1.90%8.60%0.58%-1.11% 2.084.3 
JMUTX$10,000$12,011 6.12% 1.93%10.90%0.44%-1.09% 2.266.050.57
PUCZX$10,000$12,468 7.42% 2.13%12.62%1.24%-1.13% 2.627.140.59
JMSIX$10,000$12,062 6.27% 2.14%11.79%0.82%-0.93% 2.135.850.53
IOFIX$10,000$13,569 10.40% 2.67%14.04%1.77%-0.87% 3.0812.930.05
 
1) The easy stuff first.  For low SD SEMMX is the best.  For higher SD IOFIX is the best.
2) Next is VCFAX with low SD=1.6 + performance > 6%.  VCFAX is your securitized fund with 50/50 (IG/below IG) and a good sub for "old" PIMIX
3) I will give the edge to PUCZX over JMUTX because performance is over 1% better annually. 
4) PIMIX+JMSIX are last.
5) IISIX is the only absolute fund in this category
 
As expected, the funds that invest mainly in securitized lead the pack.

 

 

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Frequent Contributor

Re: 2020 - bond funds analysis


@TerryD1 wrote:

Thanks Chang. If you are familiar with the Morningstar concept of "Buckets" allocation, they suggest two years worth of living expenses in bucket #1 in safe cash equivalents (or, money markets) in VMLUX, hence my question. Sort of an emergency fund in taxable account.

Another question. Do you have any international bond funds? What do you think of Dodge & Cox Global Bond Fund (DODLX)? Nobody seems to talk about it. 

Thanks again.


I don't believe in "emergency funds". Silly idea if you ask me. Why take 2 years of money and park it where it earns nothing instead of investing it according to your overall plan? If an emergency happens, then just pull the money you need from somewhere, deal with it, and then readjust afterward.

Intl bonds: sorry, no I haven't paid any attention to these. I don't see what value int'l bonds would bring to my investment portfolio.

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Frequent Contributor

Re: 2020 - bond funds analysis

FWIW a couple of days ago I was about to drop another large bucket of dough into IISIX (conservative MS), but decided instead to go one rung up on the ladder of FD's collection of MS funds (in terms of risk, yield, CAGR etc.) So, like you, I immediately narrowed it to PUCZX or JMUTX, and with five minutes of analysis (dt would be horrified) decided in favor of PUCZX and entered the trade.


@FatKat wrote:

Considering placing some of my cash reserves in PUCZX, or JMUTX. Anyone have an opinion on which is best, or should I invest in both funds in tax sheltered account.


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Follower ○○

Re: 2020 - bond funds analysis

International bond as a diversifier? I own your former favorite bond fund, DODIX, but the global version, DODLX, seems to have a higher return than the plain vanilla DODIX.

Incidentally I recall you used to say you took your risk only at the equity side, not bond side. Hence your reliance on DODIX. Why the sudden interest in aggressive bond funds that you used to avoid? I understand getting older and desire for higher yields. May I ask your current AA? Equity/bond ratio? International equity allocation? Thanks again?

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Frequent Contributor

Re: 2020 - bond funds analysis

Some Retirees with lower % in stocks select to invest more in multi/nontrad bonds in order to get higher returns + income. 

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Frequent Contributor

Re: 2020 - bond funds analysis


@chang wrote:

FWIW a couple of days ago I was about to drop another large bucket of dough into IISIX (conservative MS), but decided instead to go one rung up on the ladder of FD's collection of MS funds (in terms of risk, yield, CAGR etc.) So, like you, I immediately narrowed it to PUCZX or JMUTX, and with five minutes of analysis (dt would be horrified) decided in favor of PUCZX and entered the trade.



Thanks Chang. I have now some shares of PUCZX.

Have already held JMUTX, which is a NTF at Fidelity.

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Frequent Contributor

Re: 2020 - bond funds analysis


@FatKat wrote:

@chang wrote:

FWIW a couple of days ago I was about to drop another large bucket of dough into IISIX (conservative MS), but decided instead to go one rung up on the ladder of FD's collection of MS funds (in terms of risk, yield, CAGR etc.) So, like you, I immediately narrowed it to PUCZX or JMUTX, and with five minutes of analysis (dt would be horrified) decided in favor of PUCZX and entered the trade.



Thanks Chang. I have now some shares of PUCIX.

Have already held JUMTX, which is a NTF at Fidelity.


I don't think JUMTX, PUCIX exist.  

PUCZX has a $49.95 fee at Schwab but none at Schwab.

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Frequent Contributor

Re: 2020 - bond funds analysis


@FD1001 wrote:

@FatKat wrote:

@chang wrote:

FWIW a couple of days ago I was about to drop another large bucket of dough into IISIX (conservative MS), but decided instead to go one rung up on the ladder of FD's collection of MS funds (in terms of risk, yield, CAGR etc.) So, like you, I immediately narrowed it to PUCZX or JMUTX, and with five minutes of analysis (dt would be horrified) decided in favor of PUCZX and entered the trade.



Thanks Chang. I have now some shares of PUCIX.

Have already held JUMTX, which is a NTF at Fidelity.


I don't think JMUTX, PUCIX exist.  

PUCZX has a $49.95 fee at Schwab but none at Schwab.


huh? JMUTX does exist, I have it.

Not sure what you mean by "PUCZX has a $49.95 fee at Schwab but none at Schwab."? I think you mean 'PUCZX has a $49.95 fee at Fidelity, but none at Schwab.'? Yes, that would be correct, but I am not interested in opening up another account, just to purchase a few funds without a fee.

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Frequent Contributor

Re: 2020 - bond funds analysis

@FatKat , note your typos.

YBB
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Frequent Contributor

Re: 2020 - bond funds analysis

I think he knows what I meant; this is a simple perceptual error, not a conceptual problem. I'm not well sighted and misspelled PUCZX, yet the topic itself and who I responded to,  who I quoted with the correct tickers does properly convey. I would not let such little matters bother me, nor should anyone else.

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Frequent Contributor

Re: 2020 - bond funds analysis


@FatKat wrote:

I think he knows what I meant; this is a simple perceptual error, not a conceptual problem. I'm not well sighted and misspelled PUCZX, yet the topic itself and who I responded to,  who I quoted with the correct tickers does properly convey. I would not let such little matters bother me, nor should anyone else.


Not to worry, I don't want other posters to look for JUMTX and PUCIX

My statement "PUCZX has a $49.95 fee at Schwab but none at Schwab" meant to say "PUCZX has a $49.95 fee at Fidelity but none at Schwab

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Contributor ○

Re: 2020 - bond funds analysis

I wanted to put some of the cash (up to another 5% of portfolio) in non-Corporate, non-auto loans but low (<2) duration fixed income.  I currently have PIMIX - 12%; PMZIX - 4%; IOFIX - 5%; and SEMMX - 2.5% of portfolio.   Looked at the Voya fund in FD's table, but it has too much in below investment grade.   Would you go to 7.5% of portfolio in SEMMX? 

Just want to be prepared for a situation where both bonds and stocks get hit - possible if rates go up, as in 2108.

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Re: 2020 - bond funds analysis


@Anitya wrote:

I wanted to put some of the cash (up to another 5% of portfolio) in non-Corporate, non-auto loans but low (<2) duration fixed income.  I currently have PIMIX - 12%; PMZIX - 4%; IOFIX - 5%; and SEMMX - 2.5% of portfolio.   Looked at the Voya fund in FD's table, but it has too much in below investment grade.   Would you go to 7.5% of portfolio in SEMMX? 

Just want to be prepared for a situation where both bonds and stocks get hit - possible if rates go up, as in 2108.


Let me repeat or elaborate on what I said.

VCFAX has IG > 50%.  It is the most diversified with high % in securitized.  I prefer it over PIMIX.  According to M* SEMMX have much higher % below IG than VCFAX so why are you OK with SEMMX but not VCFAX?

SEMMX is the best lower SD fund.  IOFIX is the best higher SD fund.

I would sell PMZIX because SEMMX is much better. 

I would add PUCZX or JMUTX.  I prefer PUCZX.

Basically, VCFAX,SEMMX,IOFIX,PUCZX and with these funds you don't need PIMIX.

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Contributor ○

Re: 2020 - bond funds analysis

SEMMX is entirely non-Agency MBS, which in of itself could lead to legacy rating that is lower than the Voya fund’s rating.  I will take a legacy subprime MBS over corporate credit and auto loans that are below investment grade.  The Voya fund has both corporate credit and auto loans.

One of the things I have been struggling with is that Money Markets pay 1.7%.  JPST pays much higher.  To get a higher Yield from investment grade fixed income funds is to carry higher duration but is the additional  yield at the current rates worth the duration risk?

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Frequent Contributor

Re: 2020 - bond funds analysis

Look at DHEIX/DHEAX, over 80% IG, a higher yield > 3.5% than JPST, short duration and better performance too.

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