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dtconroe
Participant ○○○

A Slightly Different OEF Bond Thread

Mlott has been having some health issues, but his thread on the old forums was very popular, so I thought I would re-start his thread on the new forums.  Consistent with mlott's request, this thread is for bond oef investors, who are not comfortable with frequent trading, favor a wider array of bond oef investing strategies than just momentum based investing, use bond oefs for a wide array of uses/purposes, such as ballast purposes, buy-and-hold strategies, or possibly some hybrid strategies.  

483 Replies
MGinCali
Follower ○○○

Re: A Slightly Different OEF Bond Thread

Dt, thank you for adding this topic in the new forum. I've  learned a lot from you and others. I don't post because I don't have the knowledge you guys have, but I do read the forums.

I'm a buy and hold for equities and bond funds.

MG

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dtconroe
Participant ○○○

Re: A Slightly Different OEF Bond Thread

MGinCali, there are many posters in your situation.  Feel free to do what you are most comfortable in doing on this thread--ask questions, make comments, or just read as you choose, etc.  When mlott is feeling better, I suspect he will welcome you your participation.  In my personal situation, I am in retirement and will be doing much traveling over the next 3 months.  I will not be able to actively participate in this thread during that period.  My bond oef holdings are very low risk funds, that I need to "hold" without much active monitoring, until I am back home in the fall. I use funds like PUTIX, MWCIX, PIMIX, BTMIX, VCFAX, SEMMX, etc.  Other posters have a different set of criteria, often selecting good ballast funds to offset equity holdings, and they may choose other bond oefs for their portfolio.  Some investors prefer a large number of bond oefs for their portfolio, but others like me, will limit their bond oefs to 10 or less.  Hope things go well for you in your investing decisions.

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yogibearbull
Contributor ○○○

Re: A Slightly Different OEF Bond Thread

I saw @mlott1 [probably mlott from the old forum] comment on a thread in the new forum. If that is the case, he may find his way here eventually.

YBB
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FD1001
Contributor ○○○

Re: A Slightly Different OEF Bond Thread

As usual, the devil is in the details.  This is the old thread(link).  The OP specifically mentioned: "What would be your one best recommendation for an OEF bond fund, or bond index fund with the view of holding for the long term?"... "I want something simple and reliable, not a trading strategy, or CEFs that have to be monitored and bought and sold."  That means holding for years without monitoring and usually simple means 2-3 funds which is exactly how Mlott1 is investing. 

YBB nailed it right away: "One can have 1 multisector bond fund and 1 intermediate-term/total-return bond fund, and then just forget about it. If one wants to trade, one can do it with some real stuff - stocks, ETFs, CEFs, commodities, options, futures."

The old thread request lasted about 3 weeks and then...it was back to posters who own 5-15 funds and more frequent trading after all, simple and LT is pretty basic stuff.

If you trade every 6 months are you a trader? is there a huge difference between 3 to 6 months? why 6 months is a good choice and 3 or 9 months are not?

More, if you just post your funds without explanation your goals and why it doesn't add much value.  Example: If you own just one bond fund (the index BND) is this a good choice? I don't know if you don't explain it.

It's funny how the new OP isn't the same as the old one so it can fit several posters :-)

BTW, the thread I'm running for years is wide open to discuss anything you want, over the years we discussed ST+LT and different styles and just because I'm trading doesn't mean you should too.  I never believed one should practice a similar style to others but what I preach is how one can improve their own style and goals by listening to other ideas that follow the same styles and goals. 

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rila3400
Participant ○○○

Re: A Slightly Different OEF Bond Thread

I have followed this thread on the old forum but have not commented until now.
I'd like to retire in 5 - 10 years.
My current overall target bond allocation is 25%.
The following fixed income investments are available in my 401K.

401K Fixed Income Choices.JPG

I've invested in Dodge & Cox Income (DODIX) which comprises 31% of my 401K.
My Roth IRA investments include Pimco Diversified Income (PDIIX) which comprises 25% of the IRA.
The DODIX position is approximately three times greater than the PDIIX position.
I also own Vanguard Ultra Short Term Bond (VUSFX) which makes up 17% of my taxable account.
Comments?

 

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dtconroe
Participant ○○○

Re: A Slightly Different OEF Bond Thread

mlott: "While I read and understand FD1000's approach to OEF bond fund investing, I recognize that I am not going to be able to pull off trading in and out of various bond funds every few months.  I've tried to track the various recommendations from FD and others, but I have no feel at all for this approach.  And while I have attempted to educate myself on bonds and bond funds in general, I am not impressed with the results"

FD, this is from mlott's OP on the old thread.  He started his thread to appeal to investors with a different style of investing to yours.  Apparently that was very appealing to a large number of posters, as the number of posts became very large, and was appealing to a number of posters who became uncomfortable with your thread.  Over the course of mlott's thread, he vocalized his comfort with a number of posting styles, other than frequent momentum trading, and he embraced those posters to participate on his thread.  When mlott chooses to return to posting on this thread, he can clarify any miscommunications I might have made to what he would prefer on this thread.  

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Gary1952
Participant ○○○

Re: A Slightly Different OEF Bond Thread

Thanks for doing this. I thought about it myself. Too bad all the history will be gone. 

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dtconroe
Participant ○○○

Re: A Slightly Different OEF Bond Thread

rila3400,

Maybe others will chime in regarding your holdings and thoughts about your portfolio.  I don't choose to make too many comments about others portfolios, and plans, as it seems that is very much impacted by your personal investing objectives and style of investing.  I will say I have owned DODIX  in the past, see it included in many model portfolios, and M* talks highly about the quality of the fund and its managers.  It seems to be a very popular core holding in many portfolios by posters on the M* forums.  I envy your ownership of a stable value fund--many of us have no access to such a fund.  I have never owned the other funds,  so I will refrain from commenting about them

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rila3400
Participant ○○○

Re: A Slightly Different OEF Bond Thread


@dtconroe wrote:

rila3400,

Maybe others will chime in regarding your holdings and thoughts about your portfolio.  I don't choose to make too many comments about others portfolios, and plans, as it seems that is very much impacted by your personal investing objectives and style of investing.  I will say I have owned DODIX  in the past, see it included in many model portfolios, and M* talks highly about the quality of the fund and its managers.  It seems to be a very popular core holding in many portfolios by posters on the M* forums.  I envy your ownership of a stable value fund--many of us have no access to such a fund.  I have never owned the other funds,  so I will refrain from commenting about them


dtconroe,

Thank you for your response.
I've decided not to invest in the Wells Fargo Stable Value Fund.
The fund's expense ratio (0.41%) is high relative to expected returns.
The expense ratio for DODIX is 0.43% but its future performance should compensate for slightly higher expenses.

401K Fixed Income Returns.JPG

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mlott1
Participant ○○

Re: A Slightly Different OEF Bond Thread

dtconroe, thanks for reestablishing the thread, wasn't sure what would happen when we transitioned to the new forum.  And your mission statement is spot-on, as the thread morphed into a wide-ranging OEF bond discussion.  I have been hampered by a bad fall I took early last month, and it has proven remarkably resistant to healing up.  It's turned out to be quite a pain in the...er, lower left leg.  It's kind of taken the steam out of me.  But, it could have been worse, and I'll eventually get over it.  Anyway, glad to see that the thread is up and running, and I am very gratified to see and hear that it has been helpful.  There have certainly been lots of good, informative posts, and I know that I have got a lot out of it.  

Thanks again, dt...

mlott1
Participant ○○

Re: A Slightly Different OEF Bond Thread

I probably should have read all the posts before I posted.  Yes, my original post was a pretty specific question, but as it moved towards a more general oef bond fund discussion, I did post that I was pleased at the turn taken, and encouraged everyone to use it as such.  In his original post reestablishing the thread, dtconroe articulated my feelings probably better than I could have.  FD's thread is very helpful and informative, and I always check it out when I visit the forum.  I think this thread is a bit different, and between the two I think that a lot of bond fund issues and ideas are discussed.  

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dtconroe
Participant ○○○

Re: A Slightly Different OEF Bond Thread

mlott, glad you are doing okay and approve of the wording of the post to restart this thread.  You started this thread on the old forum, and look forward to you continuing your OP role on this thread.  I will start my summer travels next week and so my participation will be spotty for the next few months.

PN
Participant ○○

Re: A Slightly Different OEF Bond Thread

Concern: ‘Trader vs. Non-Trader’ - Momentum investing has become popular, which increases the risk for what can happen when people push asset values for a certain type of asset to an unreasonable level. Further, as we head later into the economic cycle, at some point lower-quality bond issuers are likely to come under increased scrutiny. Moving up in credit quality in both taxable and tax-exempt bond markets will likely result in lower returns as things presently stand, but may be prudent to avoid risk.

During the recovery from the 2008 crash, fluctuations in price have been primarily due to interest rate risk. Going forward credit risk may be more of a factor.

DocWu
Explorer ○○

Re: A Slightly Different OEF Bond Thread

In 2017, I had a yield of 6% from the bond component of my IRA, driven by PONAX. When bond funds went down last year, I started to chase yield. It did not work well for me, and now in 2019, I wished I owned the funds I sold in 2018 like PONAX MGFIX, BCOSX and didn't have FFRHX and LFRAX. Well I sold the latter on Monday.

The better performing members of my bond lineup include a long term holding in VWEHX and newer holding in **bleep**IX, but they are hardly ballast tyoe funds.  I plan to bring back BCOSX and FTBFX, and then leave them all alone.  I'll just  have a stable blend funds that don't need changing or much attention.

 

 

 

DrVenture
Participant ○

Re: A Slightly Different OEF Bond Thread

I've had similar feelings as you, DrWu, in the past. In my case it was because I held onto positions too long that were not working. Not wanting to incur trading costs or jump from fund to fund too often was part of the problem, coupled with not wanting to 'lock in" losses. Now, if the "momentum" part of my bond oefs are not working, I just move to cash and reallocate much more quickly. It seems to me the alternative is to choose far less volatile issues and then take the long view. I have come to believe that you cannot have it both ways, choosing volatile funds (often specific sector bets) AND hanging on for the long term. Just my humble opinion and not sure it helps your situation at all.

DrVenture
Participant ○

Re: A Slightly Different OEF Bond Thread


@PN wrote:

Concern: ‘Trader vs. Non-Trader’ - Momentum investing has become popular, which increases the risk for what can happen when people push asset values for a certain type of asset to an unreasonable level. Further, as we head later into the economic cycle, at some point lower-quality bond issuers are likely to come under increased scrutiny. Moving up in credit quality in both taxable and tax-exempt bond markets will likely result in lower returns as things presently stand, but may be prudent to avoid risk.

During the recovery from the 2008 crash, fluctuations in price have been primarily due to interest rate risk. Going forward credit risk may be more of a factor.


You are totally correct, I believe. And there will no doubt be "pockets" of pain for sectors that are seeing herd mentality movements. Yet, I am not convinced we are late in the economic cycle. I do believe that tariffs and trade wars are really suppressing the markets (at this time) and completely undermining the corporate tax cuts. But, there are really no signs that despite this very serious headwind, the underlying economic conditions are faltering. On the contrary, it is a strong global economy that is enabling this trade war. I could see asset bubbles erupting, should the FED cave in to political pressure and lower rates without the data to support such a move. But, absent such a move, and assuming China and the US back away from turning this into a protracted battle of wills and idealogies, this could potentially be a very long period of growth. Until we see otherwise.

I subscribe to the notion that expansions don't simply die of old age, they are murdered.

dtconroe
Participant ○○○

Re: A Slightly Different OEF Bond Thread

I subscribe to the belief that different market conditions, impact funds differently.  I believe 2018 was largely impacted by interest rate rises, but toward the end of 2018, interest rates dropped and have been largely flat in 2019.  It is not feasible to think junk bonds, EM bonds, etc. can keep up their torrid performance indefinitely, as they have for the past 6 months, and they become vulnerable to changing market conditions.  As equity markets become more vulnerable, you see a gradual, sometimes rapid, movement to safer harbor funds.  I prefer to focus on multisector and nontraditional bond funds, which can focus on adjusting asset holdings, adjust their more sophisticated investing strategies, and to avoid sector funds that fall in and out of favor.  I prefer funds that have lower volatility, and funds that have "periodic" pauses, but do not experience major downturns.  So, I focus on Bond oefs, with lower SD and higher Sortino ratings.  I like funds with good upside/downside capture ratios.  I am not going to do well following momentum based trading techniques, but I do focus on a number of multisector and nontraditional bond funds that are not clones in their performance of each other, but over time, tend to complement each other, and have positive performance.  I continue to hold funds like PIMIX, VCFAX, SEMMX, MWCIX, PUTIX, etc.

Gary1952
Participant ○○○

Re: A Slightly Different OEF Bond Thread

Looking at the performance charts of good bond OEFs you can see they move mostly up with “pauses” or short downturns. So I agree with the above statements. 

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DrVenture
Participant ○

Re: A Slightly Different OEF Bond Thread

I like all your fund choices DT. I am a bit more adventurous right now, but as I get closer to retirement I suspect that my bond portfolio will look a lot more like yours.

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