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Frequent Contributor

Re: Where to Put Cash? [Ultra & ST ETFs]

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Hi Yogi,

Thanks for fleshing out a few possibilities, and for charting them. Funds like BSV are short-term bond funds which invest in 1-5 year maturities. The ultra-short group invests in 1-year or less.

The ultra-short funds under discussion are these:

Cash Funds 1.jpg

The chart is YTD daily. The reason yields are high is because calculations use the end of last month for pricing, it is an anomaly.  SHV is ultra short treasury, and we know what that yield should be.

Average weighted coupon / price = yield, and prices were low on 4/30. Price for most have not yet recovered.

I prefer two buckets of cash.  One is for the infrequent trading of OEF's at days end, and the other is for mid-day trades of stocks and ETF's.

I need my cash positions to perform well during crisis because that is often when I trade. FCONX has no round-trip restrictions, I can sell shares and use proceeds to buy another fund in a single order and the transaction processes at the end of the same day. The yield for FCONX compares reasonably. 

I have been using FDRXX for flexibility in mid-day trading, and I think that I will switch to SHV if the funds are immediately available upon sale. If there is a settling period, then it defeats the purpose.

SHV comes with additional interest rate risk due to the AAA ratings, so there is that.

Thank you,

Holiday

 

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Re: Where to Put Cash? [Ultra & ST ETFs]

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Update: Based on my research, and other comments, I settled at ICSH at Schwab. It does have T+2 settlement but no other trading restrictions as ultra ST bond OEFs would have. M-mkt fund SNVXX is at 0.02% and SWVXX is at 0.34%, and even those require manual shifting back and forth with T+1 settlement.

As I have margin account [although I don't use margin now], I would have no problem entering simultaneous buys and sells with T+2 settlements for stocks, ETFs, CEFs utilizing ICSH as source or target for funds.

YBB
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Re: Where to Put Cash? [Ultra & ST ETFs]

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ICSH (1.7% yield) lost 4% peak to trough in March.  My money market equivalent, DBLSX (3.2% yield), lost 7%, 3% worse but picks up 1.5% in yield differential.  March was violent re-pricing in bond assets that we hadn't seen in a long time and I am not going to let it make me lose confidence in my fund.  Just presenting alternate thought, but everyone has to arrive at their own risk tolerance for short term money investments.  

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Re: Where to Put Cash? [Ultra & ST ETFs]

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I keep enough in MM for trades (higher than usual volume now) and the rest in BIV — which is not a “cash sub”. I don’t want a permanent “cash” position. I have other bond funds, of course, but BIV is essentially my non-equity “core account.”

If I had to give a recommendation, it would be BSV (or SWSBX at Schwab).

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Re: Where to Put Cash? [Ultra & ST ETFs]

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@FD1001 wrote:

@PaulR888 wrote:

FD ...  Mr. Merriman has been suggesting VSCSX for several years now.  It has done well for years up until March when spreads blew out, even in high quality bonds.  People were selling indiscriminately.  The March bond re-pricing was bad and swift.  IG debt dropped huge peak to trough in 3 weeks before snapping back.  VSCSX has recovered.  

Since you throw your customary darts at Mr. Merriman, I remind you of your once touted DHEAX as your cash equivalent fund.  Remember that call of yours?  VSCSX is up .8% YTD and 4.4% over past year.  Your DHEAX is down 8% YTD and down almost 6% over the past year.  Who made the better call?


Let's look at facts, I posted about Merriman but you posted about me.  So, before you complain take a note.

VSCSX isn't proper as cash, after all, it lost over 7% regardless of what it did YTD or longer-term.  Someone who wants cash wants an investment that doesn't lose money.

I posted about funds such as SEMMX,PUTIX,DHEAX as "cash sub" (pay attention to the "" "") for people who understand the risk and know what they are doing. Any posters who didn't understand the risk and didn't do their due diligence it's their fault. 

But, we also know that you didn't understand your portfolio risk, you admitted that and was surprised...mmm...I wasn't.  It's not a surprise you collected many funds over the years and thought your portfolio is diversified.  It's not the quantity it's the quality.


Umm ... a fund like SEMMX should NEVER have been touted as a cash-sub. NEVER, on any planet, in any macro-economic environment! It isn't a cash-sub if it has to be closely monitored by the investor to avoid huge downside performance OR if it moves in lock-step with equity or bond sector performance. The entire point of cash and cash-equivalents is to insulate your exposure risk to other assets or to park money for tactical opportunities or expense commitments.

FD, I realize you can't own failure so I don't expect this to influence your own investing behavior but it might serve as a warning to those who might try to follow your preaching.

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I like to express my thanks and appreciation for the many helpful comments and suggestions I received from so many of you.

At this point, I have narrowed down my selection to these three funds: BSV, ICSH and PPVFX. I selected these funds primarily with the following criteria in mind:

- a positive YTD total return,

- a loss of < 1% in March,

- SD < 1.75,

- yield > 1.75%,

- and the percentage of bonds rated AAA-A > 75%.

Since I currently have a significant amount of my portfolio in cash/MM (approx. 60%), it will be allocated among these three conservative funds until, as I said, I get a better sense how this downturn, that is “without modern precedent” according to Fed Chair Powell, evolves.

Hence, as a retired investor, I need to keep reminding myself at times that my top priority, during this highly unusual and extremely uncertain time, is and remains capital preservation.

Thanks, again.

Fred

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Re: Where to Put Cash? [Ultra & ST ETFs]

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@VA-Tech wrote:

@FD1001 wrote:

@PaulR888 wrote:

FD ...  Mr. Merriman has been suggesting VSCSX for several years now.  It has done well for years up until March when spreads blew out, even in high quality bonds.  People were selling indiscriminately.  The March bond re-pricing was bad and swift.  IG debt dropped huge peak to trough in 3 weeks before snapping back.  VSCSX has recovered.  

Since you throw your customary darts at Mr. Merriman, I remind you of your once touted DHEAX as your cash equivalent fund.  Remember that call of yours?  VSCSX is up .8% YTD and 4.4% over past year.  Your DHEAX is down 8% YTD and down almost 6% over the past year.  Who made the better call?


Let's look at facts, I posted about Merriman but you posted about me.  So, before you complain take a note.

VSCSX isn't proper as cash, after all, it lost over 7% regardless of what it did YTD or longer-term.  Someone who wants cash wants an investment that doesn't lose money.

I posted about funds such as SEMMX,PUTIX,DHEAX as "cash sub" (pay attention to the "" "") for people who understand the risk and know what they are doing. Any posters who didn't understand the risk and didn't do their due diligence it's their fault. 

But, we also know that you didn't understand your portfolio risk, you admitted that and was surprised...mmm...I wasn't.  It's not a surprise you collected many funds over the years and thought your portfolio is diversified.  It's not the quantity it's the quality.


Umm ... a fund like SEMMX should NEVER have been touted as a cash-sub. NEVER, on any planet, in any macro-economic environment! It isn't a cash-sub if it has to be closely monitored by the investor to avoid huge downside performance OR if it moves in lock-step with equity or bond sector performance. The entire point of cash and cash-equivalents is to insulate your exposure risk to other assets or to park money for tactical opportunities or expense commitments.

FD, I realize you can't own failure so I don't expect this to influence your own investing behavior but it might serve as a warning to those who might try to follow your preaching.


Your point fell apart. I never said it's a cash sub it was clearly defined many times  "cash sub" (pay attention to the "" "") for people who understand the risk and know what they are doing. Any posters who didn't understand the risk and didn't do their due diligence it's their fault. 

You tried but you failed, nothing new.  Keep trying.

The usual, I post according to the goals of others, this thread was another proof of that.  Why didn't I mention any of these funds because the OP goals were clearly different? 

So, unless you know what you are doing please don't take advice from anybody on the internet. I don't care if you or anybody else pay attention or not, after all, it's free and for entertainment. But, since you know so much I invite to participate in any future analysis, please don't be shy to make your opinions known.

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Explorer ○○

14 May 2020

I’ve used FUMBX in my Roth IRA as the non equity ,cash, money in and out of trades, fund for a long time now and it has served me well.  It received the money from my sale of the utility fund and real estate fund earlier this spring and I am very comfortable using it in this manner, though I am not sure it has the same quality of stats as your list.

John

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@fred495 , FWIW, although I went with ICSH, BSV was also a finalist.

BSV acted similarly but had lower 30-day SEC yield and higher duration [it is short-term, not ultra short-term]. What worked for it was higher weight  in government [70%].

ICSH also has a good chunk in short-term CDs.

I was looking for alternatives for ST OEFs that have 60-90 day trading restrictions & needed only one ETF for brokerage transactions and ICSH met the need for now.

YBB
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Re: Where to Put Cash? [Ultra & ST ETFs]

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@FD1001 wrote:

I posted about funds such as SEMMX,PUTIX,DHEAX as "cash sub" (pay attention to the "" "") for people who understand the risk and know what they are doing. Any posters who didn't understand the risk and didn't do their due diligence it's their fault. 

 

Your point fell apart. I never said it's a cash sub it was clearly defined many times  "cash sub" (pay attention to the "" "") for people who understand the risk and know what they are doing. Any posters who didn't understand the risk and didn't do their due diligence it's their fault. 

 

Paul:  I extract the above from recent back and forth with FD.  You can read it as many times as you wish and it will continue to make no sense.  We have now seen the illogical morph into the incomprehensible.  Recall FD also once constructed a 3 bond OEF that he claimed was "set and forget" or "sleep well" or something like that and during March they (ALL 3) tanked about 13%.  Oh, maybe the "..." mean something to him that excuse their performance.  Most people here have integrity and admit to our mistakes.  Heck, even professionals doing this for a living make mistakes.  We all do. 

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@PaulR888 wrote:

Paul Merriman has historically suggested Vanguard's short term IG corporate bond fund, VSCSX, particularly since money markets have such low returns now, taking a little of such corporate risk gives better return for money you may want to tap relatively soon.  I think worth considering at any rate, if you have access to Vanguard Admiral funds.   


 

Thanks for the suggestion, Paul. But, I don't have an account at Vanguard and would have to pay a transaction fee of $75 to access VSCSX at my brokerage firm.

Also, since this is a dedicated corporate bond fund that lost 3.97% in March, and I am in the camp that wouldn't be surprised if we had another March meltdown, I would not want to own this fund, or any fund that has a heavy exposure to corporate bonds, in the current pandemic induced recessionary market environment. 

Thanks, again.

Fred

 

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Re: Where to Put Cash? [Ultra & ST ETFs]

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VCSH is the ETF class of ST-corporate VSCSX. BSV is the ETF class of ST VBIRX. One can now trade ETFs commission-free at most brokerages.

In March, Vanguard bond ETF classes diverged a lot from their OEFs, see Stockcharts; more government % meant less divergence. Don't look for this divergence in M* charts as they show ETF NAVs [which are the same as OEF NAVs], not the ETF prices. However, M* Performance tables have price- and NAV- performances [TRs] and those are noticeably different for March or for periods that include March.   https://stockcharts.com/h-perf/ui?s=BSV&compare=VCSH,VBIRX,VSCSX&id=p12479348063

YBB
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@willt65 wrote:

Another ultrashort ETF is VNLA, Janus Henderson Short Duration Income ETF. I use this along with VUSFX for my near cash holdings.

VNLA has a SD of 1.32, SEC Yield of approx. 2%, duration of 1.61 years and is considered an ultrashort income fund. It holds up fairly well with JPST in 1-month, 3-month and YTD. It's heavy on corporates for sure.


 

Thanks, @willt65, appreciate your suggestion. 

As you pointed out, VNLA is primarily invested in corporate bonds, more than I feel comfortable with in the current environment. I am in the camp that wouldn't be surprised if we had another March meltdown, and with only 46% of the bond holdings rated AAA-A, and only 29% in the US, the fund raises a red flag for me. In more "normal" times, it's probably a very good "near cash" holding. But, for the time being, I will put it on my watch list for possible future reference.

Thanks, again.

Fred

 

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@yogibearbull wrote:

@fred495 , FWIW, although I went with ICSH, BSV was also a finalist.

BSV acted similarly but had lower 30-day SEC yield and higher duration [it is short-term, not ultra short-term]. What worked for it was higher weight  in government [70%].

ICSH also has a good chunk in short-term CDs.

I was looking for alternatives for ST OEFs that have 60-90 day trading restrictions & needed only one ETF for brokerage transactions and ICSH met the need for now.


 

Well, @yogibearbull, I am glad to hear that you also have a good opinion of two of the three funds I selected. I needed to pick a third fund since I didn't want to put more than 20% of my portfolio in one fund.

Thanks, again.

Fred

 

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@Muggles208 wrote:

14 May 2020

I’ve used FUMBX in my Roth IRA as the non equity ,cash, money in and out of trades, fund for a long time now and it has served me well.  It received the money from my sale of the utility fund and real estate fund earlier this spring and I am very comfortable using it in this manner, though I am not sure it has the same quality of stats as your list.

John


 

Thanks, John. I didn't consider an all Treasury fund as a possibility, but I will take a good look at FUMBX since it seems to meet most of my requirements.

Fred

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Re: Where to Put Cash? [Ultra & ST ETFs]

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@PaulR888 wrote:

 

 

Paul:  I extract the above from recent back and forth with FD.  You can read it as many times as you wish and it will continue to make no sense.  We have now seen the illogical morph into the incomprehensible.  Recall FD also once constructed a 3 bond OEF that he claimed was "set and forget" or "sleep well" or something like that and during March they (ALL 3) tanked about 13%.  Oh, maybe the "..." mean something to him that excuse their performance.  Most people here have integrity and admit to our mistakes.  Heck, even professionals doing this for a living make mistakes.  We all do. 


Paul, you are all in so let's look at facts. 

You started a thread(link) and revealed that your portfolio lost more than you expected. This was a proof you didn't do your homework.  All your learning, diversification, buckets, 20 funds, Merriman was thrown out of the window. Please keep reading and using several styles and methods maybe you will find it at the end  :-)

What happened to my portfolio? I got out almost at the top. I was positive since week one in 2020 and now at several % positive for the year with extremely low volatility.  When I was in cash I still made several successful trades. Basically, not only I met my strict goals I exceeded them.  That's what a good investor does.

More from your thread above

Your bucket one DBLSX was on 3/25 down -6.5 which is your cash.  It is still down for the years -2.5%. Nice going

See below your CEF performance for 2020 as of 3/22...PTY -35.7%  TWO -61.7%  STOR -52.15  PZVEX -37.4  IFN -23.2  DSL -33.05

I just looked as of yesterday and PTY is still down -24.6  and TWO -69.15...no need to look farther.

The rest is just noise.

Just keep posting.

 

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Re: Where to Put Cash? [Ultra & ST ETFs]

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FD ...   You are the king of deflect and divert.  All my big down investments are CEFs in Bucket 2 and equity in Bucket 3.  I do not fret over those.  I give them years to rebound.  Yes, DBLSX is down as you said, but I got the yield as a buffer.  It too will rebound and much quicker.  And it still beats your DHEAX that has lost 7.1% YTD.  Ouch!

As you have no idea what my asset allocation in dollars are, I will say my YTD through April is down 14% but I've also received $15K in dividends so I am on track to more than cover all my gap expenses for the year.  While my risk assets are down, I do maintain 6% to 8% in precious metals/commodities:  FNV is up 46% YTD (and 100% over 1 yr) and LCSIX is up 14% YTD. 

And finally, my diversified portfolio made 20% last year.  I can keep fully invested all the time and not have to rely on your Ouiji board or whatever you use to exit and enter markets.  Yes, staying in the market subjects oneself to painful losses sometimes.  Like a golfer who gets into trouble on certain holes during the round but if he or she sticks to their game plan and strategy they can still win.  

To refresh your memory, on Sep 25, 2019 1:03 PM, you posted "I would invest in Multisector bonds funds with several bond categories and let their management worry and adjust their asset allocation, duration and others for market conditions. Just buy the following 3 funds VCFAX/VCFIX, JMUTX/JMUIX, JMSIX/JGIAX...all with distributions over 4%...and go to sleep." 

Well, during March peak to trough, VCFAX lost 20%, JMSIX lost 18% and JMUTX lost 16%.  What ya say 'bout that FD?

You throw darts at my bond funds yet your bond fund picks are no better.  You throw darts at my equities yet we don't know what your equities were.  I often wonder why your base is so strong here?  You remain all hat and no cattle, no better predictor of performance than the next guy.  All you outshine us is in the ego category.      

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@yogibearbull wrote:

@fred495 , FWIW, although I went with ICSH, BSV was also a finalist.

BSV acted similarly but had lower 30-day SEC yield and higher duration [it is short-term, not ultra short-term]. What worked for it was higher weight  in government [70%].

ICSH also has a good chunk in short-term CDs.

I was looking for alternatives for ST OEFs that have 60-90 day trading restrictions & needed only one ETF for brokerage transactions and ICSH met the need for now.


BSV is very good, but I can't see holding it for yield alone?

ICSH is about the best cash sub, it has been pretty flat all along and yield is about 1.6%

NEAR is going to yield over 2% and holds some short cooperates and securitized debt; it did take a dive, yet before that, since 2014, it held up pretty even in NAV at around $50, which is what you want in cash sub, constant yield,with little flux.

MINT is a bit more volatile.

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Re: Where to Put Cash? [Ultra & ST ETFs]

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@yogibearbull wrote:

VCSH is the ETF class of ST-corporate VSCSX. BSV is the ETF class of ST VBIRX. One can now trade ETFs commission-free at most brokerages.

In March, Vanguard bond ETF classes diverged a lot from their OEFs, see Stockcharts; more government % meant less divergence. Don't look for this divergence in M* charts as they show ETF NAVs [which are the same as OEF NAVs], not the ETF prices. However, M* Performance tables have price- and NAV- performances [TRs] and those are noticeably different for March or for periods that include March.   https://stockcharts.com/h-perf/ui?s=BSV&compare=VCSH,VBIRX,VSCSX&id=p12479348063


@yogibearbull ...  Although I don’t really consider it to be a cash sub I do have a sizable holding of BSV.  I also hold ISTB.  I have recently put much of my cash holdings in VGSH.  I believe during a recession (correction) treasuries will fair a little better than corporates and is a little closer to being a cash sub.

helmut

 

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Re: Where to Put Cash? [Ultra & ST ETFs]

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place to put cash no losses      CD,s   1 year  fdic insured        1.50%    to 1.80 %   check all banks

 

to take risk      consider preferred     under the callable amount    some pay 5% to 6%     at banks like wells fargo

 

      

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