Bond Squad

Seeking advice on bond(funds) diversification

xiaotian — Sat, 21 Nov 2009 19:46:06 GMT

I'd like to get some advice on diversifying my bond allocation from more experienced bond investors.

*Goal:

Seeking better return than current MM funds, while avoid volatility in stock market. reduce overall risk in my entire portfolio.

Currently I am about 50/50 for bond in my portfolio, in next year or so will reduce bond allocation to about 40/60.

current holdings:

Cash: 30% Taxable account

FGMNX 30% Retirement account (maxed out)

VIPSX: 20% Taxable account

FHIGX: 20% Taxable account

1. Obviously I need to put that 30% cash to work.

2. I am worried about FHIGX - the municiple bond fund has CA and NY in top 5 holdings - both facing huge budget issues in coming couple of months. so I don't plan to buy more munis.

3. Not sure about VIPSX, are we heading to inflation or deflation? CPI hasn't changed much but USD is heading south.

4. What's missing in my bond allocation so I can distribute the 30% cash to that? Global bond fund? Emerging market bond fund?

I am in my 30s so bond allocation is for reducing risk from the stock market side. I like to stay on investment class bonds.

Your advice is greatly appreciated.

-Xiaotian

advice on bond fund diversification

modenesi — Fri, 20 Nov 2009 22:02:26 GMT

I would love some advice from this forum on bond fund diversification.

I'm 62 and over the next 3 years plan to sell about $250,000 in stocks and buy bond funds to fix my AA.

My problem is I only own Vanguard funds and would like some bond fund diversification. I'm thinking 4 or 5 funds. I currently own VIPSX in a Roth plus VWINX AND VWELX. I also own a muni fund in the taxable account.

Suggestions are very welcome; thanks

PRHYX, PRPIX VS. PRCIX

mikeyz — Thu, 19 Nov 2009 03:29:30 GMT

What does the future hold? Stocks have had a nice run but I fear a pull back. I have a stock portfolio and I am hedging with a couple of bond funds (PRHYX & PRPIX, junk and corporate bonds) Should I diversify my bond fund holdings with a purchase of PRCIX or add to my junk and corporate bonds?

Drop in 3 month T-Bill Rates

james57 — Fri, 20 Nov 2009 12:53:20 GMT

Note that 3 month t-bills have dropped from 0.55 to 0.30 to 0.05% over the past two days. Last time this occurred was back in late 2008 during the crisis.

Just wondered if anybody knows the reason for this. My VFISX also has jumped up quite a bit. So short treasuries are also affected.

I get nervous when something happens that I don't have an explanation for. So would appreciate any knowledge on this , or is it just a quirk? Thanks.

Jim

VIPSX vs. TIPS

Kenwood — Mon, 16 Nov 2009 02:48:51 GMT

Pardon my naivety, but I'm wondering which offers the best selection in an IRA (in terms of risk, return, and liquidity) a TIPS Funds such as VIPSX, or a TIPS' Bond.....

Thanks,

Fidelity CA Muni bond fund

PamelaW — Thu, 19 Nov 2009 19:04:26 GMT

I'm looking at investing in FCTFX. I've never invested in bond funds except for PIMCO Total Return in my 401k. It would be in a taxable account and this fund is tax exempt for state and federal taxes.

I plan on re-investing dividends for at least the next 10 years. I'm 46 yrs old and want to retire at 55.

Any thoughts on FCTFX? This fund would be in addition to World and Emerging Mkt bond funds.

The only thing I am a bit leery of is that the minimum investment is $10k. I can do that but is it a good time to put that large (for me) of a chunk in right now?

Seeking short-term high yield mutual fund

TallyMan — Wed, 11 Nov 2009 20:19:44 GMT

I'd like to explore establishing a position in a short-term high yield fund.

My wife & I currently hold some shares of Vanguard High-Yield Tax-Exempt (VWAHX), but with its current average duration of 7.0 years I have been paring down our holdings in it due to concern over interest rate risk. The average duration of 4.5 years in Vanguard High-Yield Corporate Fund Investor Shares (VWEHX) is slightly more appealing but 4.5 yrs is still higher than I'd like and its price has recently surged.

Running M*'s mutual fund screener using as criteria Municipal Bond, High Yield Muni, Duration less than equal to 3 years resulted in No funds displayed. When I switch to taxable/ultra short bonds, A or higher quality 111 funds are returned, which is "too much information," given my limited time.

OTOH, I noticed Fidelity Floating Rate High Income Fund (FFRHX), with a Average Eff Duration 0.01 Yrs and avg credit rating of BB and yield of 3.26%, according M*. This seems like a decent prospect.

Are there any short term high yield tax exempt funds anyone would recommend?

Also, Your thoughts on FFRHX or any other taxable short-term high-yield fund?

Thx,
Steve

RettW and others. % Allocation for 2010

Limoman — Wed, 18 Nov 2009 23:23:09 GMT

RW and others..

An FA/ Advisor I just met with for a Intro meeting, for 2010 fwd , came up with his own recommended Port of Index Funds and I just matched my current Bond Port to that and came up with this kind of mix..

10%-FNMIX

15%-HABDX

20%-PTTDX

20%-TGLMX

20%-TGBAX

15%-VIPSX

What do you think? Do a Optimum chart on it?

Thanks

Dennis

estonia(government of) is rated down A1 of moody's rating.

kamisama — Thu, 19 Nov 2009 12:44:04 GMT

what country is estonia? in Africa,high gdp developing.new economy area is africa.
but,these day's economic crisis expands these area,africa.so,moody's rated down estonia to A1 17
november.rated A1 is not high rank.i think this rating is not match to estonia.but,it is concerned that neighbor country latvia financial crisis spark.but,these country
is new high developing economic country.i want to expects that africa leads world.very many
population and high growth power will beat all crisis.

Treasury laddering as diversification?

Romey — Mon, 16 Nov 2009 23:29:19 GMT

I have a good portion of my portfolio in various bond funds for diversification purposes. However, I look at the probably interest rate increases in the future and am concerned about my bond funds going down in value. I am considering laddering treasury bonds instead for the portion of my bond holdings I hold in intermediate and short term bond funds. My broker has a service to set up such a ladder easily and I have enough money involved to make any losses due to transaction costs insignificant.

I know the theory of holding bond funds as a diversifier in relation to the equity portion of my portfolio. Will individual treasury bonds held in a ladder work similarly--or do bond funds fluctuating NAV make them work where indidual bonds will not for this purpose?

How is this AA for budding portfolio for taxable account?

lucky7 — Sat, 14 Nov 2009 17:07:48 GMT

Am building bond portfolio for income in a taxable account, dividends transferred to a checking account, surplus reinvested. Forums have been extremely helpful so far, truly very appreciative. Does the following seem reasonable in terms of an AA?:

Tax Exempts-approx. 35% (have VNJTX, VWLTX)

Core Bond Fund- approx. 35% (have TGMNX)

High(er) Yield- 10-15%, started purchases of MWHYX, actually avg. weighted credit quality BBB, but will categorize as its name as high yield.

Global; EM; and Multisector-collectively considering as 15-20 % of portfolio. Maybe equally weighted.

Have not yet purchased for taxable. Looked at TEI, GIM, and for multi-sector LSBRX or maybe ACG though latter is leveraged. Curious aside about LSBRX which I own in tax advantaged. It did not seem to offer much protection for weakening dollar, had bought in part for that several years ago.

Any thoughts would be appreciated. Willing to take moderate risk, and for now not overly focused on tax issue. Ultimately, will swap off and place in tax advantaged account, while repurchasing the equity from tax advantage in taxable. But for now, as recovering efficient market believer, want decent, moderately dependable income and need for time being to utilize taxable. Thanks again for any suggestions.

Bob

Presentation on EM debt bonds

closer — Sun, 15 Nov 2009 17:33:52 GMT

Shareholders of TCW funds or others interested in emerging-market debt bonds may be interested in viewing a presentation (see link below) by Luz Padilla, manager of TCW Emerging Markets Income (TGEIX). What surprised me is that 72.4% of her portfolio is currently composed of investment-grade bonds, including Brazilian issues, and 21.78% BB-rated bonds. (This made me think that I'd rather hold IG Brazilian bonds than U.S. "junk.") Full disclosure: I own TGEIX.

http://www.tcw.com/cmRoot/docs/cm/111109Pres.20091113111111739.pdf

Buying Municipal Bonds

Melissa — Sat, 03 Oct 2009 14:53:34 GMT

I read a lot about interest rate impact on Muni.

If I invest 25k in a PR bond (ends 2029) at 5 % coupon.

Is it a totally dumb move ?

If this 5% income is assured for the next 20 years I am happy.

Now if the interest rates go up --will I be a big loser ?

If interest rates go up --where will long term muni's end -- 7 -8 or 9 .

Thanks for the education.

Too good to be true?

philo1a — Mon, 16 Nov 2009 18:00:02 GMT

Is there a plausable explanation as to why TGLMX is paying 8% while all its peers are paying less than 6%. Is Bernie Maddoff out on bail?

GNMA Funds?? At Risk??

VinoSupremo — Mon, 05 Mar 2007 03:14:00 GMT

Gretchen Morgenstern has recently written about the risks of the sub prime market falling apart and how mortgage failures may reach into the prime markets and beyond into the financial industry

Given this I am still not sure how this affects positions in GNMA funds like Vanguard's VFIIX or American Century's BGNMX. A substantial portion of my bond portfolio is in these funds (for monthly income) and I am starting to wonder if I should reduce my position or move out entirely.

Any suggestions or thoughts welcomed...

Frank

Originally posted in thread: 3366

Treasury laddering as diversification?

Romey — Mon, 16 Nov 2009 23:29:15 GMT

I-Bond Q

chicago69 — Sun, 15 Nov 2009 18:01:16 GMT

I have question about the following security:

Confirm #: IAAAB
Purchase Schedule: None
Security Type: Series I Savings Bond
Issue Date: 10-01-2003
Maturity Date: 10-01-2033
Interest Rate: 0.00%

The fixed rate for this security was 1.10, so why it's showing as 0.0% as interest rate - Please help.

Regards

Buying bond funds in retirement accounts

Fundscan — Thu, 05 Nov 2009 03:24:40 GMT

My spouse and I retired in 2007 and we have more than sufficient income from my two pensions and my social security...bolstered this year by her social security.

In preparing for retirements, we shifted to a 30:70 stock to fixed account ratio in 2007 in both a 401(k) and 403(b). The fixed accounts pay a guaranteed annual interest rate each month. We could probably do much better investing in bond funds. We probably won't take any drawdowns in either account until required minimum distributions kick in a few years from now.

We don't have any experience investing in bond funds in retirement accounts but do want to protect the principal amounts invested in bond funds reasonably.

Should we wait until interest rates go up and bond prices fall. If so, should we wait till the interest rates rise 1%, 2%?, 3%? etc?

I tried investing in a taxable account in Fidelity Total Bond Fund, FTBFX, in 2009 to gain some experience in bond fund investing. But I got cold feet when the price started flucuating, so sold the fund at a profit after a few short months in 2009. I keep hearing rumors that bond fund prices will fall 6% for each 1% rise in interest rates. I didn't have the heart to wait to see what would happen to the price of FTBFX when interest rates rise.

Our fall back position is to continue in the fixed accounts run by Metlife for both the 401(k) and 403(b).

Bond funds for Income-How many are enough?

lucky7 — Sat, 07 Nov 2009 17:52:02 GMT

While building income with bond funds within taxable accounts (too young to withdraw without penalty in tax advantaged accts), am wondering how many are enough. TGMNX is one core fund, have spliced in a high yield. Have several tax exempts. But how many different funds do others tend to hold, in particular in a taxable acct., and what principles guide your diversification strategy?

Bob

P.S. I have looked when available at portfolios but thought might be worthwhile to post as question. If as with equities risk tolerance is major variable, assume middle of road approach.

Did not want to bump my own post, but in tax advantaged- short, intermediate, long term treasuries, and did buy LSBRX a few years ago to protect against dollar slide. Dollar slid but didn't protect, though at least recouped now. Have nil in TIPS. Thinks that is roughly it...

selling individual bonds?

ribs4me — Thu, 12 Nov 2009 16:31:29 GMT

I have a couple of bonds I'am thinking of selling. AAA rated, mature in 2012, 4.75% coupon, bought at a discount 98.7 they now will sell at a premium 106.5. I would then put the proceeds in a bond fund. If I hold until maturity I lose the premium. The premium right now is worth 1 1/2 years of interest. ??

If had to choose one vwahx vs.vwltx-high yield or not muni

lucky7 — Thu, 12 Nov 2009 22:24:10 GMT

Between two tax exempts? The high yield (vwahx) is A credit quality 4.71% yield and 7.5 yrs avg. duration, the long term tax exempt (vwltx) is AA quality, 4.46% yield, and 7.3 yrs avg. duration. So far picked the vwltx, but wonder if had to choose one which most might prefer. The "high yield" seems misnomer given avg. credit of A, and little difference in duration-only issue now is not that much difference in yield either. Just food for thought.

Bob

Diversified Bond Portfolio

nobhead — Wed, 11 Nov 2009 23:03:52 GMT

I need to invest $160,000 in bond funds to get my asset allocation correct. I have been a long time investor but mostly through stock mutual funds. Any suggestions would be appreciated. Thanks.

Tips On Buying Gold Now..

Limoman — Wed, 11 Nov 2009 23:07:17 GMT

How to Make Gold's Rise Work for You at SmartMoney.com

Gold should be viewed as a hedge against other investments, and investors shouldn’t let it constitute more than 5% of their portfolio, says William Larkin, a fixed-income portfolio manager with Cabot Money Management. “Basically, when the crisis hits, I want [gold] to zig when the other things zag,” Larkin says. Because gold prices are so volatile – and so high right now – investors may want to wait for a pullback, or build up a position slowly, Larkin says.

Is NSMIX a good pick for tax exempt bond fund?

mfcking — Wed, 11 Nov 2009 04:30:39 GMT

Compared with the following peer funds,

ATOIX & PRFSX & SMUAX & STSMX & VMLTX

Is NSMIX worth consideration?

Any thoughts are appreciated.

where to invest 500K

wistrick — Thu, 15 Oct 2009 15:57:21 GMT

Single, age 52, retirement account worth 200k (has 60% stocks & 40% VBMFXbonds w/Vanguard). My questions:

Has 500k cash in cd/mm a/c and is looking to invest in a safe that yields 5%.

Currently unemployed maybe indefinite. Is there a possibility to outlive the money? A conservative spender.

Any suggestions, I appreciate anyone inputs.