Bond Squad

Re: Simple comparison

Limoman — Wed, 24 Dec 2008 14:58:04 GMT

"It is too bad American Century does not have a complete corporate bond fund, like VFSTX. Corporate bonds are apparently the things to buy right now. I wonder why American Century is so sparse on high quality corporate bond funds....they must take a special type of investment research. "

Re?

Well maybe it's Due to the fact they are Corporate /Co.'s and How have Co.'s been doing of late this yr and into the Next? Kinda Risky maybe? and If your Fund Familiy is a "Long Term" investment basis? Could be the reason why.. they stayed out of them in the past and not to interested in Jumping on the wagon now..

and as for VFSTX? Sure, looks good for the short term, but the past 10 yrs? Not so much vs the likes of even VFITX or VBMFX do they?

And Don't forget something else.. Who is doing all the hyping about them? ie: Consider the source...Many are out to Support their Industry & Jobs, Hidden agendas, while others have a shorter term investment Horizion as well. And they ain't giving such Great Ylds or Potentials for Recovery $ away for Being in Good Shape are they?

and if greats like Bill Gross , Larry Swobe can't beat them? Who can? Let alone the likes of Vanguards VWEHX ( -24% ytd ) and a BIG, BIG, - 6% apy past 3 yrs now? Real nice.....Sure it might Gain back +30%, but so what..! Your just going to be even at best, while they line their pockets with your $ in the meantime for free...!

And do you want to own Bonds issued by a Bunch of Decieving people, from Both the Rating Firms all the way up? I think it's One of the Best of American Century funds staying out of them..

Junk bond yields are crazy high, but tread carefully - USATODAY.com

The reason yields are so high, of course, is because traders are worried about default — in which case, bondholders would have to stand in line to get their principal back. An IOU, after all, is no better than the word of the company that issues it. And these days, Wall Street is taking no one's word.

alot of people got mislead and burned on these Bums and bet they sure wish they never got into them.. with their misleading "Bond" titles.. vs Looking at All Bonds thru the trees , Should be retitled as what they are> High Risk Junk Bonds..be they AAA or ZZZ.. tehy're all the same.. Since we can't get any Trasnparency, let alone depend on those " Honest Rating Agencies".....until After they come with their hands out for $..

Kavous Emptor

Re: Simple comparison

RettW2 — Wed, 17 Dec 2008 18:07:39 GMT

Good bond portfolio. Yes, I've had most of those American Century bond funds too...up until today. I had CPTNX, BTTNX, ACITX. CPTNX and BTTNX have done fine over the past few months, as expected. You have done well if you have held them all year.

Now Dan Fuss says in his Dec 12 video that it is time to get out of treasury bonds, and the treasury bond bubble conversation on this forum tends to support that. With 0% interest rates...what is a guy to do with federal bonds?

With all the talk now of 2009 inflation as a certainty, because of the 0% rate, ACITX may be better than ever. Another interesting fund now is AONIX, which recently held 50% cash, 28% bonds, and 22 stocks. It is another American Century fund of funds. It seems to provide a little exposure if the stock market rally is for real, and has some international bonds instead of all treasury bonds. I will exchange CPTNX for AONIX Friday. The upside for CPTNX is very limited, and the downside is huge.

It is too bad American Century does not have a complete corporate bond fund, like VFSTX. Corporate bonds are apparently the things to buy right now. I wonder why American Century is so sparse on high quality corporate bond funds....they must take a special type of investment research.

Re: Simple comparison

bigsteve — Wed, 17 Dec 2008 17:38:39 GMT

Thanks for the good post. I'm glad I hold VBMFX and VIPSX as my primary bonds.
Got into int'l bonds with a bit of LSGLX earlier this year, and have been a tad disappointed. Not sure what I'm gonna do with that one.

Big Steve

Re: Simple comparison

Limoman — Wed, 17 Dec 2008 13:18:59 GMT

Although I had my doubts, but My Managed Account with a Firm has some of these In my Bond Allocation since last yr..Small Positions along with the mix of Traditional Bonds of Treas./GNMA's, surely boosting my Bond Port with them.. I don't recommend getting in them now though.. but might be something to KIM..(Keep In Mind) for the future..

DXKLX

YTD Return
as of 12/16/08:

46.72%

GVPSX

YTD Return
as of 12/16/08:

44.04%

Re: Simple comparison

chipmunk — Sat, 13 Dec 2008 17:54:38 GMT

You're welcome, closer. I myself used to use VBMFX (BND) / VIPSX (TIP) / BEGBX *, but cut my bonds down to just VBMFX for simplicity. Also, I'm not trying to get rich quick here or to take unnecessary risk.

* Since BEGBX is now closed, I used RPIBX as a substitute.

I did this simple exercise because I got confused trying to figure out monthly cash flows from bond funds, reinvestment to boost NAV, SEC vs. other types of yields, and a host of other supporting details that was making my head spin.

One of my points was that instead of stretching for yield with VWEHX, you could use VBMFX, pull off some of the principle, and get a higher current income with less loss of value. VBMFX also provided a positive return during this bear market, which is almost unheard of.

Simple and cheap (indexing) has worked out pretty well so far.

Dan

Re: Simple comparison

closer — Sat, 13 Dec 2008 17:09:45 GMT

Thanks, Dan, for your simple--and revealing--comparison. It reinforces some moves I made in bond funds early in 2008, such as pairing BND and TIP in my wife's Roth IRA. In my 401(k), I sandwiched three American Century bond funds (ACITX, BTFTX, CPTNX) with Fidelity Ginnie Mae (FGMNX). As for U.S. HIY bonds, I wonder if you'll hear from the denial deer who frolic in the high-yield meadows as the junk grass burns.

Simple comparison

chipmunk — Sat, 13 Dec 2008 16:39:57 GMT

I thought I would share a simple comparison of the long-term total return performance (current income plus change in value) that I examined of the major bond asset classes:

Total Return Comparison of Major Bond Asset Classes

Asset Class	Ticker	1-Year	3-Year	5-Year	10-Year
USA TIPS	VIPSX	-3.63%	2.73%	3.46%	6.21%*
USA Bonds	VBMFX	3.85%	5.14%	4.23%	5.06%
Int'l Bonds	RPIBX	-2.57%	4.94%	3.74%	3.87%
USA HIY Bonds	VWEHX	-28.04%	-7.17%	-2.26%	1.09%
* Index

Here are a few observations:

USA treasury inflation protected securities (TIPS) did the best long-term*, even though the current SEC yield is currently a mere 3.45%. This outperformance came with no need to take on the additional risk of corporate bonds.
Simply indexing the entire USA bond market has yielded outstanding results. In fact, Morningstar now rates VBMFX as 5 out of 5 stars. Not only that, but this is the only fund on my list that actually had a postiive return during the bear market of this past year. Indexing bonds rocks!
International bonds did not outperform USA bonds, even though interest rates overseas have typically been higher and the dollar has been weaker over the past 10 years.
USA high income yield (HIY) did the worst long-term, even though the current SEC yield is a whopping 13.85%. In other words, loss of principle has eroded the NAV so severely that the overall total performance has been poor. **

* Assuming the 10-year performance will soon be close to that of the index.
** Hmmm...I sense an ElLobo response somewhere... ;-)

Dan