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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • It is ever thus...bonds!
    One other point of interest (at least to me): If you look at a bond fund like ABNDX, can find performance history back to 1975 on Yahoo Finance, it has never had two down years in a row. If we get a down year this year, then this will be the first time in 47 years that has happened. Looking at next year...will it be downside momentum, and an unprecedented third down year in a row, or reversion to the historical pattern? I still think there will be a rush to grab yield before long, but likely more pain until then, another bad day today.
    wxman123 in Fund Discussions
  • Several Million U.S. Workers Seen Staying Out of Labor Force Indefinitely
    "Survey shows many labor-force dropouts plan to maintain social distancing after pandemic, raising implications for economy"
    Free link to WSJ Article
    A few points from the article:

    • The U.S. is still missing about 3.5 million workers... several million workers plan to stay out indefinitely
    • About three million workforce dropouts say they don’t plan to return to pre-Covid activities—whether that includes going to work, shopping in person or dining out—even after the pandemic ends
    • Consistently, 1 in 10 have said they plan no return.
    • The labor force [may] be depressed for potentially years after the pandemic recedes
    Old_Joe Old_Joe in Other Investing
  • Mechanics of Buying & Selling 5-Yr TIPS
    @Observant1, keep in mind the following.
    1. As mentioned elsewhere, 5-yr TIPS now are 2nd best to I-Bonds. So, it for those who had their max fill for I-Bonds or who won't buy I-Bonds.
    2. Individual TIPS do tap into month-over-month changes in CPI-U that is very high now and unsustainable: Jan +0.841%, Feb +0.913%, Mar +1.335%. Look at -0.54% real yield as monthly cost of 54 bps/12 = 4.5 bps only. BTW, I-Bonds tap into semi-annual change in CPI-U.
    3. There is TIPS auction on this Thursday (4/21/22), so the time to act on it is short.
    4. If the CPI-U growth slows down, as it must, sell TIPS or stick with them for 5 years (that may still turn out OK). As for what the current data are saying about inflation-expectations for 5 years, we will find that out in 5 years. But this idea here is to tap into the inflation wave for months, not years.
    yogibearbull yogibearbull in Other Investing
  • It is ever thus...bonds!
    Summarizing some things I've posted recently...
    We sold all of our dedicated bond funds earlier this year and kept small toeholds in NHMAX and RPHYX. Last Friday we sold the NHMAX toehold.
    ALL of the dedicated bond funds we owned are DOWN a little-to-significantly this year. Dedicated bond fund proceeds were invested FFGCX and FNARX an the below-described ladder.
    Bond proceeds from the more recent sales of allocation funds were/are being re-deployed into a relatively ST CDs/TNotes ladder (6 mos - 2-yrs, the latter being the sweet spot).
    And now adding comments related to this thread...
    There can be NO denying that this was the proper way to invest this year, and IMO for the coming months, maybe years.
    For this year, who would you rather be, an investor faithfully hanging onto dedicated bond funds DOWN 1%-10-??%%, or an investor who saw opportunity and acted, currently holding FFGCX, UP ~35% YTD, having sold FNARX UP ~30% (at the time), and holding a ST CD/TNote ladder averaging ~2% APY?
    BUYing an equity crash is COMPLETELY DIFFERENT than BUYing a bond market crash because the reasons for the respective crashes are different and the prospects for recovery are different. No investor should look at them as the same or even similar.
    And don't let easy excuses for investment decision failures and confirmation bias for those failures cloud your thinking.
    Sadly, an investor takes on much greater risk now with the equity plays noted in this post. But on dedicated bond funds vs a ST CD/TNote ladder, which investor would you rather be, one faithfully holding onto dedicated bond funds for the next couple of months/years, or an investor with a ST CD/TNotes ladder paying an FDIC'd/Full Faith'd 2% average APY?
    If you sold your bond funds before a 4 to 6 percent decline and bought your other funds before they moved higher than of course, fantastic timing. Making such a move over the past 10 years (maybe longer) when many talking heads were saying yields can only go higher would have been a very different story. I stick to my plan of mostly buying assets when out of favor. With bonds, as yields move higher so will returns (over time). No reason to bail, and especially in taxable accounts.
    wxman123 in Fund Discussions
  • It is ever thus...bonds!
    @stillers, If I understood your post correctly, I think you are not suggesting investors to now get into FFGCX. I think your only suggestion is to get into "ST CD/TNotes ladder (6 mos - 2-yrs, the latter being the sweet spot)." Is that correct?
    ......Because FFGCX has run-up too far, too fast, already? I'm late to the party, but I am now into TRP "New Era" fund. Natural Resources. PRNEX. And growing it. I don't see the Ukraine War ending soon. Inflation is not going away, either. In order of size in my portfolio:
    1. Financials. I hope I'm just EARLY to THAT party!
    2. Healthcare.
    3. Tech/Cyclicals, same size.
    4. Utilities.
    5. Industrials.
    .......Still growing the Nat. Res. piece.
    Sold out of PRSNX over last Wed/Thurs. Great bond fund. But bonds are not the place to be. That was a pleasant rescue-job, knowing I was preserving profit which has built-up over the course of several years. I am sticking with my TRP Floating Rate PRFRX so far, YTD, hugging zero this year. I'm below 30% bonds now. Quite a reversal. The dividends feel good----- as long as the fund doesn't make a "deep southerly turn."
    Happy Easter to all of you observing it. We spent our first night in our new digs last night. A world of difference for the better.
    Crash Crash in Fund Discussions
  • It is ever thus...bonds!
    Summarizing some things I've posted recently...
    We sold all of our dedicated bond funds earlier this year and kept small toeholds in NHMAX and RPHYX. Last Friday we sold the NHMAX toehold.
    ALL of the dedicated bond funds we owned are DOWN a little-to-significantly this year. Dedicated bond fund proceeds were invested FFGCX and FNARX an the below-described ladder.
    Bond proceeds from the more recent sales of allocation funds were/are being re-deployed into a relatively ST CDs/TNotes ladder (6 mos - 2-yrs, the latter being the sweet spot).
    And now adding comments related to this thread...
    There can be NO denying that this was the proper way to invest this year, and IMO for the coming months, maybe years.
    For this year, who would you rather be, an investor faithfully hanging onto dedicated bond funds DOWN 1%-10-??%%, or an investor who saw opportunity and acted, currently holding FFGCX, UP ~35% YTD, having sold FNARX UP ~30% (at the time), and holding a ST CD/TNote ladder averaging ~2% APY?
    BUYing an equity crash is COMPLETELY DIFFERENT than BUYing a bond market crash because the reasons for the respective crashes are different and the prospects for recovery are different. No investor should look at them as the same or even similar.
    And don't let easy excuses for investment decision failures and confirmation bias for those failures cloud your thinking.
    Sadly, an investor takes on much greater risk now with the equity plays noted in this post. But on dedicated bond funds vs a ST CD/TNote ladder, which investor would you rather be, one faithfully holding onto dedicated bond funds for the next couple of months/years, or an investor with a ST CD/TNotes ladder paying an FDIC'd/Full Faith'd 2% average APY?
    stillers stillers in Fund Discussions
  • Question re tax owed on MLPs held inside an IRA
    @hank,
    Just to clarify, it’s not the amount of distributions from the MLP, it’s only the amount of UBTI that MLP produces. And some years, MLPs produce negative UBTI (or so I have heard from past holders in various investment boards). You may already know this, but it wasn’t clear from your second post. Apologies if you already knew it. Cheers!
    Graust in Other Investing
  • Question re tax owed on MLPs held inside an IRA
    Thank you @msf
    - Re “I'm not clear about what you find special regarding pass throughs in IRAs. Mutual funds are pass throughs. REITs are pass throughs.”
    My (evolving) understanding is … with a traditional corporation the entity has already been subject to / paid taxes at the corporate level. With MLP’s they have not. (See citation below.) You are, in effect, legally part of the corporation, and hence, responsible for paying tax.
    - Re “If one is really set on holding MLPs in IRAs and there is the possibility of exceeding the $1,000 filing threshold, why not simply split the holding between two or more IRAs?”
    That’s an interesting thought. Fortunately, I think, the investment would be small enough that I’m quite confident the dividends paid out over one year would not reach $1,000 based on the MLP’s history. Dividends are paid quarterly so there would be ample opportunity to monitor and adjust.
    - Interesting article (linked by @msf) re mutual funds. I suspect most managers avoid MLPs not wanting to add tax complexity.
    - The MLP would be purchased thru Fido like a stock or fund and so there’s some assurance of support from them should it become necessary. It is encouraging that the $1,000 applies to each tax year and is not carried into future years which would cause one to exceed that threshold. But, if I understand correctly, exceeding the $1,000 limit by even $1 would lead to taxes being owed on all $1001 of the UBTI. (Doesn’t seem fair)
    *Here’s a relevant citation: “Due to the way MLPs are structured, these entities usually don't pay corporate taxes. MLPs avoid the standard double taxation problem that regular C-corps have, in which the company pays tax on its net income that funds the dividend, and then investors have to pay their own tax on that dividend.” Source
    hank in Other Investing
  • Fallen Funds - TREMX
    The situation with Russia is worse than that of 2008, where everything took several years to fully recover. Is there a turn-around this time?
    BlackRock stands to loss the most - billions $ since they have the largest Russian exposure. Earning season is underway and watch for the financial sector. JP Morgan reported last week.
    https://jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/quarterly-earnings/2022/1st-quarter/c1afebcf-9ba1-44de-97fc-a446d7baf619.pdf
    Sven in Fund Discussions
  • Frank Holmes on the Markets
    @Hank. Detroit guy here …
    +1 My family moved to the Detroit area for a few years after I was born (roughly ‘48-‘52). Dad worked at Dodge Main and than the Warren Tank plant.
    hank in Fund Discussions
  • Frank Holmes on the Markets
    Can anyone remember when a nickel would buy a nice sized candy bar ?
    @Derf Yes. I was 4 or 5. Could buy a very nice sized candy bar for 5 cents.
    A quarter back than bought you a delicious ice cream soda, malt or banana split at Sanders in the old J.L.Hudson building in downtown Detroit. Now you might get the banana for a quarter - but not the split. - Also, single scoop cones were a nickel. Double scoop 10-cents.
    Problem growing older is you can remember the price of something 70 years ago but not where you put the car keys 5 minutes ago!
    hank in Fund Discussions
  • Schwab says buy Long-term Bonds
    Realizing that we've had a tremendous Bull run in US bonds and much accommodation from the Fed, its still amazing to look at a Bond index fund like VBMFX that has had 30 yrs up and only 5 years down. Going back to 1987, its worst year was -2.7%.
    However, its down over -8% YTD. I would think at some point this year...in another quarter or so.... that there should be a really nice opportunity to crawl back in.
    JD_co in Other Investing
  • Hypothetical Question for I-Bond Aficionados
    @hank: 3) In the case of Roths one might invest 100% in I-Bonds without fretting over tax consequences.
    That is a nonstarter. Treasury Direct doesn't allow IRAs, and electronic I-Bonds can be only held at Treasury Direct.
    But I-Bonds are tax-deferred already (federal) for up to 30 years and exempt from state/local taxes. So, why wish for I-Bonds in IRAs? - a near impossibility. There are exceptions if one can find a willing IRA sponsor to buy and hold I-Bonds especially for you in custom IRA, but most won't bother.
    yogibearbull yogibearbull in Other Investing
  • While You Were Sleeping - FAIRX is #1 again
    Years ago, I almost bought FAIRX but its $10K min put me off. I thought the guy had some nerve to set the min at $10 K when prevailing min were $1K-3K. Well, the guy did have steel nerves, but to me, he could do whatever without me.
    yogibearbull yogibearbull in Fund Discussions
  • In times like this,
    SFHYX is managed by Ralph Doudera. He also manages SVARX and SAPEX. All great for last few years, except a very unpleasant atypical nearly 20% drop YTD in SAPEX. I've been looking at SFHYX almost since inception but fear it has all the earmarks of great till it isn't. I do hold SVARX as it seems the game there is to time and hedge multisector bond funds, not likely to lead to disaster, but still would not commit serious money. As I've said elsewhere, VWINX=sleep like a baby.
    wxman123 in Fund Discussions
  • While You Were Sleeping - FAIRX is #1 again
    I used to be a proud owner of FAIRX for about 7-8 years during 2001-2008. It's part of my system(link).
    FD1000 in Fund Discussions
  • In times like this,
    MAFIX was recently discussed in the "What are you buying . . ." thread. I figured this post belongs more here. Q1 information is now available at the fund site -
    https://www.abbeycapital.com/multi-asset-fund/
    Also, I have noticed some members have sold JHQAX in Q1 (possibly to increase equity exposure, to reallocate some to the other funds in the JPM Hedge Equity series, etc.). With Q1 behind us and the market down (or choppy / treacherous if you prefer) for a full quarter for the first time in a few years, I figured a re-discussion of JHQEX could be timely.
    Both these funds were mentioned in this thread.
    BaluBalu in Fund Discussions
  • One 2022 Mutual Fund Lesson
    Shakespeare said, “What’s in a name?”
    But on closer examination, that’s a horrific YTD return, likely made worse by rapid outflows. Reminiscent of something similar here involving MFLDX many years ago. Rats fleeing a sinking ship. My heart goes out to those who lost money in this.
    Call it “Short end of the stick” maybe.
    Names don’t tell you much. I have a dab in QMN which is probably closer to being “market neutral” - as it doesn’t seem to go anywhere … :)
    hank in Fund Discussions
  • While You Were Sleeping - FAIRX is #1 again
    $1.5 billion in assets X 1% expense ratio = $15 million annually.
    And in bad years, like 2020, when his fund dropped (47%)...Bruce still collected 1% in fees...$7.5 million-ish. But that's true with every fund manager. They get paid in both up and down markets.
    bee bee in Fund Discussions
  • Another Absolutely Awful Day for Bond Funds
    @hank, I-Bond sales data are available as Excel download, https://www.treasurydirect.gov/govt/reports/pd/pd_tdsecuritiesissued.xlsm
    Monthly I-Bond Sales
    10/2021 $0.23 billion
    11/2021 $1.07 billion (new rate 7.12%)
    12/2021 $2.78 billion
    01/2022 $3.26 billion
    02/2022 $0.91 billion
    As noted in the I-Bond thread, one can bunch up lot of buying as gift I-Bonds. So, let us say that you have 5 favorite relatives and friends (include me, if you want (-:)), then you can buy, say, $100K for EACH in gift I-Bonds to HOLD in your Treasury Direct account, and dole/DELIVER them out at $10K/yr/person over 10 years. That would be $510K total in I-Bond purchases NOW or ON 5/1/22, $500K in gift I-Bonds and "puny" $10K for yourself (-:). Well, this a hypothetical for those who complain about not being able to buy enough but think of the estate and asset transfer angle. Of course, you cannot have the gifted bonds yourself for any reason (actions are irreversible).
    What if the I-Bond rate collapses in a year or two? Well, then you still go through your estate plan but the receiver can sell them and buy something else.
    Edit/Add: Treasury Direct also has linkable history of Savings Bond sales, 1935-2012. Sales peak (including all types of Savings Bonds) were in 1944 ($16.04 billion; WW II time), 1978 ($7.96 billion), 1986 ($11.91 billion), 1992 ($17.70 billion), 2001 ($11.58 billion), 2005 ($22.43 billion). I am sure there is a good story behind the ups and downs in the Savings Bond sales. https://www.treasurydirect.gov/indiv/research/history/history_sbsales.htm
    yogibearbull yogibearbull in Fund Discussions