I opted for NVHAX over BTMIX when I bought on 1-2-2020. The allocation to NVHAX was in my taxable account with money for future (most likely 2 years down the road) monthly expenses. I like the stronger performance over BTMIX. The short duration downturn recovered quickly in 2017 but I will watch NVHAX closely and switch to BTMIX or possibly AAHMX if I see the need to change. I am not a trader so holding on thru a downturn is similar to holding equities in a correction. Thanks for the update.

(From John’s link) “In a recent survey, Schroders Investment Management questioned 1,004 men and women aged 45 to over 70 about retirement planning. ... Some 55% of respondents admitted they didn't know how their assets were allocated.”
This might explain that: Vanguard: More than half of DC participants investing solely in target-date funds Story
Makes sense to me that if someone who is not financially inclined defaults to their 401-K (or other employee plan’s) target date fund they would not be able to explain the “ins & outs“ of how that fund invests. Seems to me those funds are designed for precisely that kind of individual.
It would be nice if they all became fund junkies like most of us here - but that is not the reality. I don’t think any amount of citizenry education is likely to alter that. However, as one moves from contribution years to distribution years it’s likely their interest in financial matters grows. Experience on this forum testifies to that subtle transition,

By Alpha Gen Capital at SeekingAlpha.com
Summary
° Retirees have an over-reliance and spend far too much time on rates of return. Instead, investors should focus on cash flows, both in and out of your household.
° This is a construct of Wall Street who wants you to be placing all your investable assets into the market, while placing all the risk on your retirement on you.
° We think the next few years will show a significant shift in the way investors/retirees manage their financial retirement.
° It is our belief that a focus on cash flows, not rates of return, will be the future, including the use of income annuities.
Article Here

@MikeW: "DHEIX has an average annual return of about 4% and a MAXDD of only 0.2%. Looks like a very interesting fund. SD is only 0.7."
Also, DHEIX has only been negative one month. I shares were down 17bps in November 2016 while the benchmark was down 41bps. There have been 41 full calendar months of performance since inception (August 2016 through Dec 2019. The securitized debt in the fund is ABS 62%, all IG. The overall credit rating of the fund is 80% IG. Its duration is 1.43 years.

"Old_Skeet">@dtconroe,
I have enjoyed reading and following your thread on open end bond funds (oef).
One of the things that I picked up on in reading this thread is that you are a momentum type investor and move among one fund, or funds, to another from time to time. Would you please describe your process in doing this? What indicators you may use? What triggers movement? How do you track and etc?
I've been looking for a investing strategy that I might incorporate within my fixed income sleeve to keep it positioned within the faster currents. With this I've invested mostly in multi sector bond and income funds and let the fund manager find the better places to be invested. My fund's range of movenment between their 52 week low vs. 52 week high range from 2% on the low side to about a 6% range of movement on the high side. I've been thinking of a way to use this range of movement within my investment strategy. Any thoughts?"
Old_Skeet, I am on this forum, posting about OEF bond funds, because I am NOT a "momentum type investor", at least Not on a frequent short term trading basis. On M* there is some strong support for an investing approach, that uses momentum data based on 90 day moving averages, to invest in the "best" 4 or 5 funds. Based on the belief that 90 day moving averages signals the beginning or end of a performance pattern, investors will move between various bond oef categories, to select the "best" momentum based fund, with a strong emphasis on risk characteristics as well. I tried to use this approach for a few years, but I am not a good trader, am not very good at selling funds near their highs, and not very good at buying funds near their lows. There are some posters/investors who do this, and can do this much better than me. I am not criticizing them, but I need a different investing approach that fits my strengths, while acknowledging my shortcomings.
With that said, I am not a pure buy and hold investor, and I do keep up with total return performance data, and I will sell a fund during the calendar year when it is lagging severely, normally to reinvest those proceeds in other existing holdings that I am familiar with and approve of. I prefer bond oefs that will produce "at least" 4 to 5%, or more", annually, with low standard deviation, and relatively smooth upward total return performance, that have a history of holding up well in down markets. I will invest in 10 to 12 funds, with the intent of holding them for at least the calendar year, and at the end of the calendar year, I will rebalance my fund holdings, and may choose to replace some existing bond oefs, with similar but better performing funds. For example, I held BTMIX for the entire 2019 year, and I chose to replace it with another very conservative, but better performing Muni fund (AAHMX) for 2020. Another example is that I held PTIAX for almost all of 2019, but toward the end of the year, I chose to replace PTIAX with IISIX, because I believe IISIX will perform similarly in total returns to PTIAX over extended periods but with lower risk.
Some more frequent momentum based investors, will criticize me for not jumping on the performance bandwagon, because there is clearly a hot performing fund, they will hype continually, during very hot performing periods like 2019. I like smooth, above average performing funds, to hold for at least a year, and at the end of the year, my loyalty is then subject to intense re-evaluation for holding, selling, and possibly replacing them. I don't marry my investments, don't take a vow of holding them til death do us part, and do expect a level of total return performance (at least 4 to 5% TR) that is reviewed on an annual basis. In 2020, my 10 to 12 fund portfolio has almost all of the same funds I owned all of 2019, but I did replace a couple of those funds, I did increase the amount of my investment in several existing funds, and I did reduce the amount of my investment in a couple of my existing funds.

I enjoyed reading about Dr. Madell's five year rolling periods of stock market returns. I've noticed this, as well, and have incoropated the five year rolling total return period principal, to assist me, in setting my portfolio's rate of distribution.
What I do is a relative simple strategy. Generally, I take a sum of no more than what one half of my five year average annual return has been. With this, my current distribution rate is now at about 3.25% since my total return on my portfolio has averaged about 6.5% annually for the past rolling five years. In this way, I have found that principal grows over time since the residual is left to increase and build capital formation. In addition, I'm running a 20% cash/40% income/40% equity portfolio which generates enough income without having to sell securities to meet my current distribution needs.
I realize that this distribution strategy is not for everyone as I'm just sharing how I govern and what I have found that has worked well for me and my family through the years. I used this strategy, years back, whan I was running my parents money, when they were retired, and I now use it for me and my wife.
Pretty neat and information packed study by Dr, Madell.
If you are retired and in the distribution phase of investing perhaps others can learn if more investors post how they set their rate of distrbution coming from their portfolio. Naturally, there is the RMD withdrawal requirement that is in place on retirment accounts. But, many of us have money invested outside of retirement accounts. Perhaps, Dr. Madell can write more on some strategies in an upcoming newsletter.
I wish all ... "Good Investing."
Old_Skeet
cc: @tmadell

I would note that Intermediate Core-Plus bond oefs, have a fair degree of diversity "between" different funds. If you want a very high grade of investment holdings, then fund like BCOIX and DODIX are appealing. If you want lower standard deviation and lower duration, somewhat similar to non-traditional and many multisector bond oefs, then a fund like MTGAX is appealing, with a standard deviation below 2 and duration close to 2 years. It seems that the longer duration funds like JAFIX, BCOIX, and MWTRX has benefited the most as the Feds hold interest rate steady for the last year. I am impressed that DODIX, with its A rating portfolio, and its low standard deviation close to 2, has been able to turn out double digit total return in the last year. You could easily hold several funds from this category, that are enough different from each other, to add another layer of diversification.

I do not or never have owned a "core" bond fund. I am not really sure what the benefits are. When comparing them to some non-traditional funds they are much more volatile. I will assume the higher credit rating in these funds are the attraction. It seems that many less volatile funds in other categories work just as well for ballast.

Agreed for the most part at present.
That said, I used to own a couple core/IB funds a few years ago. I recently jettisoned my last one, a residual holding in WAPIX, which was good while I owned but, but worthy future gains with it seemed iffy at best.
I currently run with a spattering of munis, multis, nontrad's and one preferred stock fund. I own bonds only because I need to own them as ballast** for my stock allocation and would rather let respective PM's slice/dice.
**Aside: Portfolio ballast to me is anything other than stocks.
Either way one's preference on core funds or others, dt IMO is doing a GREAT job here of covering bond categories and topics, and I wish him continued success with this thread and those initiatives.

https://www.governing.com/topics/finance/gov-three-ways-tax-reform-impacted-muni-market.html
The tax law changes also impacted the refinance/issuance of new bonds. As noted in above, from Dec 2018:
Muni Bond Supply Is Down
Far and away, the most notable effect that the tax overhaul had on the municipal market this year was through the elimination of a valuable cost-saving tool for municipalities. Called advanced refunding bonds, the tool allowed governments to refinance debt earlier, thus letting them take advantage of lower interest rates years sooner.
Losing this benefit has pushed down supply. By some estimates, it's cut refinancing activity by as much as 20 percent.

This post is about Intermediate Core-Plus bond oefs. In general, this is one of the more popular bond oef categories, with an emphasis on Investment Grade Bonds, typically with much diversification in its holdings. Some refer to this category as Multi-Sector lite. According to M*, this is the formal definition:
"Intermediate Core-Plus Bond
Intermediate-term core-plus bond portfolios invest primarily in investment-grade U.S. fixed-income issues including government, corporate, and securitized debt, but generally have greater flexibility than core offerings to hold non-core sectors such as corporate high yield, bank loan, emerging-markets debt, and non-U.S. currency exposures. Their durations (a measure of interest-rate sensitivity) typically range between 75% and 125% of the three-year average of the effective duration of the Morningstar Core Bond Index"
Here are several funds in that category worth considering:
1. BCOIX/BCOSX: Credit rating A, Standard Deviation 2.74, Duration 5.68, 1yr/3yr total
return 10.84/4.86
2. DODIX: Credit rating A, Standard Deviation 2.05, Duration 4.3, 1yr/3yr total return
10.02/4.74
3. JAFIX: Credit rating BBB, Standard Deviation 2.63, Duration 5.68, 1yr/3yr total return
10.28/4.11
4. MWTRX/MWTIX: Credit Rating BBB, Standard Deviation 2.87, Duration 5.92, total
return 1yr/3yr 9.93/4.36
5. MTGAX/MTGDX: Credit Rating BB, Standard Deviation 1.82, Duration 2.07, total
return 1yr/3yr 7.41/5.10
6. TGLMX/TGMNX: Credit Rating BB, Standard Deviation 3.07, Duration 5.80, total return
1yr/3yr 8.46/4.04
7. IICIX: Credit Rating BBB, Standard Deviation 2.83, Duration 5.94, total return 1yr/3yr
10.63/4.96
8. SGVAX: Credit Rating BB, Standard Deviation 2.14, Duration 3.00, total return 1yr/3yr
6.82/4.29
9. DBLTX/DLTNX: Credit Rating BB, Standard Deviation 2.08, Duration 3.89, total return
1 yr/3yr 6.64/3.71
Comments: I have owned many of these funds over the years, but my favorite funds are DODIX, BCOIX and MTGAX. If you have owned any of these funds, you are invited to discuss your experience with them.`

@msf...Muni income (though tax exempt) does increase AGI (Adjusted Gross Income) . Your links may have already mentioned this. I recall this fact when calculating AGI (for ACA Health insurance) a few years back.

Interesting to note that gains (on muni bonds) are tax free and losses (on muni bonds) can be claimed against other taxable gains.

@MSF
All my HY munis funds' monthly distributions for 2018 (and all priors years) were Fed exempt. I never buy single bond and probably will never do it in the future.

Relevance?

@MSF
All my HY munis funds' monthly distributions for 2018 (and all priors years) were Fed exempt. I never buy single bond and probably will never do it in the future.
=======
I made a mistake in my first post. Early 2019(not 2018) was the first time I ever bought HY Munis in an IRA and not taxable. I also did it again several weeks ago when HY Munis took off compared to Multisector funds. I'm a momentum investor.
Year to date...NHMAX 2%...ORNAX 1.9%...OPTAX 1.7%

http://funds-newsletter.com/jan20-newsletter/jan20-new.htm
T.maddell monthly newsletter Jan20
What Lies Ahead for Stocks? We May Be Able to Foresee This Better Than You Think
By Tom Madell
Article Summary: Based on 27 years of continuous data, five year periods of strong stock fund returns for two highly representative funds are surprisingly strongly negatively related to subsequent five year returns. If the relationship carries forth into the future, one can anticipate mid-single digit returns as the most likely average broadly diversified stock fund return for both US and international stocks.

Thanks @bee. This is what I most enjoy about MFO - the free exchange of ideas. I am not a financial advisor or expert. Just my “gut” reactions (worth maybe a nickel).
#1: Put It All In One Fund - Not me!
#2: Create Your Own Yield - I like the term “stream of return” better. One needs to have a reasonably steady stream of return in retirement as averaged out over the short / intermediate term. This may be accomplished with a broadly diversified portfolio and some prudent hedging and / or cash reserves. Unless it’s a tax consideration, I don’t think it matters whether that SOR comes from “income” or capital gains - particularly in tax-deferred accounts.
#3: Don’t Buy A Long-Term Care Policy - I’m agnostic on this one. Don’t know enough about the subject.
#4: Cut Your Portfolio Management Costs - Yes. Of course. But I won’t be driven into index funds. I still retain confidence that the good actively managed funds will do comparably well over longer time spans, in spite of indexing being all the rave today. Active is what I grew up with. I’ll stick with what I know (but have owned index funds on some rare occasions).
#5: Pay Off Your Mortgage Rapidly - Both sides are right. No correct answer. I’m happy to be carrying a small 3% fixed-rate mortgage on main residence. Also own a couple parcels that are paid off. Knock on wood - but I’ve been able to pull much higher than 3% annual on my (tax sheltered) conservative investments over more than 20 years in retirement. There’s an added advantage in having more liquidity at your disposal than if that money were sitting in the home. Like I said ... I can see both sides of this one.
#6: Moonlight - Hell no (not me)! - but others will feel differently. I’ll say here that I perform a lot of home maintenance which others would pay to have done. So, in a sense, I am working. But it’s my schedule - not somebody else’s.

Taxation of muni bonds is not so straightforward.
Thumbnail sketch:
- "gain" (actually accretion) due to OID is reportable annually as tax exempt interest (can affect SS, IRMAA)
- "gain" due to market discount is taxable as ordinary taxable income (unless de minimus, which is reported as cap gain); may be reported annually or upon bond redemption/sale
- "loss" is reported as amortized bond premium (ABP), essentially return of capital, on a yearly basis (see Form 1040-INT box 13). Cost basis is reduced accordingly.
- any additional loss is reported as capital loss at time of sale.
Simple examples:
$1K par bond is purchased for $900 (no OID), redeemed at maturity five years later for $1K. The $100 "gain" is reported as ordinary income.
$1K noncallable par bond is purchased for $1100, redeemed at maturity five years later for $1K. Each year, the tax-free interest is reduced by some amount (ABP) according to formula, which over five years totals $100. There is no loss; the adjusted purchase price is $1K.
The best pages I've found on muni bond taxation are at InvestingInBonds.com.
See http://investinginbonds.com/learnmore.asp?catid=8&subcatid=60
See also: https://scs.fidelity.com/webxpress/help/topics/learn_tax_info_year_to_date.shtml
The fun really begins when multiple considerations are combined. You can purchase an OID bond at a premium to its discounted price, called acquisition premium. In that case you have to net the OID accretion and the premium amortization.

https://www.forbes.com/sites/martinsosnoff/2020/01/22/how-to-maintain-and-compound-inherited-wealth/#3f98161f2f58
How To Maintain And Compound Inherited Wealth
First, a brief history of financial markets:
Stocks beat bonds over a 25- to 50-year time span.
Volatility of fixed income investments can equal that of equities in both directions.
The market (S&P 500 Index) can sell at book value, now at two times book. Bond yields can range from 1% to even 15% when inflation rages.
Thirty-year Treasuries, currently yield 2%, but in 1982 during FRB tightening hit 15%. Five-year paper, a comparable trajectory.
Inflation, now at 2%, rose to 8%, early eighties. It made our country uncompetitive, as in General Motors.
Dollar depreciation or appreciation can range between minus 25% to plus 25%.
Deep-seated financial risk lurks in almost every type of asset. Banks capitalized at $200 billion can self-destruct with hidden bad loans. American International Group needed a government package of $180 billion to remain solvent after guaranteeing sub-prime loans.
Municipalities, even countries, in turn can bankrupt themselves. Consider Greece and Venezuela. Brazil, Iceland and Thailand were world destabilizing forces through their overleveraged banks even though their GDPs were miniscule. Chicago, Detroit, Sacramento, possibly New Jersey currently and New York City some 20 years ago saw the wolf at their door.
Puerto Rico now hovers near basket case status, even shamelessly falsifying their hurricane mortality numbers.

https://www.fool.com/retirement/2020/01/22/the-top-12-401k-mistakes-to-avoid.aspx
The Top 12 401(k) Mistakes to Avoid
An employer-sponsored 401(k) account can be a wonderful thing, helping you amass hundreds of thousands of dollars for retirement. Don't make any of these mistakes, though, or they could cost you -- a lot.
Most people can't sock away $26,000 each year, but the table below shows how much you might amass over time investing various sums regularly and earning an average annual return of 8%:
Years of 8% Annual Growth
Balance if Investing $10,000/Year
Balance if Investing $15,000/Year
Balance if Investing $20,000/Year
5 years
$63,359
$95,039
$126,718
10 years
$156,455
$234,683
$312,910
15 years
$293,243
$439,865
$586,486
20 years
$494,229
$741,344
$988,458
25 years
$789,544
$1,184,316
$1,579,088
30 years
$1,223,459
$1,835,189
$2,446,918
401(k) mistakes that can cost you a lot
It's clear that you'll need to be diligent if you want to build wealth with your 401(k) account. You'll also want to avoid common pitfalls. Here are 12 common 401(k) mistakes that could cost you a lot, followed by a closer look at each:
Not participating in your 401(k) plan
Not contributing enough to your 401(k)
Not increasing your 401(k) contributions regularly
Not contributing enough to get the full employer 401(k) match
Loading up on too much company stock
Staying with your 401(k) plan's default investment choices
Picking the wrong mutual funds and investments
Ignoring fees in your 401(k)
Not considering the Roth 401(k)
Ignoring important 401(k) rules
Cashing out or borrowing from your 401(k)
Not appreciating the downsides of 401(k)s

@catch, you think the article is good. I think it's average. I have read so many generic articles with generic ideas. I like to discuss specifics and help people with uniques problems because most have unique situations. I made comments about each rule and what can be improved.
As I said before, the most important rule is for someone is to start early and invest 10-15% for many years and pay all the bills monthly on time and don't touch the savings.
If you like to discuss further on any rule please post about it.

“ The 60/40 Stock/Bond Rule is ubiquitous, and that’s stupid because it’s just not right for everyone. Asset allocation is the most important decision, and is designed to achieve objectives. Risk preference needs to be controlled by risk capacity. It’s easy to be smarter than 60/40”.
Strikes me as a “straw man” argument. If you lead off with a dumb enough assertion, than it’s pretty easy to knock it down. I’m not familiar with what fee-only advisors might recommend, but doubt it’s as uniform as he asserts. I did have a commission-based advisor in the early going and he seemed to want me and everybody else he worked with in the most aggressive (all equity) investments available. Likely, that was because he continually skimmed a % of our portfolios off through some type of back load (12-1B perhaps?) for years into the future. Think about that. We, the investors, took the added risk. The adviser stood to profit more depending on the degree of risk we took.
Most good fund houses today, like TRP, make-available a wide range of products across a wide risk spectrum. The classic 60/40 exists. It might even make a convenient starting point for a discussion of risk. But there’s nothing sacred about it. Nothing I’ve read in fund house literature today suggests that the 60/40 is right for everyone. Does John’s author even address the ultra-low bond yields today? That alone ought to make you think twice before plugging 40% into bonds - long dated ones anyway.