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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.
  • Schwab MM question
    @zenbrew, the issues mentioned don't apply to margin a/c.
    I have had margin a/c for years, but I don't use margin loans anymore.
    Without margin a/c, you are relying on good graces of the brokerage to extend you a penalty-free overnight overdraft.
    Of course, margin is N/A or very limited in IRAs, and I do face similar issues there.
  • FHMIX
    For a muni fund with a wide range of duration, one can look outside the box (national muni funds).
    STWTX / STWVX (Hartford Schroders Tax-Aware Bond Fund) was classified as a muni fund through 2018. Since then it's been classified as a taxable bond fund. As M* describes the fund:
    It often holds 70%-80% of assets in munis but will make big shifts to this allocation when its managers see more value there. [In 2020-2021 it dropped munis to 50%-60% of the portfolio. Since 2022 munis have constituted 70%+ of the fund.]
    Currently, 93% of its assets are muni bonds.
    With respect to duration:
    The Fund may invest in fixed income securities of any maturity or duration. The Fund’s effective duration may vary overtime
    Summary Prospectus.
    M* shows that over the past five years, the fund's style box has ranged from short term/middle grade to long term/high grade. In words, M* writes:
    duration stood at just under 4.0 years for most of 2019 through the end of 2021, but it extended again throughout 2022 and 2023 to over 9.0 years
    Where the rubber meets the road:
    Even on a pre-tax basis, BSNIX has performed significantly better. But as its prospectus says, it does not go long. (See also its fixed income style map here.) Both funds are five star funds. I'd stick with the lower risk, higher performing Baird fund.
    Wide ranging funds, even five star funds, are not always what they're cracked up to be.
  • FHMIX
    As I mentioned in David Snowball's thread, I too was concerned about the new MAGA trying to raise revenue by getting rid of tax exempt status of muni bonds. I had also posted that Alliance Bernstein article. After further reflection, I think that is a low probability outcome for the next four years because they are playing a long game. Sorry if I inadvertently alarmed others about this.
  • FHMIX
    I own Baird Strategic Municipal Bond BSNIX (current duration 4.28 year) as well as Vanguard Intermediate-Term Tax-Exempt VWIUX (current duration 5.6 years). In the past, I have used them for tax-loss harvesting and currently have a much larger position in BSNIX.
    I am please with BSNIX and have concluded that the additional 21 basis points in the ER has been well worth it. BSNIX 12 month, 3-year, and 5-year returns have been significantly better, with a higher 3-year alpha and a lower Standard Deviation. I had also looked at NSAOX, but the considerably higher Standard Deviation scared me away.
  • FHMIX
    @a2z
    Have you considered Baird Strategic Municipal Bond Fund?
    I'm not sure how the fund's targeted duration would align with your preferred 1 yr. - 8 yr. period.
    "It targets an average maturity in the short to
    intermediate-term range, investing across the
    1-15 year segment of the yield curve. The
    team utilizes yield curve positioning in the
    investment management process to capture
    pricing inefficiencies and optimize yield and
    'roll' while striving for tax efficiency."

    "While obligations of any maturity may be
    purchased, under normal circumstances, the
    Fund’s dollar-weighted average effective
    maturity is generally expected to be between
    three months and ten years. The Fund has a
    targeted duration of +/- 2 years to its
    benchmark."

    https://www.bairdassetmanagement.com/siteassets/pdfs/fact-sheets/bond-strategic-muni-fact-sheet.pdf
  • FHMIX
    good discussion. been having a running chat with charles bolin on regular+timed asset shifts to tax-free options, and have yet to find an attractive low cost active fund with a goal (not mandate) to invest across a wider duration (preferably 1-8 years).
    i dislike myself having to weight between short vs. mid, and all these highly rated groups (e.g., baird, but preferably with lower cost) have the skills to do so.
    there is also a related chat on whether tax-free arena can be a safe place from MAGA\DOGE\trump related volatility.
    it seems too boring for them, but anyplace they dont have a stake is a potential target for any crony with an agenda.
    see
    https://www.alliancebernstein.com/corporate/en/insights/investment-insights/will-a-red-wave-affect-municipal-bonds-tax-exempt-status.html
  • Outflows: VWELX, VWINX, VDIGX, VPMAX
    I thought for years VWINX seemed to ”walk on water” - meaning it regularly outpaced the competition for reasons difficult to fathom. Great management for sure. Low fees of course. And likely some good luck. It began to slump about the time interest rates ratcheted up. For a year or two the sentiment among owners (from what I could discern on the board) was “It’s just temporary. Hang on or buy more.” But investors today have scarce little patience. Given that performance relative to peers didn’t turn up in a year or two, outflows might be expected.
    None of this is meant to dispute all the other reasons listed by others above. I did briefly entertain thoughts of investing in VWINX at Fidelity only to learn it wasn’t available. Not a big deal. For any given fund I own, a half-dozen or more others were considered and might have also served the role intended.
    Interesting line from The Gambler someone posted to Bill Fleckenstein’s board earlier this week …
    "And somewhere in the evening the gambler he broke even, and in his final words I found an ace that I could keep..."
  • Outflows: VWELX, VWINX, VDIGX, VPMAX
    Vanguard has never created an ETF share class of an existing actively managed fund. Until a few years ago that would have created disclosure problems (publishing portfolios daily) for the existing funds. Even now, it might find it difficult to shoehorn the newer ETF rules into its patent for ETF/OEF share classes. (Don't know, haven't checked.)
    Nor is Vanguard likely to ever clone an OEF into an ETF. That could immediately trigger an outflow from the OEF into the cheaper ETF, at least in tax-sheltered accounts. Vanguard was burned by doing something similar not too long ago - opening a cheaper clone of a TDF to lots of investors by lowering the min for the clone. The resulting shifting of assets by investors created a hefty cap gains tax liability for those investors remaining in the more expensive fund.
    The third alternative would be to convert the OEFs into ETFs. If that were such an obvious move, then one would expect most fund companies to have already done this. While some have, the number seems to be more like a trickle than a flood.
    IMHO RK is understating VDIGX's performance issues. I agree that when one invests in a particular style of fund and that style by design underperforms, that's not cause for concern.
    However ... a quick M* screen of large cap blend funds with "Dividend" in their name (e.g. Rising Dividends, Dividend Growth, etc.) turns up 60 share classes. VDIGX is 60th of 60 for 3 year returns. 97th percentile in 2023, 98th percentile in 2024, and 89th percentile YTD.
    OTOH, with Primecap, ISTM that its moderate underperformance (55th percentile over 3 years, 63rd percentile over 5 years) may indeed be attributed to its long term style - investing more in large caps and less in mega caps, and investing 10-20% internationally. If one is looking for a pure US large/mega fund, this isn't it and never has been.
    Finally, there's a difference between moving away from Vanguard's platform and Vanguard's funds. It may be possible to negotiate a waiver of transaction fees for Vanguard funds on another platform. I was able to do that with Schwab when I brought my (somewhat sizeable) Vanguard holdings there. Though it is very difficult to buy additional Admiral shares of actively managed Vanguard funds on non-Vanguard platforms.
  • Can FPURX, FBALX Beat the "Vanguard 3-Fund Portfolio"
    @mskursh, before our 403b was changed ("improved", as they said), I had AF RERGX (Euro Pacific R6) in our large plan and owned it for years. So, they are available in plans, not just for AF TDFs.
  • Outflows: VWELX, VWINX, VDIGX, VPMAX

    some arrogance involved.
    primecap and wellington had many years to ask vanguard to adopt an etf structure for tax\trading benefits.
    the fee declines seem too little, too late for typical active retail buyers.
  • Tactical-Allocation Funds
    The average return of a category of funds in any of the past ten years can be found on the M* performance page of a sample fund in that category. Precise to the basis point.
    For example, using LCORX:
    https://www.morningstar.com/funds/xnas/lcorx/performance
    Thanks for the reminder. That category average is “hidden in plain sight”. Hard to miss. I don’t typically compare any fund to category - much as I use M*. Every fund is unique.
  • Tactical-Allocation Funds
    The average return of a category of funds in any of the past ten years can be found on the M* performance page of a sample fund in that category. Precise to the basis point.
    For example, using LCORX:
    https://www.morningstar.com/funds/xnas/lcorx/performance
  • Outflows: VWELX, VWINX, VDIGX, VPMAX
    Good points by @InformalEconomist and @Derf.
    But I think that there are other issues too.
    Looking at other allocation funds with MFOP, ABALX / BALFX is doing OK in AUM, but VBINX, FBALX, FPURX are showing similar outflow patterns. An explanation may be that ABALX / BALFX has both advisory and DIY channels, and handholding or marketing by advisory channels may be at work. Other funds are mostly DIY and those investors can be impatient, and sometimes act against their own best interests, as Morningstar Mind-the-Gap studies show.
    BTW, I am a holder of VWELX and VPMAX (along with other PRIMECAP-managed VG funds). I got rid of VWINX years ago.
    One practical implication of heavy outflows is that yearend CG distributions may be high - but mine are in the IRAs. So, the OP wasn't intended to motivate holders to just sell, but to evaluate.
  • Outflows: VWELX, VWINX, VDIGX, VPMAX
    Thanks for posting this and checking into past five years.
    Russel Kinnel, author of the article, speculates:
    I think the driver of flows in this case is the long-running move to target-date funds in 401(k)s.
    He also notes VDIGX's lower exposure to Mag 7 tech funds.
    I would add, VWELX and VWINX are among Vanguard's oldest funds, and RMDs could have something to do with outflows
  • Outflows: VWELX, VWINX, VDIGX, VPMAX
    Morningstar has a short blurb on the 2024 outflows for 4 popular Vanguard funds - VWELX, VWINX, VDIGX, VPMAX. Reasons vary - bonds have been a drag for allocation funds & VPMAX is a high conviction growth fund that can misfire (so, it needs patience).
    I was curious if this was an issue for 2024 only or had a longer-term pattern. MFOP FLOWS came in handy to determine that there have been significant outflows for 5 years; in the prior times, there were mostly inflows.
    https://www.morningstar.com/funds/4-vanguard-funds-pummeled-by-outflows-2
    MFOP FLOWS
    image
  • the February issue is live
    Edit on 2/6: please ignore this post, as I now conclude the elimination of tax exempt status of muni bonds in the next four years as a low probability event.
    ******
    I have been reluctant to buy muni bonds for the following reason -
    Is it possible the current federal government (with help from Congress) may consider eliminating the tax exempt status of muni bonds to reduce federal deficit?
    This says "no" https://alliancebernstein.com/corporate/en/insights/investment-insights/will-a-red-wave-affect-municipal-bonds-tax-exempt-status.html#:~:text=Muni%20bonds'%20tax%20exemption%20dates,help%20to%20the%20national%20deficit.
  • Flaming Orange Craziness tariffs
    I haven't been able to access it yet but found this one instead:
    We're at war
    The Dems missed the memo. They don't catch on very quick - or at least, they don't SPEAK UP quite often enough. Always so afraid of calling him out.
    The rest of us are SCREWED. Two years of hell ahead, and that's assuming the Dems gain control of Congress in Nov-2026. But by then it will be way too late to save this country.
    SCREWED.
    On the bright side, at least the markets seem immune...or just oblivious for now?
  • Pricing of a “fund of funds” ETF?
    The problem described doesn't depend on whether the underlying holdings are ETFs or other traded securities. Either way, the question is whether an ETF's bid and ask prices are representative of the aggregate prices of the underlying securities.
    IOW, what you're asking is just a variant of a question already addressed (knowing an ETF's NAV). In math terminology, your problem can be reduced to a previously-solved problem.
    See Boiling Water joke.
    Until a few years ago, all ETFs were required to publish Intraday Indicative Values (IIVs), aka intraday NAVs (iNAV) every 15 seconds that purportedly "indicated" the NAV.
    https://finance.yahoo.com/news/etf-eulogy-inav-190000321.html
    In this case, pricing might not always accurately reflect the value of those underlying funds.
    That's true for "vanilla" ETFs as well. This is why Authorized Participants exist. They arbitrage away these discrepancies. They buy ETF shares and redeem them when the shares are underpriced, and do the reverse when shares are overpriced. Consequently ETF prices don't wildly diverge from values.
  • the February issue is live
    Hi, guys.
    As you might have noticed, the February issue is live!
    Lynn does exceptionally detailed work on three aspects of fixed-income investing. I try to work through water infrastructure as an asset class. Since that's something folks have discussed before, I'm hoping I got it approximately right. And, too, I walked through my own portfolio. Unlikely past years, I tried to focus more on the Big Picture aspects - the role of investments in a healthy adult life, the necessary tradeoffs implied in the dual pursuit of eating well vs sleeping well - than on individual funds. I did allow that you could probably achieve comparable outcomes with two funds, and modeling the 2024 performance of two such portfolios. And, as well, TheShadow tracked down a slew of industry machinations.
    My publisher's letter touched on chaos and the prospect that some forms of chaos are productive. I am struck that our total public debt after 204 years (that is, as of 1980, was $900 billion, smaller than our yearly deficit now. Too, some forms of chaos are purely toxic; "havoc" (from Old French, "pillaging" or "looting") might be the alternate term there. I did excise rather a substantial chunk of the draft text as less relevant and inflammatory.
    Please do follow the same impulse. If you're going to excoriate any particular politician or political movement, it should live in "Off Topic" and strive to be civil. Discussions of trade wars might plausibly be "Other Investing" to the extent that we try to reason through how to hedge against such.
    Be well!
  • CFPB halts work after Trump appoints Bessent as acting head
    Following are edited excerpts from a current report in The Washington Post:
    The consumer watchdog agency was formed in the wake of the 2008 financial crisis. Elon Musk wants to “delete” it.
    The Consumer Financial Protection Bureau halted much of its work to investigate and penalize corporate wrongdoing on Monday, after Treasury Secretary Scott Bessent — tapped to lead the watchdog on an acting basis — ordered an agency-wide review to “promote consistency” with the new Trump administration.
    Shortly after assuming the post, Bessent and his aides ordered bureau staff in an email to cease crafting regulations, enforcing rules, conducting probes or providing “public communications of any type,” according to a copy obtained by The Washington Post, which said he had instituted the ban “effective immediately.”
    The missive appeared to herald a stark shift for the CFPB, a powerful agency formed in the wake of the 2008 banking crisis to protect consumers from unfair, deceptive or predatory financial practices. It came on the same day that President Donald Trump named Secretary of State Marco Rubio acting administrator of another agency, the U.S. Agency for International Development, which the administration moved to shutter as part of a broad and contested effort to slash government spending and regulation.
    The financial watchdog is a longtime target of Republicans’ scorn: Party lawmakers have threatened for years to defund the CFPB or neuter its powers — and tech billionaire Elon Musk, who is advising Trump on his reconfiguration of American government, has called on Congress to “delete” the bureau entirely.
    Under President Joe Biden, the CFPB had been active and aggressive: Its leader, Rohit Chopra, issued a wide array of rules to crack down on predatory lending, reduce the burden of medical debt and cut fees that customers pay when they fall behind on their credit card bills or overextend their checking accounts. Chopra also expanded the bureau’s watch over Apple, Google and other tech giants as their digital payment apps grew more popular with consumers.
    Trump similarly moved to restrain the CFPB during his first term. His acting director then — former congressman Mick Mulvaney — at one point requested no new money for the agency and settled its pending enforcement actions, sometimes for as little as $1.
    This time, Republicans have promised to pursue even more significant changes to the CFPB, targeting its leadership structure, investigative powers and funding source; the bureau gets its money from the Federal Reserve. Last week, Sen. Ted Cruz (R-Texas) unveiled the latest bill to curtail its funding, describing the CFPB as an “unelected, unaccountable bureaucratic agency.”