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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.
  • Wealthtrack - Weekly Investment Show
    March 25th Episode:

    bee bee in Fund Discussions
  • Edward "Ned" Johnson III Passed Away at 91
    +1
    carew388 carew388 in Other Investing
  • Edward "Ned" Johnson III Passed Away at 91
    @carew388 Happen to have a real paper booklet nearby for Fido. A few trinkets.
    1987
    FPURX = no load (1946 inception).
    FBALX = 2% load (1986 inception).
    1993: FPURX now has a 2% load, FBALX, no load
    Sidenote: 1979, all fund loads removed; 1981, loads reinstated on some equity funds.
    catch22 catch22 in Other Investing
  • Edward "Ned" Johnson III Passed Away at 91
    ISTR that FPURX and FBALX were sold without a sales charge in the 1980's ?
    carew388 carew388 in Other Investing
  • M* -- Bond Investors Facing Worst Losses in Years
    Thank you @sma3. (BTW. I've always liked that name!) Yes, similar to @wxman123, I did not know there were fixed term ETFs. Very cool.
    Individual bonds, on other hand, I'm somewhat familiar with. I do suspect that if investors could hold IG bond certificates at home or in a safety deposit box, while receiving regular dividend drops in the mail or checking account, there would not be the outcry we have been bombarded with since autumn last year.
    Charles Charles in Fund Discussions
  • Morningstar Portf. Manager speed
    Re-test:
    Down: 134.2 Mbps
    Up: 45.4 Mbps.
    ...Just for the record. So much better than what I had to deal with at the previous apartment.
    Crash Crash in Other Investing
  • Edward "Ned" Johnson III Passed Away at 91
    He had the best record of Magellan (FMAGX) managers, both in absolute and relative terms, with an annualized return of 30.6% vs. 7.9% for the S&P 500.
    https://greensboro.com/magellans-best-manager-the-envelope-please/article_287cfc10-6b68-5515-a321-c7caacfbf802.html
    OTOH, it seems like a bit of a stretch to say, as CNN does, that "In 1974, he broke the mold by selling mutual funds directly to individual investors instead of through traditional brokers."
    Almost from day one, some mutual funds were sold direct:
    By the 1940s, the wholesale distribution system [selling through brokers] had become the norm, and it continued to be so through the 1960s. Yet this was not the only sales model employed by mutual funds. Two of the largest fund complexes in the 1950s and1960s, — Hamilton Management Corporation and Investors DiversifiedServices,Inc. — employed their own salespeople. These individuals only sold their respective firm’s funds, and they were the only sales representatives who did. A minority of funds distributed their shares directly to the public without a sales force of any kind.
    https://www.ebhsoc.org/journal/index.php/ebhs/article/view/208/191
    Nor was Fidelity at the vanguard (pun intended) of offering no-load funds. Unlike families like Scudder (the original no-load fund), T. Rowe Price, Dodge & Cox, Mairs & Power, Mutual Series and others, it did not offer no-load funds in the sixties. It wasn't until the early 2000s that Fidelity dropped its "low" (2-%3%) loads on its most lucrative funds, like Magellan and Contra (FCNTX).
    https://www.jstor.org/stable/4469596?seq=4
    https://www.orlandosentinel.com/news/os-xpm-1995-06-11-9506080389-story.html
    https://www.thinkadvisor.com/2003/06/24/fidelity-drops-sales-charge-on-magellan-fund/
    If one is going to give Ned Johnson credit for selling direct, then he also gets credit for charging loads that went entirely to Fidelity. He was brilliant at growing not just the company but its profits.
    A brief note on the Wikipedia entry - It says that Ned Johnson managed Fidelity from 1963 to 1977, seemingly to have forgotten Dick Habermann (1972-1977).
    http://personal.fidelity.com/myfidelity/InsideFidelity/NewsCenter/quickFacts/Magellan.html
    msf in Other Investing
  • M* -- Bond Investors Facing Worst Losses in Years
    Federal funds rates do not reflect the real interest rates changes his year. Treasury yields have gone up much more in the shorter maturities than longer.
    Last three month changes
    6 mo treasury up 0.78%
    1 year 1.2%
    2 year 1.4%
    5 year 1.1%
    30 year 0.6%
    15 year mortgage rates have risen even more:1.5% and 30 year rates about 1.6%.
    DODIX has a duration of 4.7 per M* so you would expect it to drop 4.7% for every 1 % increase, or 5.2% based on treasuries or up to 7% based on mortgages.
    It is down 5.5% YTD per M*
    These changes are also in line with short duration funds like VUSFX ( duration of 0.98) which is down 1%.
    If you use bond funds for income, you are now going to get more, although it will be a while before it makes up for the drop in NAV.
    If you use bond mutual funds for portfolio balancing and diversification, it may be a difficult time, because if interest rates continue to rise, NAVs will continue to fall, and this may occur just at the same time stocks fall too, if the war gets worse or there is a recession. This is not how "bonds as ballast" is supposed to work.
    An alternative is to look at individual bonds, where ( without a default) you are guaranteed the YTW return and to get your capital back. High rated 5 to 7 year corporates are yielding 2.5 to 3%. If inflation continues to increase, you will still loose money as the coupon rate will not increase, but you will get your principal back (of course it looses some purchasing power).
    There are also fixed term ETFs where all the bonds mature about the same time and the ETF terminates at the end of a specific year. You can set up a ladder with equal amounts in each year and roll this years redemption into an ETF on the top of the ladder. This is simpler than individual bonds, provides diversification and has a low expense ratio (0.18% for BSCM the 2022 Invesco product)
    ishares and Invesco both have lots of these available for corporate munis emerging market and high yield.
    https://www.kiplinger.com/investing/bonds/601759/build-a-bond-ladder

    I heard of these ETFs but not quite sure how they work. The article says at the end of the term you get back your money plus capital gains. Does this mean you are guaranteed not to lose any principal if you hold on until the end of the ETF's term, same as if you bought an individual bond? Would this hold true if you bought in the middle of the term?
    wxman123 in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    Federal funds rates do not reflect the real interest rates changes his year. Treasury yields have gone up much more in the shorter maturities than longer.
    Last three month changes
    6 mo treasury up 0.78%
    1 year 1.2%
    2 year 1.4%
    5 year 1.1%
    30 year 0.6%
    15 year mortgage rates have risen even more:1.5% and 30 year rates about 1.6%.
    DODIX has a duration of 4.7 per M* so you would expect it to drop 4.7% for every 1 % increase, or 5.2% based on treasuries or up to 7% based on mortgages.
    It is down 5.5% YTD per M*
    These changes are also in line with short duration funds like VUSFX ( duration of 0.98) which is down 1%.
    If you use bond funds for income, you are now going to get more, although it will be a while before it makes up for the drop in NAV.
    If you use bond mutual funds for portfolio balancing and diversification, it may be a difficult time, because if interest rates continue to rise, NAVs will continue to fall, and this may occur just at the same time stocks fall too, if the war gets worse or there is a recession. This is not how "bonds as ballast" is supposed to work.
    An alternative is to look at individual bonds, where ( without a default) you are guaranteed the YTW return and to get your capital back. High rated 5 to 7 year corporates are yielding 2.5 to 3%. If inflation continues to increase, you will still loose money as the coupon rate will not increase, but you will get your principal back (of course it looses some purchasing power).
    There are also fixed term ETFs where all the bonds mature about the same time and the ETF terminates at the end of a specific year. You can set up a ladder with equal amounts in each year and roll this years redemption into an ETF on the top of the ladder. This is simpler than individual bonds, provides diversification and has a low expense ratio (0.18% for BSCM the 2022 Invesco product)
    ishares and Invesco both have lots of these available for corporate munis emerging market and high yield.
    https://www.kiplinger.com/investing/bonds/601759/build-a-bond-ladder
    sma3 in Fund Discussions
  • Morningstar Portf. Manager speed
    @Crash- I'm just saying that your internet speed is at least ten times faster than ours, but I really don't know what the available range of speeds is, or what's considered fast or slow.
    We don't have any large screen or high definition video equipment, so we contract for the cheapest service tier provided by AT&T Uverse. All we really wanted when we signed up was reasonably fast internet browsing and email. We didn't anticipate watching streaming video at the time, but since Amazon Prime Video was available with a fair amount of "free" content we later started streaming from Amazon and PBS. Our speed (bandwidth) is enough to simultaneously watch two separate streaming video feeds, but the largest screens are only standard resolution 27", so it doesn't take all that much bandwidth to drive those.
    If we wanted to use the very large high-definition screens we would likely have to pay for greater bandwidth/speed.
    Additional info: I just took a quick look at this site, which says:
    We’ve gathered official figures from many of the most popular streaming services currently available to the public. Obviously, we do not feature every service on this list, but what we’ve seen seems to suggest a standardized range of data usage.
    Netflix: Netflix provides specific estimates for each of its streaming settings. Standard definition uses up to 0.3 GB per hour. High definition (720p) uses up to 1 GB per hour. Full HD (1080p) uses up to 3 GB per hour. UHD (4K) uses up to 7 GB per hour.
    DirectTV Stream: DirectTV recommends a minimum of 8 Mbps to deliver an “optimal viewing experience.”
    Amazon Prime Video: Prime Video recommends a minimum download speed of 1 Mbps for SD content and 5 Mbps for HD content. Prime Video says it will serve the highest quality streaming experience possible based on the bandwidth speed available.
    YouTube: YouTube recommends 1.1 Mbps for SD, 2.5 Mbps for HD 720p, 5 Mbps for Full HD 1080p, and 20 Mbps for 4K.
    Disney+: On Disney Plus, Standard definition streams use approximately 0.7 GB per hour. Full HD streams use approximately 2 GB of data per hour. UHD (4K) streams will use approximately 7.7 GB of data per hour.
    Peacock: Peacock recommends at least 2.5 Mbps of bandwidth for HD streaming.
    Hulu: Hulu looks for 3 Mbps for Hulu’s Streaming Library, 8 Mbps for live streams, 16 Mbps for 4K content.
    HBO Max: HBO Max recommends a minimum download speed of 5 Mbps to stream HD video. For the best 4K streaming experience, it calls for a download speed of 50 Mbps or higher.
    Note that we do not use smartphones, so so not have any data plan for those.
    Old_Joe Old_Joe in Other Investing
  • M* -- Bond Investors Facing Worst Losses in Years
    A part of me struggling to understand the handwringing for buy-and-hold investors.
    If you have a say 50/50 allocation between stocks and bonds, why would you not just rebalance? Take-advantage of the cheapness?
    I get it with trend-following or trading strategies, which I like, but don't long-term investors need to accept that some years will be worse than others, no matter what the asset class?
    I saw DODIX mentioned.
    Let's say by end of year, it's -9%. About its worst MAXDD. Don't two +9's get remembered, as in 2019 and 2020?
    Here are calendar year returns going back to 1990:
    Year Count: 32
    Worst Year: -2.9
    Best Year: 20.2
    Average Year: 6.4
    Sigma Year: 5.5
    YTD (thru 3/24): -5.6
    2021: -0.9
    2020: 9.4
    2019: 9.7
    2018: -0.3
    2017: 4.4
    2016: 5.6
    2015: -0.6
    2014: 5.5
    2013: 0.6
    2012: 7.9
    2011: 4.8
    2010: 7.2
    2009: 16.1
    2008: -0.3
    2007: 4.7
    2006: 5.3
    2005: 2
    2004: 3.6
    2003: 6
    2002: 10.7
    2001: 10.3
    2000: 10.7
    1999: -0.8
    1998: 8.1
    1997: 10
    1996: 3.6
    1995: 20.2
    1994: -2.9
    1993: 11.4
    1992: 7.8
    1991: 18.1
    1990: 7.4
    Granted, all during secular bond bull. But there were certainly some periods in there of rising rates, if not with concurrent inflation.
    Also, if there is sufficient liquidity, and there seems to be, why is selling a bond or TBill early bad? Can't you just pick-up another with the reduced principal but higher interest for the remainder of the planned term? Don't you end up in same place, less trading fee/bid spread?
    Now if liquidity is crashing, I get it (e.g., IOFIX in March 2020, I do remember and will never forget). Is that what the concern is for investors ... that there will not be enough liquidity with everybody running for the door in bond fund land, perhaps including the Fed?
    Charles Charles in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    Citigroup just upped its forecast to include multiple hikes totaling 150 basis points in 2022, plus a few more individual hikes in 2023. Seems like the Fed is going to get a grip on inflation, even if it kills us.
    I'm somewhat happy just sitting on cash, thinking that it's a short term situation. I've added a bit to a few individual stock positions believing they may be a good spot to hide out... BMY, O, VZ, but am cautious.
    Frankly, I'm afraid of the next week or so in regards to Putin's next move in Ukraine. This reminds me of early 2020 when Covid was starting to reek havoc in Europe, and yet our stock market just ignored it and kept going higher. Until it didn't. I've asked myself several times since then why I didn't pay closer attention to what was going on, and the associated risks to our markets.
    PRESSmUP PRESSmUP in Fund Discussions
  • Edward "Ned" Johnson III Passed Away at 91
    Thanks to Ned Johnson Fidelity and Schwab were the early pioneers in discount brokerages that benefit many small investors. Prior to them, full service brokerages were the only option. How time have change. Fidelity was my first brokerage and they also happen to be my 401(k) administrator.
    Sven in Other Investing
  • Edward "Ned" Johnson III Passed Away at 91
    Yes. Saw this, too, last evening.
    Fidelity shaped the retail investor world into a better place for we here, to participate.
    I recall how Fidelity began to impact the very large "traditional" full retail brokerage/mutual fund houses (Merrill-Lynch, etc.) in the 1980's. Discount brokerage, much lower loads on mutual funds and the FAST system using a touch-tone phone for trades, at a time when other electronic means for trading did not exist for the small investor. Hourly trading of their "select" funds, if one chose; via the touch-tone phone system.
    AND, look at the low cost and ease of placing an investment today.
    Accounts still in place from the late 1970's for our house.
    catch22 catch22 in Other Investing
  • Edward "Ned" Johnson III Passed Away at 91
    "....."He was a visionary, an innovator, and a philanthropist who had tremendous curiosity about the world around him and who lived his life to the fullest each and every day," the Johnson family said in a statement. "To the end, he never lost his enthusiasm, his sense of humor, or his energetic spirit.".....Johnson served as chairman and CEO of Fidelity Investments, the company his father started, for over 40 years, and transformed the Boston-area mutual fund manager into the second-largest investment management company in the US and one of the most successful diversified financial services firms in the world.....The firm, now led by his daughter Abigail Johnson....."
    https://www.cnn.com/2022/03/24/investing/edward-ned-johnson-iii-fidelity-death/index.html
    More https://en.wikipedia.org/wiki/Edward_Johnson_III
    yogibearbull yogibearbull in Other Investing
  • M* -- Bond Investors Facing Worst Losses in Years
    Stating the obvious, these are very challenging times for fixed-income investors.
    I've exchanged my largest bond position (DODIX) for a stable value fund late last year.
    My other bond funds (VUSFX, RCTIX) are short-duration funds.
    I dislike the current investment environment and believe equities are more attractive than fixed-income.
    However, I can't assume the inherent risk of a 100% equity portfolio.
    I hold my nose while capital is allocated to low-yielding funds¹ guaranteed to generate negative real returns.
    ¹ RCTIX SEC yield of 4.38% is relatively high
    Observant1 in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    I should have disclosed that my MUNI fund balance (all bought in 2013) is only 1% of my current PV and anything not in equities is in cash. I am not planning to buy any bond funds with that cash, which likely will just go to money market funds when their yields become meaningful.
    BaluBalu in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    Bond TR includes (1) price changes and (2) reinvestment of income, and these act in opposite ways to rate changes. So, when rates rise, #1 is negative but #2 gets stronger; the reverse when rates fall. These 2 effects approximately balance out over the duration of the bond fund. That is behind the statement that bond fund TR is approximately the same as the initial rate at the purchase.
    Losses in bond funds are negatively related to their duration but tend to be self-limiting. Intermediate-term bond fund duration range is wide. MS/NT funds may use derivatives for duration management. So, there may be wide variations in the performance of bond funds.
    yogibearbull yogibearbull in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    This thread made me open my brokerage account to check how the MUNI funds I bought during the original taper tantrum (2013) are holding up. I am surprised to find that the NAV is +/- 2%. I expected the NAVs to be higher. The QQQ price I bought at the same time is now up 400%. I did not check both their performance until today. That was my first foray into MUNI funds and everybody extolled the benefits of bond funds. Obviously, I put more into the MUNI funds at that time than into QQQ. Even with interest rates steadily decreasing, the safety was illusory. What is a good investment depends on how much of one's energy (time and effort) it takes up.
    BaluBalu in Fund Discussions
  • M* -- Bond Investors Facing Worst Losses in Years
    My … take on bond funds is, they will continue to go down in total return as long as the FED is raising rates.
    As of today the “Fed” has raised interest rates exactly once since 2018, and that one increase was in the amount of 0.25%. The Federal funds (overnight) lending rate has “soared” to a whopping 0.50% from the previous 0.25% rate. Peanuts. So what’s really happened? The Fed “Open Mouth Committee”, including Chairman Powell and numerous other Fed bank presidents, has been clamoring in front of cameras to say how they “may” need to lift that overnight rate higher in coming meetings this year. To a large extent you’ve witnessed a market induced knee-jerk reaction to these public “musings.” And the markets are now pricing in something like 7 additional quarter-point rate hikes this year.
    The bond market is way out ahead of the Federal Reserve Board at this time. What they eventually do will depend on the data (inflation, jobs numbers, housing starts, etc.) What the FOMC might like to do and what it eventually does are two different things.
    hank in Fund Discussions