I don't see a lot of options for Joe the typical investor who like to hold several funds for years.
The main problem is bond funds. Index bond funds and even conservative managed funds such as VG funds will probably make 1.5-2% on average in the next several years.
If Joe is young then he should hold plenty of stocks.
If Joe is retired and wants to lower volatility and especially if he has enough money to keep his lifestyle then he must hold a lot more bonds. It's a lot harder now than several years ago and why Joe may use Multi sector funds. A fund like PTIAX is such a fund with about 4% yield, reasonable risk/reward, a possibility to make 4% annually which is worth it in my opinion.

@bilperk

he cites FED funds rate, but his examples are all over the board intermediate bonds.

The whole point was to show that bonds have different categories and managed flexible funds can have several categories where the managers can make changes between categories and the duration. Not all the funds I mentioned were intermediate bonds, Bank loan funds, such as EIFAX have very short term duration.

three years seems to be FD's go-to for making points. Anything can happen with bond funds (or stock funds) over a three year period.

I have been posting about investing for over 10 years. I have made many posts about investing from several weeks to several decades (comparing VWINX to VWELX since the early 70"). It all depends on the subject at hand.

"bonds are doomed" does not express my feelings nor have I even heard it before. I hear a lot about bonds being a poor investment at low rates but no so much at higher rates.

Nit-picking, it's not about feeling or what you heard, that was a typical bilpek comment.

I think a good deal of the problem is that the OP is a trader, while most of us hold bond funds for stability and over longer periods than 3 years.

mmm...My OP was generic. I can't find anything in it that talks about what I do or my style. I looked at a period where the Fed raised the rate the most in the last 10 years and it just happened within the that time.
Many investors hold funds that someone like you would never hold since you only use Vanguard funds. PIMIX was a good example of a fund with a great risk adjusted returns. Not everybody holds their funds for many years, some make adjustment along the way, wait, you are one of them. Not everyone holds only bond funds for stability, some hold for higher income, some hold instead of stocks such as high yield, some use CEFs.
Basically, most articles and research about bonds talk about treasuries but managed bond funds are a lot more diverse with more options.

Now you're on a slippery slope toward a traditional portfolio asset distribution and away from a barbell (zero risk and high risk, nothing in the middle). Once you add bonds, you're proposing a different allocation regimen with likely higher risk as you noted (whether of negative rates or loss of principal from rising rates).
His barbell strategy:

A traditional strategy (note that the leftmost category excludes bonds):

For me to make a decision, I would have to look at Sharpe ratios for these 2 funds as well as VBIAX VTMFX and VWELX . Fidelity shows VBIAX with the highest 3 yr SR at 0.71( VTMFX was unavailable) The ER of HBLYX is also 0.68, by far the highest in this group.

FWIW VWINX 36.46 % VS HBLYX 41.46 % Would it not be possible VWINX returned more in 2020 than HBLYX ? It's what in the pot cooking not so much the size of the pot.
Derf

Whoa --100K assets = 80 K X .5% ( Bondo's )+ 20K @7% so $400 + 1.4K += $1.8K On the other hand ,what if negative rates come into play !! ??
Some bed time thoughts, Derf
P.S. I stand corrected.

The equity profiles are quite similar, .....

Important to note significant differences between the two funds in equity holdings: VWINX 36% with HBLYX holding 44%.

True the equity/bond asset allocations are a bit different. Still, the equity profiles are similar:
VWINX vs. HBLYX:
LCV: 69% vs. 73%
LCBl: 21% vs. 15%
LCG: 2% vs. 3%
MCV: 5% vs. 6%
MCBl: 0% vs. 1%
Others: 0%
VWINX: 9.5% of equity is foreign (1.47% Canada, 1.48% UK, 6.59% Europe developed)
HBLYX: 9.4% of equity is foreign (1.69% Canada, 1.34% UK, 6.35% Europe developed)
Even in terms of equity allocation, the historical differences tend not to be quite so large. Closer to 5% than to 8%. Again from M*, VWINX vs. HBLYX:
2020: 36.46% vs. 41.46%
2019: 38.11% vs. 42.87%
2018: 36.90% vs. 40.15%
2017: 38.56% vs. 43.25%
2016: 38.30% vs. 41.27%

"In the past, both BlackRock and Vanguard have expressed a preference for such 'direct engagement'".
We've discussed the problems with this before. At least currently, Vanguard is the largest shareholder in WFC, and Blackrock is number 2. Either they've been asleep at the wheel, or "direct engagement" (at least with Wells Fargo) has left something to be desired.
"Meanwhile, the report broke out Fidelity's index funds run by subsidiary Geode from its active ones."
A quibble then a real question. Geode was spun off from Fidelity in 2003.
https://www.wsj.com/articles/SB106003396490241400
More to the point, the M* report broke out proxy votes for Fidelity's main (sole?) subadvisor. Did it do a similar breakout for Vanguard? The reason for this question is that Vanguard said it would start delegating proxy voting authority to its subadvisors. You write that Vanguard's votes on providing climate risk disclosures improved somewhat this year. A breakdown would help to see whether the improvement was due in part to the delegation of voting, or whether the delegation and the vote improvements were merely coincidental.

A barbell approach to asset allocation can work. It's one of several approaches to dealing with sequence of return risk. I've posted more than once about this. It's also what Buffett was suggesting with his recommendation of 10% short term Treasuries (effectively cash) and 90% S&P 500 index.
While I might suggest something closer to 20/80 (cash/equity) than 10/90, and I might suggest a bit more diversification on the equity side, I don't have problems with the general idea.
What do have problems with is what hank described as "a little nuts" - going 80/20 rather than 20/80.
If we assume inflation of around 1.4% (COLA for SS in 2021 is 1.3%) and a 7% rate of return on equity for the foreseeable future (a decade), an 80/20 mix may not even match inflation: 80% x 0% (cash) + 20% x 7% (equity) = 1.4%. And that's before taxes.

I'm less concerned than some others with the modest increase in duration of DODIX. To explain why, I'm going to have to go into why I feel that MBS durations understate risk. Negative convexity. Bear with me here.
I'll try explaining this by analogizing to a vehicle in motion. Duration can be thought of as a measure of speed. A duration of five years means that you're "driving" at 5% per 1% rate change. That is, for every 1% increase in interest rates, you lose 5% in value. That's your "speed".
If you were "driving" at a constant speed, you'd lose 5% for each 1% increase in interest rates, like driving a steady 5MPH down a road. The way vanilla bonds work, it's as though you were tapping the brakes. (A gentle tapping, nothing more, with apologies to Edgar Allen Poe.) So at the first instant, you're losing money at 5% per 1% rate change. But as soon as you start losing principal, you slow down. That's good, you don't lose money so quickly. You lose less than 5% as rates drop 1%.
With negative convexity, instead of decelerating (positive convexity), you're accelerating. You're not gradually dropping from 5MPH to 4MPH, but you're stepping on the gas, and speeding up, say to 6MPH. Instead of losing 5% as rates drop 1%, you're losing more than 5% as your losses accelerate.
One way of looking at this is that an MBS with a 5 year duration will lose more value than a vanilla bond with a 5 year duration. (So duration understates MBS interest rate risk.) Another way of looking at this is that an MBS with a shorter duration will lose just as much as a vanilla bond with that 5 year duration.
What DODIX did was shift from somewhat shorter duration MBSs to somewhat longer duration vanilla (corporate) bonds. So even though the duration looks longer than before, the expected loss if rates increase should still be comparable.

In the first six months of 2020, we established new positions in over a dozen corporate issuers at what we believe were exceptionally attractive valuations. These purchases, along with many additions to existing corporate issuers, increased the Fund’s Corporate sector weighting by 11 percentage points to 45%.
To fund these purchases, we sold certain Agency MBS and U.S. Treasuries, which now make up 31% and 8% of the Fund, respectively. We lengthened the Fund’s duration modestly through the aforementioned corporate bond purchases, though we remain defensively positioned with respect to interest rate risk.

https://dodgeandcox.com/pdf/shareholder_reports/dc_income_semi_annual_report.pdf

Thanks @FD1000 for commenting.
The author’s personnel allocation (80% cash / 20% high risk) seems a little nuts to me too. I understand the logic - even though I wouldn’t invest that way. I believe his allocation serves to drive home the concept of “barbelling”. Sometimes taking an argument / line of reasoning to its logical extreme is a good way to demonstrate a point. Certainly, there are less extreme applications for the barbell.
I have moved over the past year from a straight balanced portfolio to a more “barbellish” approach - owing to presently very high equity valuations coupled with extremely low interest rates. I prefer short & intermediate duration bond funds of good quality over cash. I’ll concede, however, that cash might well be the smarter option.
-
FYI : I’ll be adding additional sources and “takes” on the barbell strategy to my original post. Hope folks so interested will take a look at the additional ones.

Interesting ideas and definitely unique but I don't agree with this article and here is why:
1) Most investors should just use a simple formula and be invested at all times according to their goals. It's easy and makes sense
The writer is so much off main stream investing style.
2) 80% cash? + 10-15% in startups and a decent size cryptocurrency?
Ridiculous ideas
No need to go further :-)

2 new ETFs from First Trust claim to help limit downside in equities if the market declines. Not sure if these products would interest anybody here. Also not certain if they will "work", but I will probably track them (DOCT and FOCT) for now. DOCT has lower limits than FOCT. I remain skeptical until I see how they perform.
FT Cboe Vest U.S. Equity Deep Buffer ETF - October (DOCT)
Investment Objective/Strategy - The investment objective of the FT Cboe Vest U.S. Equity Deep Buffer ETF - October (the "Fund") is to seek to provide investors with returns (before fees, expenses and taxes) that match the price return of the SPDR® S&P 500® ETF Trust (the "Underlying ETF"), up to a predetermined upside cap of 9.34% (before fees, expenses and taxes) and 8.49% (after fees and expenses, excluding brokerage commissions, trading fees, taxes and extraordinary expenses not included in the Fund's management fee), while providing a buffer against Underlying ETF losses between -5% and -30% (before fees, expenses and taxes) over the period from October 19, 2020 to October 15, 2021. Under normal market conditions, the Fund will invest substantially all of its assets in FLexible EXchange® Options ("FLEX Options") that reference the performance of the SPDR® S&P 500® ETF Trust.

Why not split the difference 50-50 ? Would that equal 11 % more in equity instead of 22% ?
What was I think ? 8% or 4% =50 - 50. Stay Safe, Derf

@Old_Joe, There is also the ineffectiveness of Fed Policy (Cares Act):
federal-reserve-treasury-coronavirus

Perched above this whale is a mountain of untapped Fed Help (Cares Act Money) :
federal-reserve-treasury-coronavirus/

I find in reading both the board and the financial press a lot of confusion or conflicting opinions as to what the “barbell“ approach is. This article explains / exemplifies how I’ve always viewed it and how the barbell approach differs from conventional portfolio construction - including the traditional 60/40 approach. It seems to me the distinction rests partially on psychology. But that shouldn’t obscure substantial real differences.
Main Article https://www.goodfinancialcents.com/barbell-investing-strategy/
Additional Sources: I feel the original article, while not bad, leaves a lot to be desired. Part of the problem is there are various ideas about how to construct and benefit from a barbell approach. Following, I’m listing additional sources and alternate barbell interpretations:
- “The barbell strategy is an investment concept that suggests that the best way to strike a balance between reward and risk is to invest in the two extremes of high risk and no risk assets while avoiding middle-of-the-road choices.” Investopedia
- “One variation of the barbell strategy involves investing 90% of one's assets in extremely safe instruments, such as treasury bills, with the remaining 10% being used to make diversified, speculative bets that have massive payoff potential. In other words, the strategy caps the maximum loss at 10%, while still providing exposure to huge upside.[6] This strategy works best during periods of high inflation ...” Wikipedia
- “The barbell investing strategy, advocated by Nassim Taleb, can take many forms and may be structured in such a way that some of the holdings take significant (well above average) advantage of market movements, while another part of portfolio is very low risk and isn’t affected by major market moves. Another type of barbell portfolio is to include assets that fall on opposite ends of a chosen spectrum.” Vantage Point Trading
- Unlike a real barbell, the amount invested at each end of the portfolio isn’t necessarily the same. For example, you might have 80% in safer assets and 20% in riskier assets, depending on what will produce the best balance of risk and return ..... The traditional use of the barbell approach is in bond investing .... When applied to equities, a barbell often means investing most of the portfolio in low-risk stocks (typically large blue chips in defensive sectors) and the rest in higher-risk stocks with higher potential returns (eg, small caps or emerging markets) ..... A barbell approach can also apply when investing across asset classes as well as within them. One strategy would be to invest much of the portfolio in very safe assets (cash or very short-term government bonds) and the rest in extremely risky assets that have very high potential returns under certain circumstances, but a high likelihood of large losses or ending up completely worthless.“ Christopher Wood

In New 60/40 Portfolio, Riskier Hedges Are Displacing U.S. Debt

Many investors have no choice but to stick with Treasuries because of fund mandates, or they do so since they’re unconvinced it’s worth taking a chance on something else. Yet others are exploring riskier assets -- from options to currencies -- to supplement or fill the role of portfolio protection that U.S. government debt played for decades, a trend that highlights the dangers that the Fed’s rates policy can create.
and,
Options Hedge
Swan is a longtime skeptic of Modern Portfolio Theory, which was made famous by economist Harry Markowitz in the 1950s and is the thinking upon which the 60/40 mix is based. Two decades ago, Swan created a strategy of using long-term put options plus buy-and-hold positions in the S&P 500 to limit huge losses during economic downturns.
That approach has since been expanded to include positions in exchange-traded funds indexed to small cap stocks, and developed and emerging markets. It relies on constant allocations of 90% to equities and 10% to put options purchased on the underlying ETF portfolio.

Are riskier-hedges-are-displacing-u-s-debt

Click onto your name in your above Oct. 19 post. The page that opens will show your name at the top left, and EDIT PROFILE to the top RIGHT. Clicking Edit profile will show your current name and email address. Change your name and click the save icon.
I've not tried this, as I've not changed my name here.
I'm presuming this is the method.
Let us know the results.
It did not work for me. It appears I can change my Email but not my user name that way

@charles, @FD1k, thank you for the explanation. Think the strict definition was the source of confusion.