December Issue launched Hello,
I enjoyed reading Charles Boccadoro's blurb he wrote about "A Low Cost Alternative to One USAA Managed Portfolio."
I decided I'd carry the analysis work a little fauther on the 50/25/25 portfolio consisting of FFNOX, FTBFX & BBALX and inputed the funds along with the necessary data into Morningstar's Portfolio Manager. The things that stood out in this analysis was that the portfolio as a whole had a yield of 2.54%, with an average bond duration of 5.26 years along with an average maturity of 7.4 years. The funds within the portfolio combined were trading back of their 52 week high by 2.1%. The portfolo's year-to-date return was reflected at 6.2%, 1 year return at 4.4%, 3 year return at 4.1%, 5 year return at 7.5% and the 10 year return was shown at 4.8%. Year-to-date the porfolio's performance was pretty much in line with my bogey, the Lipper Balanced Index.
All in all, this is not a bad three fund portfolio ... and, if I were a new investor starting out today it is one that I'd most likely find favor in. But, to reconfigure my own portfolio would necesitiate tax payments for the large amounts of capital gains I'd face if I began to liquidate funds within my own portfolio and move towards something similar. Plus, I'd be taking a pay cut. My trading activity alone within the growth area of my portfolio has generated capital gains amounting to about 10% of my gross income this year. And, if I am not careful I'll be getting dinged for higher medicare premiums. So for me, I plan to continue my sleeve investment system which has also offered good returns. From review of your suggested portfolio's performance compared to my more complex one justifies running my more complex portfolio.
Thanks Charles for writting about your low cost three fund portfolio. I enjoyed reading about it very much as it provided something, crafted by an expert, for me to compare my own against.
Old_Skeet
Take A Ride On The Bearish Bond Train? Seems that some MFO members are trying to find bond funds that fit where the economy "appears for the moment" to be headed judging by recent posts. I have about 50% of my bond portfolio (38% of total assets)geared more toward decent but not best yielding and capital preservation first, return second. Yes I have done some changes, like dumping DBLTX for GIBIX, rebuying some OSTIX recently and adding some interim corporate bond funds in 2016, but don't feel the need to try and find "whats working now" for everything, Im not that smart to know when to get in and out :) Fortunately 50% of my bond portfolio is still in 2 individual munis that Im holding til maturity, so just glad to get their 4.25% yield.
I can live vicariously through some of your choices and be glad for you when it works, and not say anything if it doesn't.
Curious as to whether your bond allocations are more for income and balancing total portfolios or for return. Would love to hear some feedback on this.
Thanks!
Take A Ride On The Bearish Bond Train? December and January are the best months seasonally for high yield junk bonds. They have survived the rise in Treasuries as have bank loans/floating rate. That category (bank loan) has seemed like a "can't miss" trade since the real bottom in Treasuries this summer and "sure thing" trades always make me leery. Nevertheless remain 100% invested there with around 60% in BXFYX and 40% in EIFAX.
The past many months have been the less in and out I have done in many a moon and hope to remain there barring any 0.75% or so decline from any highs. Bank loans being junk corporate light do not have the volatility associated with the latter (ex 2008) and have been more of a tight rising channel vehicle (much like junk munis were in 2014 and 2015) since the February bottom. I am sure enjoying life without having to fret over the markets.
Take A Ride On The Bearish Bond Train? Thanks for the Muni update
TSP_Transfer
. I bought into PTIAX last year because of it's strong performance fueled by Munis. But over the last month or two I'm believing, as your information reiterates and our own
Junkster
has said, that ride may be over for now.
PTIAX was my largest bond fund holding but I sold
1/2 last month and put it into a fund Daniel Ivascyn co-manages, PFIDX. This fund doesn't get a lot of chatter here at MFO, but it is set up to (hopefully) do well in a rising interest rate environment. I've been watching for a while, and the fund is out-pacing PONDX over the last year.
per PIMCO's web site:
Portfolio positioning in a rising rate environment
The fund aims to generate a floating rate of income and maximize risk-adjusted returns by investing in a diversified portfolio of global credit issuers; it also holds short-duration securities and other duration management instruments to target a total duration of less than one year.
I'm debating whether to get out of PTIAX altogether and put the proceeds into more PFIDX and possibly PONDX.
Name the fund ..... I owned HSGFX for a few years shortly after its inception. In theory, it's a great idea: capture most of the equity market's positive return - while hedging against steep market declines. (It's not my intent here to attempt to analyze its inner workings.) Should the fund be classified as market neutral? Perhaps. But within that camp there are numerous, sometimes sharply contrasting, approaches and styles. I think most would find HSGFX's approach and operation a bit unconventional within the market neutral arena.
I keep the fund on a short tracking list along with 8-10 other funds that I don't own. Provides a glimpse (albeit incomplete and cursory) into how funds like HSGFX, as well as precious metals, high yield, GNMAs, growth, value, etc. react to market developments over both shorter and longer term periods. A purely academic persuit some would find pointless - but from which I feel I gain a better understanding of investing.
What I've observed over the past decade or more watching this fund is that during poor markets it does normally inch ahead a bit. But for every 1-foot it advances during adverse periods, it appears to lose 2-feet when the markets resume an upward bias. Over longer periods that's a losing proposition.
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It would be sacrilegious I suppose to suggest that Hussman attempts to time markets. So I won't. :) However, I'll submit that you or I as individual small investors are better equiped to time markets than a fund is. We are nimble. We are focused. We can react and literally alter our allocation on a dime. The big guys can't do this. They're anything but nimble - and since money tends to flood either in or out of funds near market inflection points, the onrush makes the manager's ability to alter his investment mix even harder.
Highlights of the Week:
