If one of you bond meisters (maybe msf?) can explain this to me it would be surely appreciated. I am looking heavily into bond funds now as I reach retirement .M* rates the PTIAX bond avg rating as BB in the style box area . Yet it then reports these bond rating percentages as present in the fund. AAA 32.71%,AA 31.37% A 10% BBB 5.75% BB 1.33% B 0.92% Below B 8.59% and NR 9.13%. I have seen similar numbers on M* where the bond avg rating is far below the actual percentages which are much greater among the higher rated bonds. It would seem to me that the above PTIAX bond rating avg would be more like A and not BB as noted. Am I missing something here?

Hi guys,
In looking back though the thread I see where the last report was made on July 4th with a reading of 125 indicating that the S&P 500 Index was extremely overbought. Since then, not much has changed with the barometer reading; and, as of Friday July 17th it scores the Index with a reading of 121 reflecting that the Index remains extremely overbought.
Recently, Jim Cramer made a call based upon some charting that he believes we might be in for a pullback towards the end of July. We will see if this comes to be. For me, I'm also thinking that there is some near term downside coming.
Here is the link to Mr. Cramer's call https://www.marketwatch.com/story/cnbc-mad-money-host-jim-cramer-uses-this-chart-to-predict-the-exact-date-the-stock-market-could-hit-the-skids-2020-07-15
Since last report ... I have reduced my equity allocation from about 45% equity to 40% equity and raised cash by a like amount. This now puts my asset allocation at about 15% cash, 45% income and 40% equity. From here I do not have any buy or sell activity planned; and, I await the next stock market pull back building cash from my portfolio's income generation. Most likely, I'll do a little equity buying should we get into a stock market pull back which would be a decline, for the Index, of -5% (3065) to -10% (2900) from its near term high of 3225. Currently, the Index is off it's 52 week closing high of 3386 by about -5% and is up off it's 52 week closing low of 2237 by just short of +45%. That is a strong run upwards, form the 52 week low, without a major pull back.
For me, a dip is a decline of up to -5%, a pull back is a decline from -5% to -10%, a correction is a decline of -10% to -15%, a downdraft is a decline of -15% to -20%, and a bear market is a decline greater than -20%.
Generally, stocks go soft during the summer ... so be cautious. I know, I am.
Take care ... and, be safe.
Old_Skeet

Hi guys,
Yes, have owned PONAX even before it was that and the ER increase. ...
God bless
the Pudd

PONAX's ER bounces around quite a bit because the SEC requires it to include the costs of traditional leveraging. These are genuine costs: borrowing $1 to make $2 still costs you interest on that dollar. But there are also ways to create leverage that have costs that aren't included in the ER.
This makes some funds appear cheaper than others, even though they're not.
Here's a M* article on this phenomenon and how M* adjusts the ER figures it reports.
https://www.morningstar.com/articles/969612/one-expense-ratio-to-rule-them-all
Currently, 0.55% of the ER for PONAX (and other share classes) is this interest expense.
See footnote 1 in the summary prospectus.

The PIMIX assessment was based solely on PIMIX previous years. In 2018 it was at 18% in its category but making 0.6% is pretty low when PTIAX made 2% and SEMMX made 3.9%.
Possibly the comparison with PTIAX alone was deemed not sufficiently persuasive. Regardless and for whatever reason, the ringer SEMMX was tossed in - a fund that isn't a multisector fund (per M*). Which begs the question: why stop with just the third best nontraditional fund of 2018?
Instead of cherry picking SEMMX, a 1* fund with a tarnished reputation, one could have cherry picked CLMAX, a 5* fund. Its 2018 performance of 7.58% not only nearly doubled that of SEMMX, but it made PTIAX look anemic.
==========
Argentinian fiasco? PIMIX had just a 2% exposure to bonds that dropped in value to 71¢ on the dollar.
https://www.pionline.com/markets/pimcos-bet-argentine-bond-paying-75-rate-hit-peso-rout
As that column noted: "PIMCO's profits or losses on the bonds would depend significantly on the extent to which it hedged its foreign-exchange exposure." PIMCO stated that half of PIMIX's position (i.e. 1%) was dollar-denominated.
The proof is in the pudding. In August, PIMIX dropped 1.11% vs. the category's 0.83% gain. It made up that 1.94% underperformance in the remainder of the year by outperforming monthly by 0.65%, 0.40%, 0.36%, and 0.50%. (Data from M*)
Interesting how attention is called to some some black swan events with small impact, while others are disregarded ("You can't look at PIMIX YTD and compare it to BND (high rated bonds) when we had a black swan")
========
PDBAX is not a M* Multi category fund but a Intermediate core plus fund
People here generally understand that M* categories are not the be-all end-all (see, e.g. RPHYX). I mentioned PDBAX specifically because M* does not calls it multisector, writing:

I ...suggest[] again to take a look at core plus funds. Generally core plus funds carry a bit less credit risk than multisector funds, though there's a fair amount of overlap between the most aggressive core plus and the more tame multisector funds. ... For example PDBAX.

The data I presented and that you quoted supports that thesis. What was your point?
FWIW, ADVNX is not a Lipper multi-sector income fund but a flexible income fund.
=========
2) SD(volatility) lower than 5
3) Morningstar return above average or high
These are effectively the same test. Since standard deviation is a second moment, a single outlier will skew the calculation. If a fund's SD is not distorted by March's performance figure, then March's performance must not have been an outlier. This in turn virtually mandates that the fund's return be relatively high (i.e. without a significant dip).

Hi guys,
Yes, have owned PONAX even before it was that and the ER increase. Made money then and now on 3-26-20 made a large 5-digit buy and am up 6.93%---again, Fido numbers, not mine. In that timeframe, I sold all bond funds except this one.....and in the future this could go, too.
God bless
the Pudd

Looking for usenet files that I've got scattered all over the place in backups of backups of backups, I ran across a posting of Ed's that I saved, from mid 1999. We can reasonably figure that I moved to FundAlarm some time early this century.
That post (after stripping headers):

Mike Roberts wrote:
> Please tell me which funds for the next 1,3 5, and 10 years will outperform
> the S&P 500 Index. What's that - I'm waiting............
Hi Mike,
I'm not Sal, but here's a list:
FSPHX, FSDCX, FSCSX, FSPTX, FDLSX, FDCPX, NTCHX, VGHCX, JAMRX, JAOLX,
JASSX, JAVLX. Do you need more?

The S&P 500 (as represented by VFIAX) dropped 19% over that span. Half of the six Fidelity Selects did better, half worse over 5 and 10 years. Only two did better over 3 years. Here's a graph for the Fidelity funds.
As for the Janus funds:
JAMRX was Janus Mercury at the time (it was renamed around 2006)
JAOLX was Janus Olympus at the time, and was merged into Janus Orion JORNX in 2006; this in turn was renamed Janus Global Select (with a new, global investment policy) in 2010.
JASSX was Janus Special Situations, which barely survived three years; it was merged into JSVAX Janus Strategic Value and renamed Janus Special Equity, which was renamed Janus Contrarian in 2004.
JAVLX was Janus Twenty, which was merged into JACTX Janus Forty in 2017.
Between the dot com bust and the 2003 timing scandal, Janus did not have a happy turn of the century.
As for the non-Fidelity, non-Janus funds, I think people know that VGHCX has always been a great performer, though it slowed down a bit in the past decade. NTCHX underperformed the S&P 500 in all timeframes in question.

PIMIX was a great fund until the beginning of 2018. PIMIX is still a decent fund
I would go with PTIAX. LT good record + good downside protection. 2 more option are TSIIX and ADVNX
2018 returns:
PTIAX: 2.01%
TSIIX: 0.68%
PIMIX: 0.58% (still top quintile)
Multisector bonds: -1.52%
ADVNX: -1.99%
Typo? 2019 perhaps?

These 3 funds are based on the following(which I post already):
1) 3 year average annually over 4.3%
2) SD(volatility) lower than 5
3) Morningstar return above average or high
4) Morningstar risk low/below average.
The PIMIX assessment was based solely on PIMIX previous years. In 2018 it was at 18% in its category but making 0.6% is pretty low when PTIAX made 2% and SEMMX made 3.9%. PIMIX was unique investing more in MBS but in the last years diversified to more global and HY but kept the distributions high. I used to own a very high % in PIMIX for years but sold in 01/2018. In 08/2019 we found out about the Argentinian fiasco bonds PIMIX had.
===============
PDBAX is not a M* Multi category fund but a Intermediate core plus fund (you can maybe called it Multi light because it has about 20% below IG per M*).
It's more global with over 30% abroad
It has 18.9% derivatives.
===============
Basically, PIMIX used to be the easiest fund to recommend but it's getting harder and why I trade :-)

PIMIX was a great fund until the beginning of 2018. PIMIX is still a decent fund
I would go with PTIAX. LT good record + good downside protection. 2 more option are TSIIX and ADVNX
2018 returns:
PTIAX: 2.01%
TSIIX: 0.68%
PIMIX: 0.58% (still top quintile)
Multisector bonds: -1.52%
ADVNX: -1.99%
Typo? 2019 perhaps?

@msf Thanks, your questions have helped greatly in my thought process
I am concerned about my category selection rather than my fund selection.
I purchased an active bond fund because I think active management can add value over passive index bond funds. I purchased a multsector fund bond fund to give the bond managers latitude in their holdings decisions. ... Thanks!

Glad to be of help. I completely understand the idea in looking for wider ranging funds, else why pay for the active management?
I originally started looking at multisector funds for myself as a way to dabble in foreign bond exposure, while, as you wrote, giving the manager leeway to decide on the allocation. I was left with the impression that multisector funds tend not to wander too widely. They may be very different from one another, but over time, each shows a decided preference for certain types of bonds.
Not that many seem to invest significantly in foreign bonds. So making my original selection was easier. (I've since tinkered with foreign bond funds, so my own reasons have changed over time.)
I mention all of this by way of suggesting again to take a look at core plus funds. Generally core plus funds carry a bit less credit risk than multisector funds, though there's a fair amount of overlap between the most aggressive core plus and the more tame multisector funds. Beyond that, it's not easy to tell the categories apart.
Here's how Vanguard describes the M* categories:
Core Plus:
- Consists of funds that invest primarily in investment-grade U.S. fixed income issues including government, corporate, and securitized debt.
- Has greater flexibility than core offerings to hold noncore sectors such as corporate high-yield, bank loan, emerging markets debt, and non-U.S. currency exposures.
Multi-sector:
- Consists of funds that seek income by diversifying their assets among several fixed income sectors, usually U.S. government obligations, U.S. corporate bonds, foreign bonds, and high-yield U.S. debt securities.
- Typically holds 35% to 65% of their assets in securities that are not rated or are rated BB and below
M* shows 24 core plus funds to which it gives a credit rating of BB (junk). Same as the typical multisector fund. For example, PDBAX (not a recommendation, just an example).
Here's M*'s description of the PGIM family's bond strategy. It notes that this family's funds take on more credit risk than their peers. The way M*puts it, PGIM has "a distaste for Treasuries and agency mortgages, which PGIM has almost universally found too expensive for its tastes." M* goes on to note that "while the [PDBAX] portfolio bounced and rallied strongly in the weeks thereafter, it fell roughly 10% during the first three weeks of March." That was the cost of greater credit risk.
https://www.morningstar.com/articles/980651/one-bond-managers-trip-through-the-latest-storm
Here's a graph showing how the relevant categories performed between March 1 and March 31. It also shows how PIMIX along with some other funds mentioned here did worse than the average core plus fund, but better than the typical multisector fund. The losses were:
Multisector category: 13.4%
PIMIX: 12.4%
PDBAX: 10%
PTIAX: 9.3%
Core plus category: 7.1%
US Agg Bond index: 2.6%

@bee, Thank for your your question about what funds I might benchmark my portfolio against. One, the benchmark must be a hybrid fund and have a yield generation of about 3.5%. Not to many hybrid funds achieve this as they are geared more towards growth than income generation. Two funds that I own that come close to the required yield are two widely held American Funds. They are Income Fund of America (AMECX) with a yield of about 3.4% and a ten year average return of 8.5%. The other one is Capital Income Builder (CAIBX) with a yield of 3.6% and a ten year average return of 6.8%. Overall I am at a yield of about 3.4% with a ten year average return of better than 9 percent.
I'm thinking the main reason that I am doing a little better than these funds comes from me being active within my portfolio and my use of special investment "spiff" positions when I feel it warranted. From a yield perspective I pair up better to AMECX and from an asset allocation perspective I pair up more towards CAIBX. Performance wise, again, I have done better than either of these two funds.
My top five funds owned (size wise other than my MMK funds) when combined account for about 25% of my portfolio are AMECX, FKINX, ISFAX, CAIBX & JNBAX.
On your other comment about living below one's means. I feel blessed that both my principal residence and 2nd home are both paid for and have been for a good number of years. Living below my means for a good number of years has helped us (wife and me) get ahead along with good prudent investing.
I have had high school buddies (at reunions) that were indeed much higher wage earners that I ... ask ... I know I made more than you through the years; and, now you have a great deal more than me. How did you do it? Win a lottery? Nope, I just spent less and lived within my means saving some along the way plus I have been a good prudent investor and grown my wealth through the years.
Besides, it cost to much to keep up with the Jones that live off credit cards and are mortgaged to the hilt.
Again, bee ... Thanks for asking. Now you know.
Old_Skeet

I considered investing in PIMIX a while ago. In the multi-sector bond category, PIMIX had generated top-decile trailing returns with below average volatility. The fund's non-agency mortgage sector investments accounted for much of the strong performance after the financial crisis. However, the non-agency mortgage sector is much smaller today. Yet, Pimco refuses to close PIMIX which currently has ~ $120 Bil AUM. Matter of fact, I don't believe that PIMCO has ever closed a fund because it grew too large. This compaoblony policy is not in an investor's best interest.

The above is a good encapsulation of M*'s latest analyst review (not paywalled):
https://www.morningstar.com/articles/986480/why-pimco-income-remains-among-the-best
With the better financial reporting, "trust but verify" is good practice. (With much financial reporting, the "trust" part isn't justified.)
Jacobson writes that "Pre-financial-crisis supply in the [nonagency residential mortgage] sector has been shrinking." Those securities are often referred to as legacy RMBS (i.e. securities issued pre-financial crisis). And the statement's correct. However, the post GFC RMBS 2.0 sector (with stricter borrower guidelines) is growing. Though it is still minuscule; I don't want to suggest otherwise.
https://www.marketwatch.com/story/credit-suisse-and-citigroup-join-other-major-banks-in-mortgage-bond-revival-with-a-twist-2019-08-20
In late 2017 Jacobson (along with lead writer Miriam Sjoblom) was making the same point about a shrinking supply, describing the post GFC years as "a once-in-a-career opportunity. " They also commented even back then on the fund size (more on that below).
A bit concerning is Jacobson's statement that "Pimco still likes the sector for its return potential and modest volatility: ... they totaled 37% as of March 2020." This seems to be overstated.
According to M*'s portfolio page (old-style version) non-agency RMBSs amounted to 8.57% (out of 120% bond exposure) of the portfolio. The largest sector was agency MBS pass throughs at 40.58% (out of 120%), followed by asset-backed securities at 33.63% (out of 120%). All as of March 31, 2020.
According to the fund's annual statement, summary section, non-agency MBSs constituted 19.5% of assets (out of 100%), and asset backed securities constituted 12.8%. We report, you decide :-)
PIMCO says that securities (substantially all are bonds) constitute 154.5% of assets. And it reports non-agency MBSs constituting 30.3% of assets. So the non-agency RMBS percentage of securities (out of 100%) is, according to PIMCO, 30.3%/154% = 19.6%, or about what was reported in the annual statement's summary.
Regarding size: current size is $120B according to PIMCO ($117B according to M*). Jacobson made the same complaint about bloat in his 2018 analyst report (free) entitled "Is PIMCO Income Getting Too Big". According to that year's annual report, the fund's assets (all share classes) totaled $112B, or about the same size as now. But it had grown from about $69B the year before.
Mitigating that, Christine Benz (M*) comments that (at least with respect to vanilla bond funds):

managers who use derivatives to express their market outlooks may be able to successfully manage more girth than managers who focus more on bond-picking to make a difference. PIMCO Total Return and its various clones, for example, were able to deliver peer-beating returns for many years even though the fund grew too large for bond-picking to make a significant difference in its returns. At its peak, PIMCO Total Return had nearly $300 billion in assets, and Gross managed various pools of money in that same style for other entities, too.

PIMCO's funds have their issues, but so far they seem to have handled them better than I would have expected. I might put the fund on a watch list for more problems. But as I wrote above, if I had reasons before for liking the fund, I would examine those reasons before jumping ship.

PIMIX was a great fund until the beginning of 2018. PIMIX is still a decent fund.
You can't look at PIMIX YTD and compare it to BND (high rated bonds) when we had a black swan.
PDIIX is another Pimco fund, much smaller and managed by the same team.
I would go with PTIAX. LT good record + good downside protection. 2 more option are TSIIX and ADVNX.
These 3 funds have the following:
1) 3 year average annually over 4.3%
2) SD(volatility) lower than 5
3) Morningstar return above average or high
4) Morningstar risk low/below average.
See the list below
(link)

I continue to do what I have done for decades which is KISS.
Prior to retirement.
We saved for years thru 401K. Always paid all bills on time. Never made a budget. Spend the rest. No more than 5-6 funds. No spreadsheet
At retirement
1) Usually 2-4 funds
2) No budget, no spreadsheet, no tracking of anything. Our discount brokers have all the information we need. I don't need anything beyond that
3) During working and at retirement we only have several thousands(maybe 2 months of expense) in checking account. Everything else is invested most times. In the last 10 years I was in the market at 99+% at about 98%. This means no MM,CD.
4) I never understood the concept of emergency fund and/or 2-3 years of expense in cash. We have access to credit cards first, then several thousands in cash. If we need more we can sell some shares and get it within 1-2 days. So why do we need cash unless it's ransom or illegal drugs?
If stocks are down then use your bond funds for that and you must have some ballast bond funds
5) We get distribution monthly, if it's not enough I sell some shares.

How do I keep track of it all? I don't try to kill myself by keeping track precisely, but since the lion's share of my stuff is with TRP, I can get a good and accurate picture about gains and losses when I log-in. Anytime, any day. And my TRP funds are all Trad-IRA. My wife's only fund is Trad-IRA, and we are not adding anything to the Trad-IRA funds at all. I'm retired, and she has no earned income, at least not officially.
I suppose my portfolio might amount to just a fraction of what some of us here are holding. In 2020, for the very first time, I withdrew a few thousand from my biggest TRP holding (PRWCX) for a new car down payment. I deliberately took the money from my biggest holding, because its relative size might assist in making up that few thousand dollar drop, for the car--- assuming an upward market. I see that the fund is already almost back up to "even-Steven," before I took that few thousand from it. PRWCX is just the best investment I've ever made. Still closed to new investors.
Our only taxable fund is a bond fund, PTIAX. Every month, it gets automatically fed, but just a morsel. Unless the sky falls down upon us all, I'll keep attempting to edge my equity stake down to about 30% of my total. I'm at 58% bonds, and 5% cash. That cash is held by the mutual funds. We do hold some REAL cash in our bank accounts, but after we save a bunch, it gets spent on extended family. For one thing, we're putting a niece through school. Last month, we saved another niece's life--- literally--- with our money. So, the "karma bank" is full-up. She had Covid, pneumonia, severe anemia and TB. Jayzuz. Frikkin' 3rd-world country. No middle class. 3% own and control everything. Everyone else goes hand-to-mouth. Every... Single... Day. To say nothing of the corruption.
Sorry, I got sidetracked. NOTE: PTIAX doesn't even have a website that allows shareholders to sign-in and check up on their accounts. I guess it keeps expenses down. Otherwise, I'm quite happy with it.

Thanks for the comments so far.
@Old_Skeet. Does"living below your means" imply you live in the basement of your in-laws? Mine were pretty mean too. We moved out as soon as we saved enough for a down payment on a house. Now the means are moving into our house and we are "living over our means".
With your portfolio construction, if you were to segregate out your 20% cash position, I could image the remaining 80% equating to a balanced fund (50% equity / 50% income). Is that one of your benchmarks?
Great job on achieving a return equal to a little over 9%.
@davidmoran, I like the idea of simplifying, but I also believe one has to keep an eye on the "cooks in the kitchen". I look for fund managers who attempt to protect on the downside while achieving most of the market's upside. PRWCX , VWINX and BRUFX are examples of this in my portfolio. VLAAX seems to fit this bill as well.
@WABAC, hope this thread helps your headache. Your retirement income needs will come from SS, maybe a pension, maybe part time work, maybe a portion of your personal retirement accounts (RMDs or other withdrawals).
If considering an annuity run some withdrawal scenarios with a fund like VWINX which may provide a similar withdrawal rate to an annuity and still allow you to have full control over it.

https://www.reuters.com/article/us-usa-markets-funds/u-s-passive-stock-funds-back-in-demand-as-investors-seek-steadier-returns-idUSKCN24H25V
U.S. passive stock funds back in demand as investors seek steadier returns
/(Reuters) - U.S. passive equity funds have started to witness inflows after a two-month hiatus as investors flock to rising equity markets, but prefer shadowing indexes to picking stocks./
Passive outperformed active 9 out of 10 yrs
Probably need both long term

Hi @bee, This is something that my broker provides for me monthly in my account statements and covers a ten year history. By year, it contains the account starting value, how much was withdrawn (or added), investment performance, and then an ending account value. With this, I know by year what the activity was for my account values, withdraws & additions, along with investment performance simply by review of this report for each of my accounts. Thus far, even though I have not made any contributions for the past five years since I have retired I have been able to grow my principal over and above my withdrawal rate and for the ten year period with my annualized performance rate of return being a little better than nine percent. A big reason for this is that my wife and I live below our means.
About five years before I retired I ran a 10% cash, 20% income and 70% equity asset allocation in my portfolio. For the past ten years, though, I have been moving more more towards an income generation allocation and I have now arrived at a base asset allocation of 20% cash, 40% income and 40% equity. From the 20/40/40 I will tweak it a little carrying up to a plus 5% overweight (or underweight) in my income and equity areas with a rebalance threshold set at + (or -) from target allocations. I generally let cash float. Currently, as I write I am at a 15% cash, 45% income and 40% equity asset allocation.
So, in answer to your question ... My broker provided account reports provide this information and this is something that I do not have to maintain myself.

while you have your wits, you can simplify down to 5-4-3 funds or etfs, I found anyway

I think I found it after trying to figure out where an M* writer got off to.
Mike Lee? Stan Lee? Used to cover ETF's at M*. Wrote a couple of pieces here.
I don't follow ETF's. But I always enjoyed reading his stuff.

I believe you are referring to Sam Lee who is a talented writer. Like you, I also enjoyed reading his

articles. After he left Morningstar, he founded SVRN Asset Management.

I checked out his site. Thanks for the tip.
He had a couple of blog posts. But seems to have lost the yen to scribble for a wider audience.

How does one keep track of their gains or losses while at the same time accounting for permanent losses from portfolio withdrawals?
Let say I have $100K and I plan on withdrawing 4% or $4K in year one of retirement and I do that Jan 1 of that first year. My balance is now effectively $96K as a result of the distribution. To me this is a permanent loss because I am spending, not saving that 4%. Obviously my bookkeeping accounts for this withdrawal until I spend it. Maybe I buy a car with this 4% and the car goes up in value after I buy it. Maybe I blow it on Jan 2 at the casino...ouch... but these are the dynamics of spending down your portfolio. You may have something (a car worth at least $4k) or you have nothing more than a recollection of the $4K withdrawal.
If my overall portfolio drops 10% soon after Jan 1, I now have $86.4K. My hope is that over the next 3-5 years I will recoup that 10% market loss, but I realize my withdrawal rate (4%) is now greatly impacted by my eventual portfolio balance come Jan1 of the next 3-5 years.
Segregating 5 years worth of withdrawal might act as a drag on my potential upside performance, but might hedge my downside potential. Five years of withdrawal that include a 2% inflation adjustment would amount to $20.8K. It might be prudent to keep this amount in a conservative investment with little downside risk. That leaves a little less than $80K invested for the longer term (5 years). An average 5 year return of 5.8% would return this portfolio to its $100K value, but inflation requires a 7.9% average return in order to keep the same buying power.
Seems to me that in retirement one needs segregate "withdrawal assets" (maybe up to 5 years worth) from "market assets". This way your withdrawals are not necessarily connected to the market's ups and downs. In 5 years, a new calculation will determine what the nest 5 years of "withdrawal assets" will amount to.
If your are managing these dynamics in retirement please share your strategy.