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Adding to bond positions

If you were underinvested in your bond positions, would you more add more to IOFAX or SEMPX, which are my two principle bond positions?


  • Good question, that. Shortly, I'm going to bite the bullet and switch gears from growth-mode to income mode. I will be deliberately moving to own less in equities and to a position of being overweight in bonds. Change is hard even when it's clearly appropriate. I just today checked my biggest holding. Over the past 5 years, I'm up in that fund by +50% in hard-dollar terms. PRWCX. "Take the profit and run, Crash." I still think I'll wait for the end-of-year shakeout and do this thing in January.
  • @Crash: Have you given any thought to DCA into bonds & DCA out of that position,PRWCX ?
  • edited September 2018
    THAT, I believe, would be a wise strategy. No need to wait for year-end, and the averaging works automatically, without even thinking about it. That seems the best way to go. I just had my brother the banker here talking about this stuff. But he did not want to give much specific advice. He did advise 30/stocks and 70/ bonds, at age 65 (next birthday.) I need to really get some more juice out of my bonds, looking forward to a new address and higher---not lower--- expenses. The move out West will depend on wifey getting work out there at roughly the same salary. Should not be a problem. She has excellent evaluations and we do have a personal connection out there. ...I don't think I want to exit that fund PRWCX completely, though. If I transfer my entire MAPOX into TRP, then I'll be left with only a single fund which is NOT under the TRP umbrella: PTIAX multi-asset bonds, and PTIAX is the only one NOT in Trad. IRA. Should the DCA-ing be done weekly or monthly, do you think? @Derf.
  • @Bobpa: Sempx cumulative YTD looks to be better than Iofax, 3.64 vs (-.34). ER is also less.
  • edited September 2018
    Derf said:

    @Bobpa: Sempx cumulative YTD looks to be better than Iofax, 3.64 vs (-.34). ER is also less.

    Must have been a loooong day at the office as that is not even remotely close. More specifically IOFAX total return through today ( August 6) is 4.76%.

    Edit. Thanks Mona.
  • I am seeing YTD numbers for IOFAX at 4.76% vs 3.66% for SEMPX.
  • @ Crash: Just my 2 cents FWIW. Sept. historically is not one of the better months for Equity. Monthly would work for me more than weekly. Take total amount you want to move to bonds & do a 40% Sept.,30%Oct., 20% Nov., 10% Dec. or something of your own thinking.
    I'll tell you I cashed in two 401-k's toward the 3/rd quarter of 2017. I was a little blue as market continued to climb, then retreated & then hit a new high lately. Currently sitting in MM at Vanguard awaiting a correction.
    As I've said before, different strokes for different folks.


  • What would be the case for investing in SEMPX when you have IOFAX?
  • @ Junkster: I stand corrected. Cumulative 1 yr. IOFAX (-.38) That included sales charge.
  • edited September 2018
    Derf said:

    @ Junkster: I stand corrected. Cumulative 1 yr. IOFAX (-.38) That included sales charge.

    IOFAX ( 1 yr 7.10 YTD 4.76) is NTF ( no load/sales charge) at a few firms ala Schwab, JPMorgan, etc. IOFIX the institutional shares ( 1 yr 7.44 YTD 4.92) are available at almost all firms for a small transaction fee. $17 at TD Ameritrade for former Scottrade customers such as myself.
  • edited September 2018
    wxman123 said:

    What would be the case for investing in SEMPX when you have IOFAX?

    Here's the latest fact sheet; see holdings info on p. 2. SEMPX is also a mortgage fund, but as you can see, it's a lot more diversified than IOFIX ... which is almost entirely legacy non-agency RMBS.
  • If serious about bonds, then JohnN has the right idea. Forget mutual funds, and buy the bonds directly. You then have total control over what to buy, when to buy, how long to hold, and when or if to sell. Barring a complete default, at the very minimum you will get your original cost back plus any interest paid over the life of the bonds.

    Just my personal opinion.
  • edited September 2018
    Hi sir... Old Joe... Individuals bonds are my more risks than mf or etf... But if buy large companies like Macy's att Verizon Ford chance Bankruptcy maybe much lower... Also set up 'att bankrupt' to your gmail acct you be first to know regarding companies may go bankruptcy and decide to sell if needed... I bought hca Healthcare bonds9 months ago and got bunch of junk mail regarding hca gobbling up bankruptcy hospitals in large junks... You can also Google for the bond cusip and see how many etf or mf hold that bond, the more number mf holding that bond the safer and good performance that bond is and everyone want to owe that bond...I.e. Bunch of etf and mf holding Ford bonds because Ford is good and always average around 130 cents
  • "more risks than mf"

    Maybe, maybe not. Depends on what you buy. If you go for max income "junk", yes, the risk may be higher because the high interest income presumably reflects that risk.

    If you buy lower risk, lower income bonds in good solid companies, the chances of default are minimal.

    In any case you have no control over what happens with a bond fund- by the time you try to react to a situation at a fund, it's all over. Again, with the actual bonds themselves, you have much more control. Of course it's a fair amount of work to watch over all of that stuff.
  • edited September 2018
    Old_Skeet's Twelve Month Income Area Game Plan

    When the US 10 Yr gets to a yield of 3.0% I may do a little buying in my income sleeve. Currently, my fixed income sleeve is at about 90% of its targeted allocation while my hybrid income sleeve is at 100% of its targeted allocation. This puts my income area, within my portfolio, at about 97% of its targeted allocation as the hybrid income sleeve is twice the size of the fixed income sleeve. My goal is to have my income area towards full allocation by yearend should interest rates be at 3% or greater. I am pretty much still with my cash build mode as my money market fund (year-to-date) is currently out performing a good number of my fixed income funds. As interest rates continue to rise so does its yield. In addition, I'm thinking that the FOMC will raise interest rates (in steps) a full percent over the next twelve months, or so, putting the US 10 Yr at a yield of about four percent. And, with the Fed raising rates most existing bonds will decline in value to compete with the higher yield of newly issued bonds. Thus, I am also striving at keeping my average bond duration back of three years.

    The rolling 12 month total return on my fixed income sleeve is about 1.9% while on my hybrid income sleeve it is about 4.5%. And, for the income area (as a whole) its average total return is better than 3.6% which is also about it's average yield. With this, I have been maintaining my income area's valuation while also enjoying the yield benefit as there has been no loss to principal. In looking back over a five year period I've grown principal by a couple percent per year plus the enjoyment of the income.
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