Matthews' metastasizing income-related funds; Vanguard's new Total Int Bond fund

InformalEconomist

I am considering establishing a toehold in MAPIX before its close on June 14. I already own MAINX and MACSX, and don’t need 3 income-related offerings from Matthews. Anything in particular I should consider in choosing 2? (Or 1?)

Also, any thoughts on Vanguard’s new Total International Bond Index fund VTIBX/VTIFX (the latter institutional)?

Here’s some language from the Summary Prospectus:
"Investment strategy
The fund employs an indexing investment approach designed to track the performance of the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged), a broad-based measure of the global, investment-grade, fixed-rate debt markets. The index includes government, government agency, corporate, and securitized non-U.S. investment-grade fixed income investments, all issued in currencies other than the U.S. dollar and with maturities of more than one year. The index is capped, which means that its exposure to any particular bond issuer is limited to a maximum of 20%. Additionally, issuers that individually constitute 5% or more of the index may not constitute, in the aggregate, more than 48% of the index. If the index, as constituted based on market weights would exceed the 20% or 48% limit, the excess is reallocated to bonds of other issuers represented in the index. To minimize the currency risk associated with investment in bonds denominated in currencies other than the U.S. dollar, the fund will attempt to hedge its currency exposures.
The fund invests by sampling the Index, meaning that it holds a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. All of the fund’s investments will be selected through the sampling process, and at least 80% of the fund’s assets will be invested in bonds included in the index."
And a brief squib from the “Product Summary”:

“The fund seeks to track the performance of an index that includes international government, agency, and corporate securities, mostly from developed countries, but also some emerging markets countries.”

Regional allocation —unavailable
Currently 100% in short-term reserves

Vanguard has added this fund to its all-in-one funds, Target Retirement (12) and Life Strategy (4).

Thanks in advance for any comments on Matthews or VTIBX.

David_Snowball

Heigh ho!

MAINX strikes me as an entirely different creature that either of its equity-oriented brethren. So I guess if I were keeping two, it would be MAINX and one of the others.

Here's the picture of the three since MAINX's launch:



Not a huge argument there for one or the other. MAPIX has a higher dividend yield (4.0 vs 2.4%), a longer-tenure manager and more exposure to Japan (20 vs 11%).

I own MAINX and MACSX (dating from Mr. Foster's tenure), but suppose I'd be pretty comfortable with MAINX and MAPIX.

For what it's worth,

David

AMatMFO

Reply to @David_Snowball: Please point out the fund represented by each line in the above graph. Thanks.

David_Snowball

Reply to @AMatMFO: MAINX is the blue line. MAPIX is green. MACSX is orange.

Sorry - M*'s embedded graphic cut off the legend.

David

andrei

This figure suggests that MAINX is 50% of MACSX for the same money, falling and rising proportionally at the same time. Then why keep MAINX if one can have MACNX + 50% cash?

MikeM

fwiw: I hold MACSX and have a smaller amount in MAINX. If I had to pick 3 funds I wouldn't want to be without, MACSX would be one of them. FGBRX is my international bond fund of choice. I don't think I really need MAINX, but I'm betting the Asia bond market might do better than U.S. in the future so I wanted a little more weight there. The interview David had with the MAINX manager also swayed me.

AndyJ

IE, I think it depends on what else in Asia/EM you own. If you've got another foreign or EM bond fund you're happy with, maybe you don't need MAINX. If you have an EM stock fund you're happy with, you might be more diversified with MAPIX than MACSX. If you have a developed ex-U.S. stock fund with investments in Asia & you're happy with it, you might be better off with MACSX than MAPIX. So I'd suggest looking at the overall portfolio to help decide.

Fwiw, over the longest time frame with a direct comparison (since MAPIX inception in late '06), MAPIX has returned more than MACSX ($10k = $20.3k MAPIX, $17.8k MACSX) with fairly similar drawdown. Up/down capture for 5y is MAPIX 80/49 vs. MACSX 73/50, so MAPIX has a slight edge on risk-adjusted return.

JohnChisum

I have both MAPIX and MAINX along with MAPTX as part if my holdings. I consider MAINX an integral part of my bond portfolio not only for what it holds but also knowing that Matthews runs a good shop and their funds are top notch when it comes to Asia. The management is excellent.

InformalEconomist

Thanks to all. @AndyJ, you are completely right. I'm in the process of trimming and reconfiguring my portfolio; thanks for the timely prompt (though I think the answer is "none").

Sven

Reply to @AndyJ: My thinking is similar. I conidered MAINX, but the high expense ratio for what it offers does not overcome Templeton Global Total Return, TRTRX, and the experience of the Templeton manager. I might consider Vanguard's fund when more details are available.

Lately new Matthews funds are carrying higher expense ratio than the older ones such as MACSX and MAPIX.