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I own the following bond funds: RPHYX (cash alternative) PRAIX (tips) DBLTX PTTRX PIMIX RNSIX I also own these funds with signifcant bond holdings: PAUIX BERIX VWINX I'm thinking there is probably a lot of redundancy here and I could consolidate into fewer funds or should trade the balanced funds for stocks funds. Would appreciate any advice.
Well, honestly, a great deal depends on what else you're holding. Surely, you have some equity funds? How are you situated, domestic, global? Give us the full Monty.
As a side note: BERIX is a solid very conservative hybrid. I own a similar domestic hybrid, MAPOX, although M* rates it "moderate" risk, not conservative. But depending on the total size of your portfolio and whatever else you own, we can be of more help if you share that much more. As for me, with $111K total, I'm happy with just 9 funds. Be careful that you're not trying to manage your own personal "Fund of funds!" Too complicated, eh?
(Or did you just give us your total Big Picture, above?) ... In that case: Use the KISS Principle as much as possible. Make sure you've got these covered:
a) core, safe, plain vanilla, domestic bond fund, like DODIX. But one of your others might fit that description, already..
b) Foreign and/or Emerging bonds. FNMIX and PREMX are great choices. But does one of your other funds fit into that frame?
c) OK, I see you have TIPS. Inflation-protected. But what rate of return are those instruments giving you??? US Treasury items can't get any lower in terms of the interest rate promised to investors. TIPS seems to me these days like a "return-free risk." Maybe some others will chime-in, further down.
...and resist growing the number of funds you'll have to babysit. If the sheer size of your holdings warrants it, then OK, you might need more funds in your collection than someone like me. We normally use proportions and percentages in here, but in this case, dare to tell us your total dollar amount and it will serve a purpose in this case.
Just came across this while I was researching PIMCO. Not looking to influence your decision. but hoping this opinion helps you in making your decision.
Reply to @MaxBialystock: I also own stock funds (about 40/40/20 stocks/bonds/cash). My objective with the bond funds has not been income but capital appreciation with less volatility. My concern is trying to understand what type of bonds I actually own and how much overlap exists, particulary since I have a lot of balanced/flexible portfolio funds like PRPFX, VWINX, FPACX, PRWCX, etc. Actually PRAIX (TIPS) is one that I was thinking of eliminating but it's 12.37 ytd performance is not a bad return.
If looking to consolidate ... Spectrum Income (RPSIX) is one good option. The managers are good at reading markets and adjusting the weightings - but could potentially experience small losses should rates suddenly rise. They have around 15% in Equity and Income (stocks) but would cut back if they felt the equity market overbought. Covers the spectrum by investing in other T Rowe Price funds. Includes: International , EM, high yield, corporates, Tips, GNMA - the works. Download an annual report for the full breakdown of investments. As Max said, DODIX is a good plain vanilla fund. Their funds carry some of the lowest ERs around (DODIX aprox .53%). Fund holds very little high yield - under 5% currently. They've kept the maturities short for several years now - expecting rates to rise. As for PRWCX, I wouldn't worry much about overlap. It's a very opportunistic fund that will go where there's money to be made and good at cutting and running before the roof caves in. So, would expect their holding of rate-sensitive bonds to be minimal at present. In the past they've held both high yield and convertibles - but likely wouldn't comprise more than a third of the fund at most - probably less.
Reply to @Riley: If you have a T. Rowe Price account you can access M* Portfolio Manager tool which might give you further insight as to what you hold collectively. This premium feature is free to TRP account holders.
Thanks, Riley, for the 40/40/20 clarification. I'm actually doing the same thing these days with my own bond funds. I'm not taking divs. yet. I'm growing them, reinvesting them. I won't be much further help, I'm afraid. I'm not familiar with most of what you're currently holding. If you own TRP stuff, bee is right: take advantage of the Morningstar X-Ray tool to dissect and drill-down to see just what you're holding presently.
I use some very specific filters in my own case. Some might say peculiar, not just "specific." And I find that there's truly no way to BE invested and find any funds that meet all of my requirements. (In a word, it is an ETHICAL filter. But you can't play the capitalist game without some compromises.) .....I don't see much within TRP that impresses me too much. It's rather late to get into the small-caps: PRSVX and OTCFX, cuz they've climed pretty steeply already. Wait for the next recession. Other than those two, (again) I like PREMX. Here's a thoughtful sampling of funds that might be useful to look at and consider:
DODIX plain vanilla, conservative. Solid. Been around a long time. MWHYX Metro West High Yield PREMX TRP EM bonds or FNMIX Fidelity Foreign/Emerging
.....Yes, your TIPS will be doing very well as long as the fund manager keeps churning things, while everybody and his brother plows INTO TIPS for their supposed "safety" from the EU storm. But in fundamental terms, US sovereign bonds are "reward-free risk." You're getting good performance right now because Mr. Market is shit-scared, running to US bonds and taking a fetal position, hiding from virtually everything else.... But remember Uncle Ben Graham and Uncle Warren Buffett: be greedy when others are fearful. The world is not due to vaporize for another 5 billion years or so. If your horizon is long-term, make your decisions without regard for the recent panic, fear, distress and bloodshed. "Break a leg."
I don't see all that much redundancy in the funds you own.
At first glance DBLTX-RNSIX looks like some redundancy, but really, not so much. The kinds of bonds in BERIX, you've got plenty of exposure to in the Pimco funds, when the Pimco gang sees value there. If you've got U.S. mid-caps covered relatively well in your stock funds, you could consider getting rid of it, imho.
But you may not be well covered in foreign bonds (some in Pttrx and Pimix, somewhat well covered in Pauix), so it might be worth considering adding a fund that has solid foreign bond exposure, like a DBLEX or FNMIX or another multi-sector that leans in that direction. (This last comment doesn't apply if you're of the mind to put the foreign asset and currency return/risk in your stock funds ....)
If you own TRP stuff, bee is right: take advantage of the Morningstar X-Ray tool to dissect and drill-down to see just what you're holding presently
Just to clarify, one does not need to own T. Rowe Price mutual funds to access M* Portfolio Manager tools on their site. All one needs to do is go to the T. Rowe Price site and "Register as a guest".
At first glance, you have no dedicated foreign or emerging market bond fund. And there would appear to be a lot of duplication of not-dissimilar domestic bond funds. I would for sure consider looking at Fidelity New Market Income Fund or something similar to it. And, if you believe that the U.S. dollar will eventually move down in value as the Fed's strategy to inflate our country's way out of its debt problems result in a much lower dollar value, it would be prudent to own non-dollar, EM bonds. While PIMCO and DoubleLine are run by some big names, don't overlook the great talent (and smaller egos) elsewhere, too.
Thank you all for your comments. I forgot to mention that I do own MAINX. Think I could live without BERIX and DBLTX if something interesting turns up. I've cut PRPFX by 50% and thinking about letting that one go too.
Comments
As a side note: BERIX is a solid very conservative hybrid. I own a similar domestic hybrid, MAPOX, although M* rates it "moderate" risk, not conservative. But depending on the total size of your portfolio and whatever else you own, we can be of more help if you share that much more. As for me, with $111K total, I'm happy with just 9 funds. Be careful that you're not trying to manage your own personal "Fund of funds!" Too complicated, eh?
a) core, safe, plain vanilla, domestic bond fund, like DODIX. But one of your others might fit that description, already..
b) Foreign and/or Emerging bonds. FNMIX and PREMX are great choices. But does one of your other funds fit into that frame?
c) OK, I see you have TIPS. Inflation-protected. But what rate of return are those instruments giving you??? US Treasury items can't get any lower in terms of the interest rate promised to investors. TIPS seems to me these days like a "return-free risk." Maybe some others will chime-in, further down.
...and resist growing the number of funds you'll have to babysit. If the sheer size of your holdings warrants it, then OK, you might need more funds in your collection than someone like me. We normally use proportions and percentages in here, but in this case, dare to tell us your total dollar amount and it will serve a purpose in this case.
Playing Defense in Search of Income
I also own stock funds (about 40/40/20 stocks/bonds/cash). My objective with the bond funds has not been income but capital appreciation with less volatility. My concern is trying to understand what type of bonds I actually own and how much overlap exists, particulary since I have a lot of balanced/flexible portfolio funds like PRPFX, VWINX, FPACX, PRWCX, etc.
Actually PRAIX (TIPS) is one that I was thinking of eliminating but it's 12.37 ytd performance is not a bad return.
If you have a T. Rowe Price account you can access M* Portfolio Manager tool which might give you further insight as to what you hold collectively. This premium feature is free to TRP account holders.
Here's some info about these tools:
morningstar-x-ray-portfolio-management-tools-for-free
I use some very specific filters in my own case. Some might say peculiar, not just "specific." And I find that there's truly no way to BE invested and find any funds that meet all of my requirements. (In a word, it is an ETHICAL filter. But you can't play the capitalist game without some compromises.) .....I don't see much within TRP that impresses me too much. It's rather late to get into the small-caps: PRSVX and OTCFX, cuz they've climed pretty steeply already. Wait for the next recession. Other than those two, (again) I like PREMX. Here's a thoughtful sampling of funds that might be useful to look at and consider:
DODIX plain vanilla, conservative. Solid. Been around a long time.
MWHYX Metro West High Yield
PREMX TRP EM bonds or FNMIX Fidelity Foreign/Emerging
.....Yes, your TIPS will be doing very well as long as the fund manager keeps churning things, while everybody and his brother plows INTO TIPS for their supposed "safety" from the EU storm. But in fundamental terms, US sovereign bonds are "reward-free risk." You're getting good performance right now because Mr. Market is shit-scared, running to US bonds and taking a fetal position, hiding from virtually everything else.... But remember Uncle Ben Graham and Uncle Warren Buffett: be greedy when others are fearful. The world is not due to vaporize for another 5 billion years or so. If your horizon is long-term, make your decisions without regard for the recent panic, fear, distress and bloodshed. "Break a leg."
At first glance DBLTX-RNSIX looks like some redundancy, but really, not so much. The kinds of bonds in BERIX, you've got plenty of exposure to in the Pimco funds, when the Pimco gang sees value there. If you've got U.S. mid-caps covered relatively well in your stock funds, you could consider getting rid of it, imho.
But you may not be well covered in foreign bonds (some in Pttrx and Pimix, somewhat well covered in Pauix), so it might be worth considering adding a fund that has solid foreign bond exposure, like a DBLEX or FNMIX or another multi-sector that leans in that direction. (This last comment doesn't apply if you're of the mind to put the foreign asset and currency return/risk in your stock funds ....)
http://individual.troweprice.com/public/Retail/Planning-&-Research/Tools-&-Resources/Investment-Planning/Portfolio-X-Ray
Thanks Mona,
Another reason to like TRP as a fund family...You can always judge a good "fund family" by the way they treat their guests.