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Wow. Depends on what you're trying to accomplish. I don't play around in bonds seeking high return. Prefer to take risk elsewhere. d
For monies that would otherwise sit in cash I use AGZD and PAAA. I think AGZD is a terrific fund. Hedges interest rate risk while investing farther out on the curve. M* agrees with me (gold rated). A good hedge against rising long term rates - if that's your mindset. Also tends to gain on nasty market days as money flees to quality.
* I have a sizable CEF sleeve. Those CEFs tend to hold a lot of bonds across the credit spectrum. But I don't consider that pertinent to the question.
Timely thread! I am looking at possibly changing some bond oef positions around. I don't have a favorite. Clearly, certain bond funds are better in certain economic circumstances. At the moment, it seems that riskier funds are the way to go. Presently, I am in PIMIX and a vanilla 401K bond OEF, where I temporarily stashed a smallish allocation after an equity sale.
Of course, if not wanting to keep an eye on bond funds, or preferring not to occasionally change funds, then vanilla may be the best bet. Many of the above cited funds look rock steady.
I am looking to take a little more FI risk right now, probably selling some PIMIX (20%) and buying EGRIX next week. My thesis is that taking added risk is prudent at times. I do have plenty in TBUX at the present.
DODLX. NEAR. SJNK. TBUX ….. With my very conservative equity allocation,,,, and shrinking risk free yields from MM and my overweight CD ladder got to go somewhere. I look for a mix of duration and yield. And I look at 2022 in the rear view mirror.
"The investment strategy as stated in the fund's prospectus is as follows: The investment seeks to track the price and yield performance, before fees and expenses, of the Bloomberg Rate Hedged U.S. Aggregate Bond Index, and Zero Duration (the "index"). The index is designed to provide long exposure to the Bloomberg U.S. Aggregate Bond Index while seeking to manage interest rate risk through the use of short positions in U.S. Treasury securities".
Albeit, the bonds the fund is long on tend to be high grade corporates while it shorts treasuries (the fly in the ointment perhaps). Morningstar rates credit quality AA. Nothing lower than BBB in the portfolio, except in negligible amounts.
What does it mean for you or me? Means you won't have to worry much about it getting clocked badly if longer term rates spike higher as they did in 2022. It's never had a losing year in its 10+ years of existence.
Price's TRBUX has done slightly better over 5 & 10 years, but with 25+% of its holdings rated either BB or not rated at all..
I have a little bit of PFF in the taxable for dividends if they are ever needed. At some point it would be a pleasant surprise if it got back to the price I paid for it in November 2021.
In the IRA, BBBIX and FGUSX are the foundation. Any other bond funds are opportunistic according to my druthers at the moment.
At the moment that's CBLDX, MGOIX, JPIB, THOPX, HSDIX, NRDCX and minor positions in VNLA and GSST intended for the opportunistic purchase of equities or sectors.
At a certain point I lose interest in what I think of as the fancier bond funds in favor of something like GLIFX.
Thanks Larry. You are right. The table at M* shows only about 4% unrated for TBUX. I was looking at the bar graph further down and apparently misinterpreting it.
@Hank. Wow. My view on. M* shows different numbers. BTW,,, if one invests at Schwab,,,, TRBUX has a $49.95 short term redemption fee. And I had it in three accounts. My bad for not noticing.
@Hank. For what it’s worth Portfolio Visualizer shows 0 Non-Rated and the same for Non-Investment Grade. You still up north? My best buddy lives in E. Lansing and this is the first time he has ever complained to me about the weather.
TRBUX Non-inv gr (BB or below) M* 0.19%, PV 0% Not-rated M* 4.36%, PV 4.36%
TBUX Non-inv gr (BB or below) M* 0.18%, PV 0% Not-rated M* 4.20%, PV 4.20%
Not-rated (NR) just means that bonds were not rated by credit agencies, but firms use in-house ratings which are typically similar to the overall portfolio quality. Credit agencies charge for their ratings, so some small or local bond issues just don't bother to be rated.
BTW, ultra-ST bond funds now are primarily inv-grade. M* definition:
Ultrashort-bond portfolios invest primarily in investment-grade US fixed-income issues and have durations typically of less than 1.0 year. This category can include corporate or government ultrashort-bond portfolios, but it excludes international, convertible, multisector, and high-yield-bond portfolios. Because of their focus on bonds with very short durations, these portfolios offer minimal interest-rate sensitivity and therefore low risk and total return potential. Morningstar calculates monthly breakpoints using the effective duration of the Morningstar Core Bond Index in determining duration assignment. Ultrashort is defined as 25% of the 3.0-year average effective duration of the Morningstar Core Bond Index.
Apologies for the erroneous data on TRBUX and TBUX. I learned something about M* chart displays which will be helpful to me in the future. I'd been looking at the color coded bar charts for bond funds and, based on those, drawing incorrect inferences. I'll have to do more work to fully understand them.
@DrVenture - A Yugo is very basic. Not for comfort, speed, handling or making an impression on the crowd. But, given a choice of walking or riding in a Yugo one might choose the Yugo. You might also invest the money saved driving one for asset growth rather then driving a fancier vehicle.
@LarryB - Every season has its positives and negatives. Mid February brings lots of sun to northern Michigan. Snow banks begin to recede. Highways tend to be clear of ice. If you have a good indoor place to work out and socialize it's not bad. Yes, not a good time to swim in Lake Michigan which is near 30% ice cover and may well exceed 50% before winter ends.
As I started to say, I don't generally view bond funds for capital appreciation or growth of principal. (except for those in the CEF sleeve.) JD's thread caption appears investor specific (What do you use?) So when I think of a "go to" bond fund, to me it represents a place of safe-keeping and one which should earn a bit more than cash. That's where AGZD fits in.
I asked Bing's AI assistant to compare the credit quality of the bonds held in TBUX with those held in AGZD. This is the answer:
"AGZD and TBUX are both bond ETFs, but they differ significantly in investment strategy and credit quality. AGZD (WisdomTree Interest Rate Hedged U.S. Aggregate Bond Fund): This ETF holds investment-grade U.S. bonds and uses interest rate hedging to reduce exposure to rising rates. Its credit quality is high, with 27.69% of holdings rated AAA, 48.45% rated AA, 11.53% rated A, 10.73% rated BBB, and 0.80% rated other (likely below investment grade). The fund is designed to maintain high credit quality while hedging interest rate risk.
"TBUX (T. Rowe Price Ultra Short-Term Bond ETF): This ETF focuses on ultra-short-term investment-grade bonds with a weighted average maturity of 1.26 years and a duration of 0.61 years. It is designed for low volatility and liquidity, with a strong emphasis on high credit quality. While specific credit breakdowns are not fully detailed in the context, TBUX is known to hold primarily investment-grade bonds, with minimal exposure to high-yield or speculative-grade securities.
Conclusion: AGZD has higher overall credit quality due to its explicit emphasis on high-rated bonds (AAA and AA) and its structured approach to maintaining credit stability. TBUX also maintains high credit quality but is more focused on short-term duration and liquidity rather than credit quality optimization. Therefore, AGZD is the better choice if credit quality is a top priority. "
@hank Preaching to the choir. My comment was not to disparage Yugos, or pick a favorite between AGZD and TBUX. Just making light of the slim difference.
My personal feeling at the moment is that there is almost no risk of rising rates, so I prefer the slightly higher return of TBUX. In a rising rate environment, I suspect AGZD would be a better choice. TBUX "hedge" against rising LT rates is its duration. Tomato tomahto. For now, I'll take the 25% better return of TBUX.
I am about split between MMF and TBUX, presently. I am thinking about making that 25/75. But, I will consider AGDZ as a possibility too. Thanks.
I have owned a few cars that would qualify as basic transportation. No judgement from me.
Currently, my "favorite" bond funds are mostly multi-sector funds that are run by experienced managers: BINC, DHEAX, ESIIX and PYLD.
I am debt free and my pensions with COL riders and Social Security cover all my daily living expenses and annual RMDs. Hence, I don't have a need to set up any emergency MM or cash reserves.
Of course, each individual situation is different and an investor's portfolio composition should ideally reflect that fact.
CBLDX, RCTIX, ICMUX I recently had DHEIX too but wanted to add more UTG and something had to go. Yes, UTG is utilities and volatile but only increased div and never cut div in 20+ years and NAV over time constantly goes up. I just have to ignore the volatility and take the income.
Comments
BBBIX is used as my "near-cash" position.
dFor monies that would otherwise sit in cash I use AGZD and PAAA. I think AGZD is a terrific fund. Hedges interest rate risk while investing farther out on the curve. M* agrees with me (gold rated). A good hedge against rising long term rates - if that's your mindset. Also tends to gain on nasty market days as money flees to quality.
* I have a sizable CEF sleeve. Those CEFs tend to hold a lot of bonds across the credit spectrum. But I don't consider that pertinent to the question.
Of course, if not wanting to keep an eye on bond funds, or preferring not to occasionally change funds, then vanilla may be the best bet. Many of the above cited funds look rock steady.
I am looking to take a little more FI risk right now, probably selling some PIMIX (20%) and buying EGRIX next week. My thesis is that taking added risk is prudent at times. I do have plenty in TBUX at the present.
My bond funds are mixes of multisector and ultra-ST bond funds with some munis thrown in.
"The investment strategy as stated in the fund's prospectus is as follows: The investment seeks to track the price and yield performance, before fees and expenses, of the Bloomberg Rate Hedged U.S. Aggregate Bond Index, and Zero Duration (the "index"). The index is designed to provide long exposure to the Bloomberg U.S. Aggregate Bond Index while seeking to manage interest rate risk through the use of short positions in U.S. Treasury securities".
Albeit, the bonds the fund is long on tend to be high grade corporates while it shorts treasuries (the fly in the ointment perhaps). Morningstar rates credit quality AA. Nothing lower than BBB in the portfolio, except in negligible amounts.
What does it mean for you or me? Means you won't have to worry much about it getting clocked badly if longer term rates spike higher as they did in 2022. It's never had a losing year in its 10+ years of existence.
Price's TRBUX has done slightly better over 5 & 10 years, but with 25+% of its holdings rated either BB or not rated at all..
https://www.cnbc.com/quotes/TUHYX?qsearchterm=tuhyx
https://www.cnbc.com/quotes/PRCPX?qsearchterm=prcpx
Gentleman, start your wheezing little 55 horsepower 1.1L engines.
Pretty certain that the fellow who originally applied the "racing Yugos" metaphor to bond oefs, back in M* forums, posted in this very thread today.
@LarryB 420 should keep the race interesting.
In the IRA, BBBIX and FGUSX are the foundation. Any other bond funds are opportunistic according to my druthers at the moment.
At the moment that's CBLDX, MGOIX, JPIB, THOPX, HSDIX, NRDCX and minor positions in VNLA and GSST intended for the opportunistic purchase of equities or sectors.
At a certain point I lose interest in what I think of as the fancier bond funds in favor of something like GLIFX.
TRBUX
Non-inv gr (BB or below) M* 0.19%, PV 0%
Not-rated M* 4.36%, PV 4.36%
TBUX
Non-inv gr (BB or below) M* 0.18%, PV 0%
Not-rated M* 4.20%, PV 4.20%
Not-rated (NR) just means that bonds were not rated by credit agencies, but firms use in-house ratings which are typically similar to the overall portfolio quality. Credit agencies charge for their ratings, so some small or local bond issues just don't bother to be rated.
BTW, ultra-ST bond funds now are primarily inv-grade. M* definition:
Ultrashort-bond portfolios invest primarily in investment-grade US fixed-income issues and have durations typically of less than 1.0 year. This category can include corporate or government ultrashort-bond portfolios, but it excludes international, convertible, multisector, and high-yield-bond portfolios. Because of their focus on bonds with very short durations, these portfolios offer minimal interest-rate sensitivity and therefore low risk and total return potential. Morningstar calculates monthly breakpoints using the effective duration of the Morningstar Core Bond Index in determining duration assignment.
Ultrashort is defined as 25% of the 3.0-year average effective duration of the Morningstar Core Bond Index.
Muni: NUV, VCRM, NAD, PMIO
Muni: Bsnix/Bsnsx (Baird strategic muni income) and Cgmu (Capital group muni income)
@DrVenture - A Yugo is very basic. Not for comfort, speed, handling or making an impression on the crowd. But, given a choice of walking or riding in a Yugo one might choose the Yugo. You might also invest the money saved driving one for asset growth rather then driving a fancier vehicle.
@LarryB - Every season has its positives and negatives. Mid February brings lots of sun to northern Michigan. Snow banks begin to recede. Highways tend to be clear of ice. If you have a good indoor place to work out and socialize it's not bad. Yes, not a good time to swim in Lake Michigan which is near 30% ice cover and may well exceed 50% before winter ends.
As I started to say, I don't generally view bond funds for capital appreciation or growth of principal. (except for those in the CEF sleeve.) JD's thread caption appears investor specific (What do you use?) So when I think of a "go to" bond fund, to me it represents a place of safe-keeping and one which should earn a bit more than cash. That's where AGZD fits in.
I asked Bing's AI assistant to compare the credit quality of the bonds held in TBUX with those held in AGZD. This is the answer:
"AGZD and TBUX are both bond ETFs, but they differ significantly in investment strategy and credit quality. AGZD (WisdomTree Interest Rate Hedged U.S. Aggregate Bond Fund): This ETF holds investment-grade U.S. bonds and uses interest rate hedging to reduce exposure to rising rates. Its credit quality is high, with 27.69% of holdings rated AAA, 48.45% rated AA, 11.53% rated A, 10.73% rated BBB, and 0.80% rated other (likely below investment grade). The fund is designed to maintain high credit quality while hedging interest rate risk.
"TBUX (T. Rowe Price Ultra Short-Term Bond ETF): This ETF focuses on ultra-short-term investment-grade bonds with a weighted average maturity of 1.26 years and a duration of 0.61 years. It is designed for low volatility and liquidity, with a strong emphasis on high credit quality. While specific credit breakdowns are not fully detailed in the context, TBUX is known to hold primarily investment-grade bonds, with minimal exposure to high-yield or speculative-grade securities.
Conclusion: AGZD has higher overall credit quality due to its explicit emphasis on high-rated bonds (AAA and AA) and its structured approach to maintaining credit stability. TBUX also maintains high credit quality but is more focused on short-term duration and liquidity rather than credit quality optimization. Therefore, AGZD is the better choice if credit quality is a top priority. "
My personal feeling at the moment is that there is almost no risk of rising rates, so I prefer the slightly higher return of TBUX. In a rising rate environment, I suspect AGZD would be a better choice. TBUX "hedge" against rising LT rates is its duration. Tomato tomahto. For now, I'll take the 25% better return of TBUX.
I am about split between MMF and TBUX, presently. I am thinking about making that 25/75. But, I will consider AGDZ as a possibility too. Thanks.
I have owned a few cars that would qualify as basic transportation. No judgement from me.
I am debt free and my pensions with COL riders and Social Security cover all my daily living expenses and annual RMDs. Hence, I don't have a need to set up any emergency MM or cash reserves.
Of course, each individual situation is different and an investor's portfolio composition should ideally reflect that fact.