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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Midyear Investing Outlook: Where to Invest Now
    First, getting out isn't momentum.
    Second, I have heard so many times, you can't time the market. When I was an accumulator, I didn't care. When I got older, and had a lot more, I learned how to do it. Since 2018, retirement, I was out to MM with a max loss of less than 1%, while the SP500 lost 3 times 20% minimum.
    Third, I got back on time, not the bottom, but at much lower prices.
    If you want to swim, you can't learn it from a book, you actually, have to do it live.

    First, you previously described yourself as a "momo" trader.
    Second, frequent trading significantly impairs returns for many investors.
    There have been numerous studies which confirm this finding.
    The Barber/Odean study may be the best-known.
    Third, get over yourself.
    Most people don't care about your "special" trading system or that
    you supposedly averted losses and got back in at much lower prices.
  • Midyear Investing Outlook: Where to Invest Now
    First, getting out isn't momentum.
    Second, I have heard so many times, you can't time the market. When I was an accumulator, I didn't care. When I got older, and had a lot more, I learned how to do it. Since 2018, retirement, I was out to MM with a max loss of less than 1%, while the SP500 lost 3 times 20% minimum.
    Third, I got back on time, not the bottom, but at much lower prices.
    If you want to swim, you can't learn it from a book, you actually, have to do it live.
  • Vanguard Customer Service
    @sven, just call TIAA. It has 2 business sides, retirement plans with restrictions (for colleges/universities & nonprofits) and general accounts (for everybody) for mutual funds, brokerage (via Pershing), 529s, taxable annuities, banking, and used to be life insurance but it stopped those. As my involvement with TIAA is through retirement plan (403b), I don't have first hand info on the latter aspects. Remember though that access to TIAA Traditional (SV-like) and TIAA Real Estate Account VA (your indicated interest) is only for special IRAs that also meet TIAA Eligibility requirements (link below that was also posted earlier) - some direct or indirect/family connection with TIAA.
    TIAA Eligibility https://www.tiaa.org/public/pdf/eligibility_flyer_external.pdf
    TIAA Products https://www.tiaa.org/public/invest/financial-products
  • Matthews Asia ETFs in registration
    Not sure. She's nowhere near retirement age, so I'm guessing she will pop up somewhere. I saw her just a month or so ago on Bloomberg, she is a pretty frequent contributor.
  • Vanguard Customer Service
    Anyone can open a conventional taxable brokerage account at TIAA.
    https://shared.tiaa.org/private/mytcbrokerageaccountopening/aobrokerageapp/secure/required
    It gives you access to what you'd find at most brokerages - stocks, ETFs, mutual funds. Like those other brokerages, it does not give you access to mutual funds sold through annuities.
    Most brokerages offer retail IRA accounts that, aside from being wrapped up in an IRA, are virtually identical to their retail taxable accounts. TIAA does not. It used to but stopped offering such an IRA account a few years ago.
    What TIAA does do is sell retirement annuities. To colleges, that's a 403(b) annuity. Like most variable annuities, TIAA's have a limited set of funds that are sold only through annuities. Notably the CREF funds, like CREF stock. And like some variable annuities, the TIAA annuities offer a fixed annuity option. Here, that's TIAA Traditional Annuity.
    For individual investors, TIAA offers two variable annuities. One is your typical VA, called TIAA Intelligent Variable Annuity. It offers "funds" (typically VA clones) shown here. The other VA is effectively the equivalent of the 403(b) annuity (plus brokerage window). It's that one that gives you get access to TIAA Traditional, CREF, and TIAA Real Estate.
    That annuity is only offered to "eligible" investors, and only as an Individual Retirement Annuity. Unlike typical VAs, you can't buy it for a taxable account.
    https://www.tiaa.org/public/retire/financial-products/annuities/annuity-ira-benefits
    As Yogi mentioned, the TIAA Traditional Annuity (fixed annuity investment option) that you can get though this limited access IRA annuity comes with a lower rate than paid to 403(b) participants. It is paying 2.50%, and has a guaranteed floor of 1.0%. I believe the IRA annuity contract restricts Traditional withdrawals to one per quarter.
    An IRA investor is at the bottom of the totem pole when it comes to the CREF funds. Several years ago, TIAA split these into three share classes, with large institutions getting cheaper shares and small institutions getting the most expensive shares. As an IRA investor, you're thrown in with the small institutions. It could be worse; TIAA could have created a fourth share class for IRA investors.
    IMHO the only significant benefit to this IRA annuity is access to TIAA Real Estate Account (TREA).
    You can find the VA options (including those for this IRA annuity) here. The IRA doesn't give you access to the non-TIAA VA subaccounts listed (except for Nuveen, which is owned by TIAA).
    https://www.tiaa.org/public/investment-performance
    Since it is structured as an annuity, this IRA can be difficult to deal with. You can't do transfers in kind (e.g. for RMDs, or IRA-to-IRA). When transferring money out of this annuity, you have to initiate the transfer from the TIAA side; typically one initiates transfers from the receiving side. These are attributes normally associated with employer-sponsored plans (401(k)s, 403(b)s), not with IRAs.
    The website is atrocious. I'm won't go into details. Suffice to say that people who complain about Vanguard's website likely haven't yet had the "pleasure" of dealing with TIAA's. And you won't know what funds you can buy through the IRA brokerage window until you actually open an account.
  • Midyear Investing Outlook: Where to Invest Now
    Appreciate the post ... Where to Invest Now? That is the question. If you're not in retirement and you have some cash on the sidelines, where do you invest? You definitely want to avoid any companies that are not generating profits. It's impossible to call a bottom. Yes. Ok, so will the recession (we are in one) last 18-24 months? If so, should you wait for another 12 months before deploying cash? DCA into index funds? Which ones? S&P 500 or Small Cap or both?
    Kiplinger article "The good news is that stocks tend to do well in the first year of Fed rate hikes. Looking back some 65 years, Deutsche Bank found that 12 months following the first hike, the stock market was up 91% of the time, by an average of 7%." <-- that's some positive data.
    I'm keeping an eye on the labor market. It's a strong point at the moment but we're seeing a lot of hiring freezes and offer letters being rescinded. It appears the Tech companies are gearing up for a slowdown. Interesting times.
  • JULY commentary. Hats off to all for your presentations; of particular note for me.....Lynn's writes
    I enjoyed all of the presentations in the July commentary. Lynn's commentaries regarding retirement planning will allow me to have more "ammunition" to "prod" a few folks who still don't realize how fast the years move along; and suddenly find themselves a lot closer to retirement than they had remembered. The psychological aspect being as important as the investment aspect.
    Remain curious,
    Catch
  • Stable Value (SV) Rates
    SVs are available only in workplace retirement a/c and their rates have gone up significantly. SVs guarantee principal and accumulated interest.
    Federal TSP G Fund is at 3%, https://www.tspfolio.com/tspgfundinterestrate
    TIAA Traditional restricted RA is at 5.25%, flexible SRA at 4.75%, https://ybbpersonalfinance.proboards.com/thread/142/tiaa-traditional-rates-monthly?page=2&scrollTo=690
    Taxable a/c alternatives include m-mkt funds, m-mkt accounts (by banks), T-Bills, short-term CDs.
  • International: Thnking about switching
    @Sven,
    Good move rotating to VGWAX.
    I like VGWAX but prefer separate funds for stocks and bonds.
    I also checked VWICX shortly after inception but decided against investing in this fund.
    Last time I checked VWICX was doing ok YTD.
    So, don't listen to me! :-)
    Edit: Although James Anderson was a great manager and thought leader,
    I wasn't too concerned about his retirement.
    Baillie Gifford has a deep bench and Vanguard takes a thoughtful approach to succession planning.
  • International: Thnking about switching
    I too have invested in VWILX for awhile when growth stocks were in favor. When long time Baillie Gifford manager, James Anderson announced his retirement, I rotated gradually to value-oriented VG Global Wellington, VGWAX, as part of risk reduction. It worked out well as value stocks started to lead after a decade long trailing the growth stocks. Wellington also runs the VG International Core fund, VWICX. YTD both VGWAX and VWICX are ahead of VWILX.
    In addition, Chinese government interfered with their tech stocks including Alibaba and Tencent that contributed to sizable loss in VWILX.
  • 10-Year CDs @ 4%
    Everyone will put their on spin and expectations on this bear market, strong probability of becoming a recession. For me, I am 74, and 9 years into retirement. My focus is to preserve my accumulated assets, and to do my best to make a positive return in this tough market. I exited the market several months, with a slight YTD loss--less than 1% and have been in money market funds. I am now adding shorter term CDs to my portfolio, to ensure I will finish with a positive total return by year end. My focus is on 6 to 9 month CDs, which have been going up in interest return in the past month. I am expecting shorter term CD interest rates to rise significantly by the end of the year--if I am correct, I will look at some laddering for 2023, but if I am wrong and this bear market/possible recession is shorter than I have predicted, then hopefully I can catch some of the rebound and maybe more stability in investing. My current, imperfect opinion, is that 2022 will not improve for the remainder of the year, and 2023 will not start off well--I may very well be wrong, but I think the Feds will continue raising interest rates to try to beat down inflation, oil supply will struggle for the rest of the year, and we will start seeing unemployment creep up. All in all, I would prefer the safety of CDs until I see more positive signs that this bear market is over.
  • Wealthtrack - Weekly Investment Show
    How do you manage through a cycle of rising interest rates and higher inflation? There aren’t too many money managers who have that experience …
    The bond bull market began in 1981.
    That’s about 41 years ago.
    Let’s assume the manager had a minimum of 10 years experience as an investment manager / advisor preceding the bond bull market.
    If age 15 when he / she began their career they’d be 66 today (in or near retirement).
    If 25 when he / she began investing they’d be 76 today.
    If 35 when he / she began investing they would be 86 today.
  • Portfolio Withdrawal Strategies Using Cash, VFSTX and VWINX
    Before pulling the pin,retiring, one should have more than a 3 legged stool or bucket in place. Pension, health care, spending pre & post retirement estimate. Can you get by with spending less? Age at which you retire, meaning when will SS & Medicare kick in ? What are you going to do to fill all that free time. To much sitting will probably become a problem . I'm speaking from experience here.
    Time to hit the gym, Derf
  • Portfolio Withdrawal Strategies Using Cash, VFSTX and VWINX
    My only concerns with "bucket" suggestions is that I think they underestimate how long the market can be down. While I do not think American Association of Individual Investors (AAII) is helpful most of the time, they did provide simple guidelines for withdrawals. When the SP500 is within 5% of its all time high, take money out of stocks. When it is not use your cash. This avoids selling in a down market
    They think 4 to 5 years cash is enough, but if you go back to 1929 you can see years where the market took 7 to 8 years to recover.
    I would keep at least 6 or 8 years of minimal expenses in cash or short term bonds
    The worst thing that can happen in retirement is to go into it in the middle of a bear market
  • Portfolio Withdrawal Strategies Using Cash, VFSTX and VWINX
    We all are pretty familiar with the 4% rule which provides a mechanism to adjust one's SWR or "safe withdrawal rate" based on one portfolio value. In a year like this, any percentage withdrawal feels anything but "safe".
    For example, if one started the year with a portfolio value of$1M and took a 4% withdrawal for the up coming year, one would have pulled ($1,000,000* .04) or $40,000. If after that withdrawal one's portfolio fell 20%. That $1M portfolio minus $40,000 (withdrawal) minus a 20% market correction, is now $768,000.
    This math frightens retirees. It's human nature to see this 24.2% portfolio drop as a permanent loss. This can trigger some of us to "sell low" and other poor timing strategies.
    For me, years before pulling from my retirement portfolio, I tried to determine what my yearly withdrawal needs were going to be and decided to separate those 3-5 year needs into lower volatility assets. In a sense, try to insulated these near term withdrawals from near term volatility. I would give up some upside to protect against the downside. So instead of selling equities into down markets, I positioned 3-5 years of withdrawals in assets that were less exposed to equity assets volatility. For me, these lower volatility assets are CASH, ST Bonds (VFSTX), and conservative allocation funds (such as VWINX).
    image
    I position 20% of my retirement portfolio in low volatility assets. Collectively the losses in these assets YTD has been close to (-6.5%). with this in mind, I have reduced my 4% SWR by 7%. So instead of my normal 4% SWR of $20,0000, I limit myself to 7% less or $18,600. I am hoping it is a helpful adjustment that my budget can handle.
    Any criticisms, comments or strategies welcome.
  • Wealthtrack - Weekly Investment Show
    June 2nd Episode:
    In an article titled “In Praise of Target-Date Funds,” one of our favorite WEALTHTRACK guests, Morningstar’s Director of Personal Finance, Christine Benz described them as “…nothing short of the biggest positive development for investors since the index fund.”
    That got my attention! So this week we are interviewing one of the best target-date managers in the business. He is Wyatt Lee, who is Head and Co-Manager of T. Rowe Price’s $390 billion Target Date Strategies, the largest group of actively managed target-date products in the U.S.
    The firm’s Retirement Series earned a Gold analyst rating from Morningstar, one of only two in the actively managed category, for its stellar performance and high ratings for its process, people, and the parent company.
    Lee begins with the basics and defines what a target-date fund does and how the product has evolved since it was first introduced in 1994. It turns out target-date funds can be an effective retirement vehicle for investors at all stages of life and that there are many options available.

    June 4th Episode:
    Part 2 of 2
    Candid career advice from three super successful women portfolio managers. Causeway Capital’s Sarah Ketterer, Capital Group’s Karen Choi, and Canyon Partner’s Robin Potts share their victories, setbacks and strategies as they tear down the pink wall.

  • TSP is going to offer mutual funds.
    Absolutely correct. Pure grandstanding.
    If they wanted to actually do something, they could repeal the statute that Congress passed in 2009 permitting the mutual fund window. Or they could have followed protocol and made comments on the fund window proposal, which the FRTIB would have had to respond to.
    It's even worse than grandstanding, it's dishonest. From the letter:
    it is unlikely that your Board would be able to ensure that the approximately 5,000 mutual funds are all free of Chinese firms that pose a direct threat to American national security, enterprises implicated in Chinese Communist Party (CCP) human rights abuses, or companies that otherwise lack the requisite financial transparency and fiduciary responsibility to qualify as prudent investment opportunities. In fact, the FRTIB has explicitly acknowledged as much ...
    This is deliberately conflating risk to a portfolio with threats, real or not, posed by some companies within said portfolio. In fact, the FRTIB emphasized the prudent nature of moving the I fund benchmark from the EAFE to the ACWI ex-US index.
    In coming to this decision [to switch to ACWI ex-US], the Board noted that moving to the broader I Fund benchmark is in the best interest of participants and beneficiaries, a current best practice in the investment industry, and is widely recognized as a smart strategy in today’s market. The ten largest U.S. companies’ 401(k) plans all invest in emerging markets, as do the ten largest federal contractor plans and the six largest target date fund providers. In addition, the 20 largest defined benefit plans—all of which are for state government workers—invest in emerging markets. TSP participants can decide which TSP funds they want to invest in.
    https://www.tsp.gov/plan-news/investment-benchmark-update/
    The letter continues:
    After widespread and bipartisan outrage in 2020, the FRTIB voted unanimously to abandon the ACWI ex-US IMI transition.
    Granting, for the sake of argument, such widespread outrage (which seems dubious as few track such details}, the delaying (not abandoning) of the transition was due to other reasons, notably covid:
    Board defers action on I Fund transition — Due to a meaningfully different economic environment related in large part to the impact of the global COVID-19 pandemic, as well as the nomination of three new Federal Retirement Thrift Investment Board Members, pending further study, the Board is delaying the implementation of the I Fund benchmark change to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index.
    https://www.tsp.gov/plan-news/i-fund-transition-defer-2020-05-13/
    Further down in the letter:
    U.S. service-members and other federal employees would likely be shocked to learn that the FRTIB is unaware of which companies make up these approved funds or what risk those companies pose. ... When they invest through TSP, they rightly expect the FRTIB will protect them and their investments from these types of dangerous investments.
    That seems to be belied by the very minutes cited in the letter. The FRTIB not only acknowledged the presence of Chinese companies in some the 5000+ funds available in the US (though identifying specific investments at every moment in time would be problematic). It also acknowledged that the developed nations benchmark used by the I fund already includes Chinese companies via Hong Kong.
    She also noted that the TSP’s current I Fund index includes Hong Kong, which is part of China, and that there is no widely recognized index for developed markets that excludes Hong Kong. As such, to both divest from Hong Kong equities and create a new, specially designed index without Chinese investments would increase costs to all TSP participants. It would also preclude the implementation of the TSP mutual fund window, as monitoring approximately 5,000 mutual funds for any investments in Chinese entities would prove too costly for the plan.
    https://www.frtib.gov/meeting_minutes/2021/2021May.pdf
  • Getting Real by Mark Freeland
    Hi, sma.
    A quick follow-up.
    1. I added the table to Mark's article as a way of giving folks leads. He's an innocent victim of my good intentions.
    2. MFO Premium's screener defaults to providing the oldest share class of each portfolio, and that's often the institutional class. In the case of Griffin Institutional Access, for example, there are four share classes available. Likewise, the BlueRock fund has a $2,500 share class. While many "A" shares have a nominal sales charge, those are frequently avoidable.
    3. In some cases, the funds are indeed targeted to institutional investors, which does represent a slice of our readership. (Who knew?) Many are advisors. Charles has noted in the past that funds that were nominally institutional were available at Schwab, through his former retirement plan, for $2,500. Intermittently I've noticed the same at TD.
    So I guess I mostly trust that readers will check out both the appropriateness and the availability of interesting funds.
    - - - - -
    You're right about interval funds. They typically invest in illiquid assets (or not very liquid ones) which offer unique investment characteristics by virtue of their illiquidity. (Owning an apartment building offers vastly different risks and rewards than owning a share of Tesla, for instance.) That makes it impossible for a manager to offer daily liquidity to shareholders. And just as you wouldn't put the money for Junior's fall tuition in shares of Tesla because you can't be assured they'd be there when you needed them, you wouldn't put them in an interval fund either.
    For what that's worth,
    David
  • TSP is going to offer mutual funds.
    if the GOP gains control of the WH, Senate and House, one of their priorities will be turning the TSP over to some fund management behemoth
    Like George W Bush privatized Social Security in 2005 ...
    Toward the end of a first term dominated by international terrorism, President Bush renewed this call in his 2004 State of the Union address: “Younger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account. We should make the Social Security system a source of ownership for the American people.”
    ... and Donald J Trump built the wall in 2017 with Mexican pesos?
    https://www.brookings.edu/research/why-the-2005-social-security-initiative-failed-and-what-it-means-for-the-future/
    https://www.washingtonpost.com/outlook/2019/01/25/why-trump-didnt-build-wall-when-republicans-controlled-congress/
    In 2025, the GOP will have its hands full dealing with all the tax breaks it instituted that will expire at the end of that year.
  • TSP is going to offer mutual funds.
    The IRS restricts in-service withdrawals (if permitted by the plan) to only those participants over age 59½ or who a hardship exception.
    https://www.irs.gov/retirement-plans/plan-participant-employee/when-can-a-retirement-plan-distribute-benefits
    TSP does permit these in-service withdrawals. But even then,
    You can make an age-59½ withdrawal only from an account that’s associated with your active employment. So, for example, if you have a uniformed services account but have left the uniformed services and are now a federal civilian employee, you can only make an age-59½ withdrawal from your civilian TSP account.
    https://www.tsp.gov/publications/tspbk12.pdf