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Re: SEC Yield, YTM, Distribution Yield, Current Yield

Kevin - Thanks for your latest comments. I also noticed that Vanguard provides the accrued dividends on all seven days of the week. Regarding the daily accrued dividends, they really had to handle it that way as otherwise a shareholder could be penalized depending on the date of redemption. There mi...
by Electron
Sat Nov 22, 2014 12:57 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Here is some data for those curious about the daily accrued dividends in Vanguard Bond funds. I extracted actual data from my account and then scaled the daily change to equal $20.00 at the start of the period for each fund. The table below shows the daily dividend accrued for Vanguard California In...
by Electron
Fri Nov 21, 2014 3:40 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

I guess this is another reason a bond fund must hold a certain amount of cash; i.e., to pay out accrued-but-not-received interest monthly. As of 7/31, temporary cash was 2.6% of fund. Thanks for the latest analysis. I agree on the cash required for month-end dividend payments, and in the case of Va...
by Electron
Thu Nov 20, 2014 3:46 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

The first set of numbers is coupons only, so doesn't factor in amortization/accretion of premium/discount, but I wouldn't think factoring that in would smooth out the distribution pattern that much, so maybe dividends are paid out on an accrual basis. My statement about the accrued interest is like...
by Electron
Thu Nov 20, 2014 12:38 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Yes, I was puzzled by raising to 6th power and multiplying by two until I dug more into how bond yields are expressed in annualized form, and yes, I think it is related to bond coupons typically every six months. I assume that bond funds pay their monthly dividends based on the accrued interest of ...
by Electron
Wed Nov 19, 2014 4:27 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Huh? I use distribution yields provided directly by Vanguard (just copied/pasted from the Distributions tab into the spreadsheet). Can you explain further what you're talking about? I was referring to your definition of Distribution Yield in that thread. "Distribution yield is determined by di...
by Electron
Tue Nov 18, 2014 12:17 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Kevin - I just ran across something that could be a factor in the confusing SEC yields that we have seen at times. Note the formula for SEC Yield presented by Wikipedia. It uses the offering price on the last day of the period. That could have significant effect. I'll assume that a fund uses bond ac...
by Electron
Mon Nov 17, 2014 4:38 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: Junk bond fund NAVs

It was mentioned that the bid-ask spread in High Yield bonds is one of several factors that has contributed to the long term decline in NAV. Wouldn't that apply to some degree to most types of bond funds? The effect may have been masked by the trend of lower interest rates over the last thirty years...
by Electron
Mon Nov 17, 2014 1:48 pm
 
Forum: Investing - Theory, News & General
Topic: Junk bond fund NAVs
Replies: 86
Views: 5155

Re: No more year-end paper statement option?

Why do you need copies? They should be available from Vanguard etc. for as long as you might need them. Thanks for the suggestions. Vanguard does appear to provide statements for quite a few previous years but I think there is a limit. Our records requirements are limited in terms of general IRS re...
by Electron
Sun Nov 16, 2014 3:33 pm
 
Forum: Investing - Theory, News & General
Topic: No more year-end paper statement option?
Replies: 19
Views: 2176

Re: No more year-end paper statement option?

Adobe reader is a free download, so what's the problem? There have been security concerns in the past with the Adobe Reader and many people switched to any of several available alternatives. The alternatives are also smaller and faster. The totally paperless option does sound attractive but I assum...
by Electron
Sun Nov 16, 2014 1:59 pm
 
Forum: Investing - Theory, News & General
Topic: No more year-end paper statement option?
Replies: 19
Views: 2176

Re: No more year-end paper statement option?

Ah ha. Since I have US Mail checked, I don't see the year end statement box that you do (my theory of the moment). I had the box to specify year-end paper statements until very recently and then it disappeared. The year-end paper statement option is available if you call a representative. It's not ...
by Electron
Sat Nov 15, 2014 5:36 pm
 
Forum: Investing - Theory, News & General
Topic: No more year-end paper statement option?
Replies: 19
Views: 2176

Re: AAPL

I'm kind of curious why my $100 option hasn't triggered yet.. when it was around $95 I sold a contract to sell it at a price of $100. I figured it would trigger right around $109 (due to fees) but nothing yet. Can anyone clarify? The option still has time premium in the price since expiration is ne...
by Electron
Thu Nov 13, 2014 11:19 pm
 
Forum: Investing - Help with Personal Investments
Topic: AAPL
Replies: 189
Views: 41103

Re: SEC Yield, YTM, Distribution Yield, Current Yield

I did some analysis of this using my 12-bond portfolio. That analysis looks fine to me. The 1% spike I mentioned was incorrect. I was attempting to show how much an actual duration change in a bond fund might display on the duration rule of thumb chart. The actual effect appears to be quite small. ...
by Electron
Thu Nov 13, 2014 3:00 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Kevin - Thanks for the additional comments and information. My interest in this thread evolved basically into three related items. First, I wanted to understand why the duration rule of thumb chart did not display a straight line. Secondly, I wanted to mention that Vanguard High Yield maintains a ca...
by Electron
Wed Nov 12, 2014 2:02 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Kevin - Thanks for the quarterly analysis and comments. I hope you are able to learn more with another set of successive quarters. Also glad I was able to contribute something to the discussion. The hypothetical portfolio example I presented where YTM and duration increased didn't actually need a fu...
by Electron
Tue Nov 11, 2014 12:34 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: Junk bond fund NAVs

In regards to how well SEC Yield predicts future returns in bond funds, here is some data that I posted a few days ago in another thread. The data is from Vanguard and Morningstar. Vanguard High Yield Corporate - VWEHX SEC Yield 1 Year Ago 4.44% - 1 Year Total Return 6.15% SEC Yield 3 Years Ago 6.57...
by Electron
Mon Nov 10, 2014 3:59 pm
 
Forum: Investing - Theory, News & General
Topic: Junk bond fund NAVs
Replies: 86
Views: 5155

Re: SEC Yield, YTM, Distribution Yield, Current Yield

So let's look at quarterly changes and see if we can explain it all! Quarterly changes may not yield much useful information. The links I posted earlier mentioned record outflows in the High Yield market. We saw sharp declines in NAV and then rebounds as investors bought the dips. A typical High Yi...
by Electron
Mon Nov 10, 2014 2:51 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Therefore, it does not seem possible that any change in fund holdings could affect YTM or SEC yield without also affecting price, without a change in one of the other variables in the price/yield relationship. Here is my thinking on the subject. Consider a bond fund that has 50% of assets in High Y...
by Electron
Mon Nov 10, 2014 12:01 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

The puzzle is not that we see relatively large, daily changes in price or yield, but that we see relatively large changes in one with respect to the other. Averaging price over 30 days gets us part of the way there, but we still see some unexpected variance in expected the price/yield relationship ...
by Electron
Sun Nov 09, 2014 4:58 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: IRA withdrawals starting at age 60

I can't find much info on "proactive IRA distributions". In doing Internet searches it helps to be creative and try various combinations of words. Try a search on terms such as Strategy Large IRA, IRA Excessive RMD, IRA Start Withdrawals Early, RMD Too High, or any other combination that ...
by Electron
Sun Nov 09, 2014 2:37 pm
 
Forum: Personal Finance (Not Investing)
Topic: IRA withdrawals starting at age 60
Replies: 8
Views: 1437

Re: Junk bond fund NAVs

The iShares HY Corporate Bond Fund ETF (HYG) for instance owns a representative sample of of the securities within the index. "Sampling" is common in smaller index funds, especially those dealing in less liquid securities. Thanks for the correction. I think the ETFs are still at a disadva...
by Electron
Sat Nov 08, 2014 2:34 pm
 
Forum: Investing - Theory, News & General
Topic: Junk bond fund NAVs
Replies: 86
Views: 5155

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Here is a possible explanation for the variations seen in Kevin's charts. The links I posted earlier mentioned a record $12.6B outflow over four weeks in the $176.3B High Yield market. That represents over 7% of assets coming out of High Yield funds. If Vanguard High Yield had outflows of several pe...
by Electron
Sat Nov 08, 2014 1:36 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: Junk bond fund NAVs

I'll expand my earlier comment on the trading costs of High Yield bonds to the actual bid-ask spread that comes into play when you buy or sell. The High Yield market is much less liquid than the Investment Grade bond market and bid-ask spreads can expand significantly at times. As a result you can l...
by Electron
Fri Nov 07, 2014 11:17 pm
 
Forum: Investing - Theory, News & General
Topic: Junk bond fund NAVs
Replies: 86
Views: 5155

Re: Junk bond fund NAVs

Here is a chart from Excel showing the NAV and Dividend trends in Vanguard High Yield Corporate since 1989.

The decline in dividend payout is probably from the long term decline in interest rates with some contribution from the decline in NAV.

Image
by Electron
Fri Nov 07, 2014 6:01 pm
 
Forum: Investing - Theory, News & General
Topic: Junk bond fund NAVs
Replies: 86
Views: 5155

Re: IRA withdrawals starting at age 60

I'll add one other comment. If most of the income is from the IRA, I believe you might still be in the 15% bracket at age 70 with the first RMD. A balance of $2.4M would generate a first RMD of $87.6K. The figure would be $90.56K if born July-December. If you subtract your itemized or standard deduc...
by Electron
Fri Nov 07, 2014 3:11 pm
 
Forum: Personal Finance (Not Investing)
Topic: IRA withdrawals starting at age 60
Replies: 8
Views: 1437

Re: Junk bond fund NAVs

Note also that the dividend payout from Vanguard High Yield has been in a long term downtrend. The monthly dividend was $0.084 in 1989 and the most recent dividend was $0.027. I think there are many factors in the declining NAV. Trading costs are significant in the High Yield market and that could a...
by Electron
Fri Nov 07, 2014 2:36 pm
 
Forum: Investing - Theory, News & General
Topic: Junk bond fund NAVs
Replies: 86
Views: 5155

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Here is some analysis of the relationship of price and yield for VWEHX. Thanks very much for this analysis which looks like a considerable amount of work. I'm starting to think we may never fully understand the large changes in SEC yield that were seen during that period. I'll pass along a few comm...
by Electron
Fri Nov 07, 2014 2:02 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

If anyone can suggest a calculation that does work, please do. I may yet come up with it, since I can load quarterly fund holdings into a spreadsheet, and do some analysis. Note that average YTM (not just SEC yield), average coupon, and average maturity, and holdings all are reported quarterly (in ...
by Electron
Thu Nov 06, 2014 5:09 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: IRA withdrawals starting at age 60

I would suggest modeling a number of scenarios in a spreadsheet. There are many variables in play such as marginal tax bracket, date that you start any Social Security, percentage of assets in taxable accounts, Roth Conversions, use of the 0% and 15% brackets for Qualified Dividends and Capital gain...
by Electron
Thu Nov 06, 2014 3:58 pm
 
Forum: Personal Finance (Not Investing)
Topic: IRA withdrawals starting at age 60
Replies: 8
Views: 1437

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Here is some data on Vanguard High Yield Corporate to see if SEC Yield was able to predict future returns. SEC Yield data is from Vanguard while Total Return figures are from Morningstar. Vanguard High Yield Corporate - VWEHX SEC Yield 1 Year Ago 4.44% - 1 Year Total Return 6.15% SEC Yield 3 Years A...
by Electron
Thu Nov 06, 2014 12:04 am
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

Thanks Kevin and ogd for the comments on Vanguard High Yield. The charts show three waves of selling this year after price highs in late June. The lows were approximately 8/05, 9/29, and 10/15. It looks like the second two waves of selling occurred within 30 day time frames and that may partly expla...
by Electron
Wed Nov 05, 2014 2:20 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: SEC Yield, YTM, Distribution Yield, Current Yield

I actually have done quite a bit of investigation on this. Here are some links to posts on this as far as back as 3+ years. Thanks for the links and comments. That is interesting seeing the short term variation in bond fund SEC Yield relative to NAV. One might guess that the variation is less with ...
by Electron
Tue Nov 04, 2014 1:39 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Re: Medicare Part D - Risk in Low Cost Plans

If that is the case, you can change plans the following year and get a more comprehensive plan that has your drug in the formulary. Thanks for the reply. I wonder if it is a better risk to avoid the very lowest cost plans. There could be a sweet spot in plans with a somewhat higher monthly premium....
by Electron
Mon Nov 03, 2014 4:04 pm
 
Forum: Personal Consumer Issues
Topic: Medicare Part D - Risk in Low Cost Plans
Replies: 3
Views: 408

Re: SEC Yield, YTM, Distribution Yield, Current Yield

I also hold VCADX and enjoyed reading your analysis. I have often wondered if the SEC Yield posted for Vanguard bond funds is very useful to the average investor. At times it seems to change more than expected with changes in NAV and might even be deceptive at times. One example recently has been Va...
by Electron
Mon Nov 03, 2014 2:14 pm
 
Forum: Investing - Theory, News & General
Topic: SEC Yield, YTM, Distribution Yield, Current Yield
Replies: 63
Views: 6266

Medicare Part D - Risk in Low Cost Plans

The recommendation for those without any current prescriptions is generally to select a low cost Part D plan. What are the risks and alternatives?

I assume that people who later need to fill a prescription may find that it is not listed in the formulary of their plan.
by Electron
Mon Nov 03, 2014 12:54 pm
 
Forum: Personal Consumer Issues
Topic: Medicare Part D - Risk in Low Cost Plans
Replies: 3
Views: 408

Re: VWNEX and VWNAX [Vanguard Windsor and Windsor II]

I would also take a look at Vanguard Selected Value (VASVX) which shares the same primary manager as Windsor II. Morningstar shows VASVX as outperforming both Windsor and Windsor II over the previous 5, 10, and 15 year periods. Windsor appears to be the leader over the past 3 years. VASVX is lagging...
by Electron
Sun Nov 02, 2014 1:47 pm
 
Forum: Investing - Help with Personal Investments
Topic: VWNEX and VWNAX [Vanguard Windsor and Windsor II]
Replies: 5
Views: 543

Re: VWNEX and VWNAX [Vanguard Windsor and Windsor II]

If these funds are in a taxable account it would be a good idea to first check any tax impact from selling. In terms of the two funds, Morningstar should provide information that would be helpful in evaluating the two funds. Years ago Windsor was more aggressive than Windsor II with the result that ...
by Electron
Sat Nov 01, 2014 5:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: VWNEX and VWNAX [Vanguard Windsor and Windsor II]
Replies: 5
Views: 543

Re: A Challenge for Bogleheads - the market has changed

It is very interesting to look at charts and study the great 1982 bull market, the technology bubble, the 2000-2003 bear market, the 2003-2007 bull market, the 2008-2009 bear market, and the 2009 to 20xx bull market. Markets prior to these periods were very different. The period 1966 to 1982 was a d...
by Electron
Fri Oct 31, 2014 2:10 pm
 
Forum: Investing - Theory, News & General
Topic: A Challenge for Bogleheads - the market has changed
Replies: 53
Views: 6756

Re: Are we really in the 0% bracket?

I would also estimate any other ordinary income that might be taxed in 2014. Many people hold online savings accounts or CDs that generate ordinary income. In the past I have tried to minimize ordinary income when taking advantage of the 0% bracket. In fact, right now I am in the 10% bracket but any...
by Electron
Wed Oct 29, 2014 1:56 pm
 
Forum: Personal Finance (Not Investing)
Topic: Are we really in the 0% bracket?
Replies: 32
Views: 3896

Re: Are we really in the 0% bracket?

Ordinary income remaining after deductions and exemptions will reduce the effective size of the 0% bracket for qualified dividends and capital gains. If you had nothing else filling up the 10% and 15% brackets, then you could fill those brackets with qualified dividends and/or capital gains that wou...
by Electron
Tue Oct 28, 2014 11:23 pm
 
Forum: Personal Finance (Not Investing)
Topic: Are we really in the 0% bracket?
Replies: 32
Views: 3896

Re: Help with HSA in CA. Am I ready? How-to?

Any comments out there on how to report the taxable earnings (other than savings interest) from HSA for CA state tax returns? It looks like California Schedule D will need to be filled out if the HSA is invested in anything other than an interest bearing account. Most people do not normally file Ca...
by Electron
Sat Oct 25, 2014 2:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with HSA in CA. Am I ready? How-to?
Replies: 22
Views: 1706

Re: Help with HSA in CA. Am I ready? How-to?

As I understand, the whole benefit of having an HSA (esp. for CA residents) is to ensure tax-efficient fund placement for bonds, which in turn frees up space in other tax-advantaged accounts to hold equities given a particular AA. The primary benefit of an HSA is the tax deduction on contributions,...
by Electron
Thu Oct 23, 2014 11:32 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with HSA in CA. Am I ready? How-to?
Replies: 22
Views: 1706

Re: Help with HSA in CA. Am I ready? How-to?

But, does this savings account pay any interest that I will have to keep track of during filing of taxes? As mentioned, you will have to keep track of taxable interest, dividends, and capital gains paid by the HSA but only for your California tax return. The extra effort for the California return i...
by Electron
Thu Oct 23, 2014 2:12 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with HSA in CA. Am I ready? How-to?
Replies: 22
Views: 1706

Re: Help with My Father's Investments

Franklin Income fund is a very well managed fund and quite conservative. Morningstar rates it quite highly. The 50-50 stock bond allocation is not unreasonable for a retiree but the complete financial situation of the retiree needs to be reviewed in detail. http://quotes.morningstar.com/fund/f?t=FKI...
by Electron
Wed Oct 22, 2014 2:53 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with My Father's Investments
Replies: 8
Views: 1152

Re: Help with HSA in CA. Am I ready? How-to?

I opened a Health Savings Account primarily for the up front tax deduction which is entered on Form 1040 Line 25. The account is at a local Credit Union with no fees of any type but the interest rate is quite low. That was not really a concern as I was only able to contribute to the account for thre...
by Electron
Wed Oct 22, 2014 1:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with HSA in CA. Am I ready? How-to?
Replies: 22
Views: 1706

Re: Limited Term Tax Exempt as a spot for short term savings

Risk is there but has not shown up for the party past few years. Municipal bonds have had a nice tailwind over the last several years. The 39.6% tax bracket returned in 2013 along with phaseout of itemized deductions. Add to that reduced issuance of new Municipal bonds. The net result was an increa...
by Electron
Tue Oct 21, 2014 1:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Limited Term Tax Exempt as a spot for short term savings?
Replies: 24
Views: 2490

Re: Limited Term Tax Exempt as a spot for short term savings

The SEC yield on Vanguard Short-Term Tax-Exempt is a little low at 0.28%, but note that the Distribution yield is 0.68%. In the case of the Admiral Shares the SEC yield is 0.36% with the Distribution yield at 0.76%. I think the Distribution yield is higher than the SEC yield on many bond funds today...
by Electron
Mon Oct 20, 2014 12:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: Limited Term Tax Exempt as a spot for short term savings?
Replies: 24
Views: 2490

Re: How does one hedge against deflation?

One concern in a long period of deflation would be maintaining investment income. That is where the long term non-callable bonds come into play. In past years Vanguard newsletters would address the subject of income durability from bond funds. An interesting thing is that the income stream from bond...
by Electron
Sun Oct 19, 2014 4:37 pm
 
Forum: Investing - Theory, News & General
Topic: How does one hedge against deflation?
Replies: 52
Views: 4092

Re: How does one hedge against deflation?

Long term non-callable Government bonds do very well in periods of deflation.

Take a look at the holdings in the Yale University Lazy Portfolio.

http://www.marketwatch.com/lazyportfolio

The 15% position in Long Term Treasury bonds is their hedge against deflation.
by Electron
Sat Oct 18, 2014 4:15 pm
 
Forum: Investing - Theory, News & General
Topic: How does one hedge against deflation?
Replies: 52
Views: 4092

Re: Find a way to explain to me "WHY" should I break up w/ M

Why don't instead you post the one from the start of 2009, forget where you have been so far and focus on where it is going. Last few years show no overperformance and with the constant manager changes the distant past tells you nothing at all. Default assumption should be you trail the benchmark b...
by Electron
Thu Oct 16, 2014 4:57 pm
 
Forum: Investing - Help with Personal Investments
Topic: Find a way to explain to me "WHY" should I break up w/ MDISX
Replies: 23
Views: 1151
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