World Bond Mutual Fund Help Needed

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World Bond Mutual Fund Help Needed

Postby cornelius » Sat Dec 29, 2012 5:38 pm

Hey guys,

I'm looking to add a world bond mutual fund to my PA for 2013. I currently have a S&P 500 index fund, an international equity index fund, a few individual stocks and two U.S.-focused bond funds. Ideally, this would be a fund that I would contribute to regularly (approx. $3,500 monthly). My brokerage fund screener recommended the following five:

INGBX ING Global Bond A
LSGLX Loomis Sayles Global Bond Retail
PFBDX PIMCO Foreign Bond (Unhedged) D
PFODX PIMCO Foreign Bond (USD-Hedged) D
PGBDX PIMCO Global Bond (Unhedged) D

All have 12-b-1's of 0.25% (looks like that's the lowest), no front-end fees and Morningstar ratings of at least 3 stars. The LSGLX has 102% turnover (others range from 267 to 486), so I'm leaning towards that one but if anyone has any suggestions regarding the above, would love to hear. Thanks!
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Re: World Bond Mutual Fund Help Needed

Postby Dale_G » Sat Dec 29, 2012 9:36 pm

I have no opinion on most of these, but PFUIX is a better deal than PFBDX. PFUIX is the Institutional class of the Pimco Foreign Bond Fund (unhedged). The expense ratio is 0.5% and there is no 12b-1 fee.

The initial investment amount is supposed to be $1,000,000, but you can get into the fund for an initial investment of $25,000 through Vanguard Brokerage services - maybe others too.

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Re: World Bond Mutual Fund Help Needed

Postby SteveKL » Sat Dec 29, 2012 11:45 pm

You may want to look at FNMIX Fidelity New Markets Income Fund. M* 4-star rated, the current ER is .86% but fund performance, considered in its entirety, makes it a competitive choice IMHO. Be aware that just over 14% of its holdings are Venezuelan, roughly twice the benchmark holdings for that country.
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Re: World Bond Mutual Fund Help Needed

Postby Johm221122 » Sun Dec 30, 2012 2:38 am

cornelius wrote:Hey guys,

I'm looking to add a world bond mutual fund to my PA for 2013. I currently have a S&P 500 index fund, an international equity index fund, a few individual stocks and two U.S.-focused bond funds. Ideally, this would be a fund that I would contribute to regularly (approx. $3,500 monthly). My brokerage fund screener recommended the following five:

INGBX ING Global Bond A
LSGLX Loomis Sayles Global Bond Retail
PFBDX PIMCO Foreign Bond (Unhedged) D
PFODX PIMCO Foreign Bond (USD-Hedged) D
PGBDX PIMCO Global Bond (Unhedged) D

All have 12-b-1's of 0.25% (looks like that's the lowest), no front-end fees and Morningstar ratings of at least 3 stars. The LSGLX has 102% turnover (others range from 267 to 486), so I'm leaning towards that one but if anyone has any suggestions regarding the above, would love to hear. Thanks!

Welcome to forum,
Two links to get you started
" Consider your entire portfolio without regard to taxes"
http://www.bogleheads.org/wiki/Principl ... _Placement
Bogleheads philosophy
"John Bogle, in his speech, “ Investing With Simplicity, ” said: “Simplicity is the master key to financial success. When there are multiple solutions to aproblem, choose the simplest one.”
http://www.bogleheads.org/wiki/Boglehea ... philosophy
John
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Re: World Bond Mutual Fund Help Needed

Postby abuss368 » Sun Dec 30, 2012 9:59 am

Not needed. Read Unconventional Success by David Swensen. He has a section devoted to International Bonds and why they are not needed and why they should be avoided.
Johm221122 wrote:
cornelius wrote:Hey guys,

I'm looking to add a world bond mutual fund to my PA for 2013. I currently have a S&P 500 index fund, an international equity index fund, a few individual stocks and two U.S.-focused bond funds. Ideally, this would be a fund that I would contribute to regularly (approx. $3,500 monthly). My brokerage fund screener recommended the following five:

INGBX ING Global Bond A
LSGLX Loomis Sayles Global Bond Retail
PFBDX PIMCO Foreign Bond (Unhedged) D
PFODX PIMCO Foreign Bond (USD-Hedged) D
PGBDX PIMCO Global Bond (Unhedged) D

All have 12-b-1's of 0.25% (looks like that's the lowest), no front-end fees and Morningstar ratings of at least 3 stars. The LSGLX has 102% turnover (others range from 267 to 486), so I'm leaning towards that one but if anyone has any suggestions regarding the above, would love to hear. Thanks!

Welcome to forum,
Two links to get you started
" Consider your entire portfolio without regard to taxes"
http://www.bogleheads.org/wiki/Principl ... _Placement
Bogleheads philosophy
"John Bogle, in his speech, “ Investing With Simplicity, ” said: “Simplicity is the master key to financial success. When there are multiple solutions to aproblem, choose the simplest one.”
http://www.bogleheads.org/wiki/Boglehea ... philosophy
John
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Re: World Bond Mutual Fund Help Needed

Postby pkcrafter » Sun Dec 30, 2012 12:07 pm

PA = personal account = taxable?

If you're speaking of a taxable account, we should back up and look at your entire portfolio. How much is tax-deferred, how much in taxable, and what is your tax bracket?

Paul
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Re: World Bond Mutual Fund Help Needed

Postby cornelius » Tue Jan 01, 2013 3:18 pm

Thanks so much for all your help, guys. It's very much appreciated!
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Re: World Bond Mutual Fund Help Needed

Postby nedsaid » Tue Jan 01, 2013 4:06 pm

T Rowe Price and American Century also have International Bond Funds. Templeton has a good one, if you can get in without a load.
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Re: World Bond Mutual Fund Help Needed

Postby nisiprius » Tue Jan 01, 2013 5:27 pm

I think you need to determine and articulate one key point of your strategy. Is it (a) or (b):

a) You basically want to engage in currency speculation or "currency diversification" if you like that phrase better. You feel sure that the dollar will weaken again as it did from 2002-2008. Although these are "bond" funds, you are perfectly aware that they will not behave like domestic bond funds. You are happy with volatility that is much higher than is normally expected in the "bond" portion of your portfolio. And the only reason why you want an international bond fund--rather than instead of holding foreign currency directly, e.g. in various international currency ETFs--is that you want some bond interest icing on your currency cake.

b) You want a plain-vanilla, boring old bond fund that, in the long run, doesn't behave very differently from a domestic, dollar-denominated bond fund, either in volatility or return--but gives you some global diversification with respect to interest rates.

You need to understand whether the bond funds you're considering are hedged or unhedged.

If it is (a) you want an unhedged fund. If it is (b) then you need either a fund that is U.S.-currency-hedged, or one that invests in dollar-denominated foreign bonds. Vanguard announced that it was going to introduce such funds, but has not yet done so.
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Re: World Bond Mutual Fund Help Needed

Postby cornelius » Thu Jan 03, 2013 1:22 am

Hi nisiprius,

Thanks for this...yes, this is definitely B. It's less about speculation and more about balancing out my portfolio since percentage-wise, I already have a decent amount in stocks and U.S. bonds and thought (maybe wrongly?) that I shouldn't go too deep into one area, ya know?
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