Merrimans Vanguard Monthly Income Portfolio

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Merrimans Vanguard Monthly Income Portfolio

Postby Bustoff » Thu Feb 07, 2013 12:11 pm

Vanguard Monthly Income Portfolio

25% Vanguard Short‐Term Investment‐Grade Inv
25% Vanguard Interm‐Term Invmt‐Grade Inv
25% Vanguard GNMA Inv
25% Vanguard High‐Yield Corporate Inv

How would you handicap such a FI portfolio ?
“There are two times in a man's life when he should not speculate: when he can't afford it, and when he can.” | ― Mark Twain
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby MrMatt2532 » Thu Feb 07, 2013 1:36 pm

I don't know what you mean by handicap, but here is a page with the returns for that portfolio: http://www.fundadvice.com/fehtml/invest ... /0206.html

You could obviously fill in more data starting in 2002 if you wanted. For the data period on that page, it compared similarly to a 5% Total US Market/95% Total Bond portfolio.

The stock bond portfolio won out a little bit in terms of a little more return for the same risk, or a little bit less risk for the same return.

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Re: Merrimans Vanguard Monthly Income Portfolio

Postby hoops777 » Thu Feb 07, 2013 2:40 pm

It certainly is not providing a lot of income unless you have a lot of money invested.What is the income about 2.5%? So a million would give you about 2K a month.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby Bustoff » Thu Feb 07, 2013 2:42 pm

Perfect -Thanks Matt ! I need to improve my investing vocabulary.

Just noticed that was from 2002 however.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby hoops777 » Thu Feb 07, 2013 2:51 pm

The chart actually shows long term corp not intermediate.Investing in that portfolio today is a lot different than the great bond market of the last 15 years or so.The yields today are among the lowest in history and the looming interest rate hikes are not a positive either.I have been going back and forth over this myself and it is a very difficult decision to make in today's interest rate environment.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby Bustoff » Thu Feb 07, 2013 2:52 pm

hoops777 wrote:It certainly is not providing a lot of income unless you have a lot of money invested.What is the income about 2.5%? So a million would give you about 2K a month.


You're right. The link that Matt provided showed 9%. But then I noticed they were 2002 returns.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby Bustoff » Thu Feb 07, 2013 2:57 pm

hoops777 wrote:The chart actually shows long term corp not intermediate.Investing in that portfolio today is a lot different than the great bond market of the last 15 years or so.The yields today are among the lowest in history and the looming interest rate hikes are not a positive either.I have been going back and forth over this myself and it is a very difficult decision to make in today's interest rate environment.


hoops, what chart are you looking at ?
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby midareff » Thu Feb 07, 2013 3:05 pm

hoops777 wrote:It certainly is not providing a lot of income unless you have a lot of money invested.What is the income about 2.5%? So a million would give you about 2K a month.



More like 3.1% over the last month. If you look at the last 6 months or so it was a good bit higher. Income is more like $2600 a month now, nearer $3K towards mid early 2012.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby hoops777 » Thu Feb 07, 2013 3:19 pm

The chart that was linked to Merriman.Unless my eyes are playing tricks on me,it had long term corp not inter term which would increase the yield and the risk.I came up with the 2.5% offthe top of my head figuring the inter corp and not the long term.I may be way off in the actual figure because it was a quick guesstimate.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby Bustoff » Thu Feb 07, 2013 3:20 pm

midareff wrote:More like 3.1% over the last month. If you look at the last 6 months or so it was a good bit higher. Income is more like $2600 a month now, nearer $3K towards mid early 2012.


What are you looking at when arriving at your figures ? I can't locate a reference.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby midareff » Thu Feb 07, 2013 3:23 pm

Bustoff wrote:
midareff wrote:More like 3.1% over the last month. If you look at the last 6 months or so it was a good bit higher. Income is more like $2600 a month now, nearer $3K towards mid early 2012.


What are you looking at when arriving at your figures ? I can't locate a reference.


Simply go to each fund's distributions page in the VG website. Look at the last two or three months yield for each fund and take an average. Add the four together (ST IG, IT IG, GNMA, HYield) and there you have it. VG publishes each fund's month to month yield there.

Under reasonable disclosure I do own all four.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby hoops777 » Thu Feb 07, 2013 3:30 pm

According to Vanguard the current yield for each is...
gnma 2.09
st inv 1.10
int inv 2.11
hy 4.37
Average them out and it is less than 2.5 unless I am missing something which is very possible :happy
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby midareff » Thu Feb 07, 2013 3:43 pm

hoops777 wrote:According to Vanguard the current yield for each is...
gnma 2.09
st inv 1.10
int inv 2.11
hy 4.37
Average them out and it is less than 2.5 unless I am missing something which is very possible :happy


You are looking at the SEC. Go to the distributions page and look at the yield actually distributed to fund owners the last one or two months or so. It is quite different than the calculated SEC %.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby hoops777 » Thu Feb 07, 2013 4:59 pm

I had a feeling that was going to be the case.Is the SEC yield always less than the actual distributions?Never mind...I googled it.Distributions are going to be higher in a low interest rate environment.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby midareff » Fri Feb 08, 2013 9:11 am

hoops777 wrote:I had a feeling that was going to be the case.Is the SEC yield always less than the actual distributions?Never mind...I googled it.Distributions are going to be higher in a low interest rate environment.


Since we are discussing a monthly income portfolio it would seem the actual amount paid out monthly or quarterly is the key. The SEC is supposed to be the yield of the securities held for the prior 30 days and on a month to month rolling basis should be a very strong indicator of actual paid out yield. As you can see in this case there is a significant difference..... 2.5% vs. 3.1%. is a 25% increase. Whether or not this pattern will continue should there be a rising interest rate environment I can't comment on. ... perhaps others will longer memories can. The present distribution pattern of this (Merrimans) portfolio is downward, a basis point or two, or a fraction at a time, month to month.

Obviously between SEC %, actual month to month yield, M*s prior 12 month dividend and M*s 12 month total return there are many numbers to try and compute a return from. For me, I use and track actual month to month or quarter to quarter paid out distributions for every fund I own to compute and track results.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby dbr » Fri Feb 08, 2013 11:00 am

Bustoff wrote:Vanguard Monthly Income Portfolio

25% Vanguard Short‐Term Investment‐Grade Inv
25% Vanguard Interm‐Term Invmt‐Grade Inv
25% Vanguard GNMA Inv
25% Vanguard High‐Yield Corporate Inv

How would you handicap such a FI portfolio ?


This is a portfolio codged together without rhyme or reason in the context other than to allow some amount of monthly interest to be delivered while not investing in a manner that is completely insane. I would start by saying this is NOT how one selects funds to meet the intended design of a portfolio. It is off base in the first place by not considering the purposes of the portfolio as a whole and in the second place by not understanding some basic things about how to obtain income from a portfolio by making withdrawals. I looked at Merriman's suggested funds web page and am at a loss as to what an investor is supposed to make of the portfolios listed there.

The best answer to your question is that such a suggested portfolio is "not even wrong."

In fairness to Mr. Merriman, a suggestion would be to e-mail or PM him on his website and ask HIM how one would handicap such a portfolio.
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby pkcrafter » Fri Feb 08, 2013 11:36 am

I would not use the 4 bond funds for a total portfolio, and I might modify it to three funds in combination with about 30-35% equity.

40% Vanguard Short‐Term Investment‐Grade
40% Vanguard Total Bond Index
20% Vanguard High‐Yield Corporate

Paul
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby dbr » Fri Feb 08, 2013 12:26 pm

pkcrafter wrote:I would not use the 4 bond funds for a total portfolio, and I might modify it to three funds in combination with about 30-35% equity.

40% Vanguard Short‐Term Investment‐Grade
40% Vanguard Total Bond Index
20% Vanguard High‐Yield Corporate

Paul


But the question is, Paul, what is Mr. Merriman proposing that this all bond portfolio is even for. Neither he nor anyone around here would seriously propose an all bond portfolio except in some really rare situation. His proposal can't possibly be an actual suggestion for a normal investor as a way to use their assets to support withdrawals for income. Also, why is your selection of those three funds, recognizing the addition of the stocks, so particularly helpful to any particular purpose. Are you saying that the bond allocation should be devised so that the withdrawals wanted are equaled by the interest paid out by the bond allocation. Otherwise, what?
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Re: Merrimans Vanguard Monthly Income Portfolio

Postby midareff » Mon Feb 11, 2013 4:13 pm

dbr wrote:
pkcrafter wrote:I would not use the 4 bond funds for a total portfolio, and I might modify it to three funds in combination with about 30-35% equity.

40% Vanguard Short‐Term Investment‐Grade
40% Vanguard Total Bond Index
20% Vanguard High‐Yield Corporate

Paul


But the question is, Paul, what is Mr. Merriman proposing that this all bond portfolio is even for. Neither he nor anyone around here would seriously propose an all bond portfolio except in some really rare situation. His proposal can't possibly be an actual suggestion for a normal investor as a way to use their assets to support withdrawals for income. Also, why is your selection of those three funds, recognizing the addition of the stocks, so particularly helpful to any particular purpose. Are you saying that the bond allocation should be devised so that the withdrawals wanted are equaled by the interest paid out by the bond allocation. Otherwise, what?


I would like to think Merriman is proposing that distribution for the FI portion of the portfolio. To propose that as 100% of a portfolio defies logic and is dangerous to your retirement.
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