Merrimans Vanguard Monthly Income Portfolio

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
User avatar
Topic Author
Bustoff
Posts: 2033
Joined: Sat Mar 03, 2012 5:45 pm

Merrimans Vanguard Monthly Income Portfolio

Post by Bustoff »

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 ?
MrMatt2532
Posts: 454
Joined: Sun Mar 15, 2009 11:58 am

Re: Merrimans Vanguard Monthly Income Portfolio

Post by MrMatt2532 »

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.

Matt
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Merrimans Vanguard Monthly Income Portfolio

Post by hoops777 »

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.
K.I.S.S........so easy to say so difficult to do.
User avatar
Topic Author
Bustoff
Posts: 2033
Joined: Sat Mar 03, 2012 5:45 pm

Re: Merrimans Vanguard Monthly Income Portfolio

Post by Bustoff »

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

Just noticed that was from 2002 however.
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Merrimans Vanguard Monthly Income Portfolio

Post by hoops777 »

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.
K.I.S.S........so easy to say so difficult to do.
User avatar
Topic Author
Bustoff
Posts: 2033
Joined: Sat Mar 03, 2012 5:45 pm

Re: Merrimans Vanguard Monthly Income Portfolio

Post by Bustoff »

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.
User avatar
Topic Author
Bustoff
Posts: 2033
Joined: Sat Mar 03, 2012 5:45 pm

Re: Merrimans Vanguard Monthly Income Portfolio

Post by Bustoff »

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 ?
User avatar
midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

Re: Merrimans Vanguard Monthly Income Portfolio

Post by midareff »

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.
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Merrimans Vanguard Monthly Income Portfolio

Post by hoops777 »

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.
K.I.S.S........so easy to say so difficult to do.
User avatar
Topic Author
Bustoff
Posts: 2033
Joined: Sat Mar 03, 2012 5:45 pm

Re: Merrimans Vanguard Monthly Income Portfolio

Post by Bustoff »

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.
User avatar
midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

Re: Merrimans Vanguard Monthly Income Portfolio

Post by midareff »

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.
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Merrimans Vanguard Monthly Income Portfolio

Post by hoops777 »

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
K.I.S.S........so easy to say so difficult to do.
User avatar
midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

Re: Merrimans Vanguard Monthly Income Portfolio

Post by midareff »

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 %.
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Merrimans Vanguard Monthly Income Portfolio

Post by hoops777 »

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.
K.I.S.S........so easy to say so difficult to do.
User avatar
midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

Re: Merrimans Vanguard Monthly Income Portfolio

Post by midareff »

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.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Merrimans Vanguard Monthly Income Portfolio

Post by dbr »

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.
pkcrafter
Posts: 15461
Joined: Sun Mar 04, 2007 11:19 am
Location: CA
Contact:

Re: Merrimans Vanguard Monthly Income Portfolio

Post by pkcrafter »

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
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Merrimans Vanguard Monthly Income Portfolio

Post by dbr »

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?
User avatar
midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

Re: Merrimans Vanguard Monthly Income Portfolio

Post by midareff »

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.
Post Reply