PIMCO Total Return (PTRAX) vs. Vantagepoint Bond Inx (VQCIX)

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radeon962
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Joined: Wed Dec 30, 2009 8:20 pm

PIMCO Total Return (PTRAX) vs. Vantagepoint Bond Inx (VQCIX)

Post by radeon962 »

I received a lot of good advice here a few years back and am working towards all of the goals that I set. One that I am still struggling with is whether to keep my bond allocation split 50/50 between PIMCO Total Return (PTRAX) and Vantagepoint Core Bond Index (VQCIX).

My 401/457 is through ICMA so I am limited as to what funds are available.

PTRAX has an expense ratio of 0.71% and VQCIX has an expense ratio of 0.20%. The rest of my ICMA portfolio I am comfortable with as the Index funds available are fine. Through my 401/457 I do not have access to other low expense funds like Vanguard, where I have my Roth IRA's and am using them to to get additional exposure to small/mid markets (VEIEX and VFSVX).

The exta 0.50% expense ratio of PTRAX means that the fund needs to "beat" VQCIX in order to make it worthwhile. I am generally very good at "ignoring the noise" but this has been bugging me for quite some time as PTRAX is regarded as one of the better funds and consistently out performs VQCIX. In every aspect PTRAX appears to be the better option, other than the additional 0.50% ER. I know you can't go on past performance, but PTRAX has a phenominal track record and I'm looking for some "advice" on what others think as I know there are other Bogleheads that are in ICMA and what their thought process was when looking at the Bond portion of their portfolio.

Thanks, Bill
Infinity
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Joined: Thu Aug 08, 2013 1:58 pm

Re: PIMCO Total Return (PTRAX) vs. Vantagepoint Bond Inx (VQ

Post by Infinity »

If you are choosing between two actively managed bond funds, pick the one with the better manager. I'd take PTRAX over VQCIX any day. As you pointed out, Bill Gross is worth an additional 0.5%.
Topic Author
radeon962
Posts: 113
Joined: Wed Dec 30, 2009 8:20 pm

Re: PIMCO Total Return (PTRAX) vs. Vantagepoint Bond Inx (VQ

Post by radeon962 »

VQCIX is an index fund.
slowlrnr
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Re: PIMCO Total Return (PTRAX) vs. Vantagepoint Bond Inx (VQ

Post by slowlrnr »

Don't know much about VQCIX but it is an index fund and PTRAX is an actively managed fund. Why the comparison and why now?

On this site there are proponents of index funds but seems like they are a little relaxed when it comes to Pimco (Bill Gross) and are sometimes okay with the higher ER. My concern; what happens if Bill Gross is no longer managing PTRAX?
Infinity
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Joined: Thu Aug 08, 2013 1:58 pm

Re: PIMCO Total Return (PTRAX) vs. Vantagepoint Bond Inx (VQ

Post by Infinity »

"VQCIX is an index fund."

Oh sorry, I looked at the graph on M* and it underperformed the index by so much that I just assumed it was active... :oops:

Given an under-performing index fund and Bill Gross, I'd personally still take Bill Gross. That said, I think your choice really depends on how much risk you want to take in your bonds. Gross prefers higher credit quality bonds, but PTRAX does have manager risk that VQCIX does not.
Topic Author
radeon962
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Joined: Wed Dec 30, 2009 8:20 pm

Re: PIMCO Total Return (PTRAX) vs. Vantagepoint Bond Inx (VQ

Post by radeon962 »

That's where I'm at. It's hard to argue with his success, but he will retire eventually and I do like to index but in the case of the specific bond index, it just does not follow the mean like Vanguard TB.

The choices in my plan for index funds are not good as they are all Vantagepoint index funds. The 500, Broad Market, Mid/Small Cap and even Overseas index all follow their respective index reasonably well. The bond index, not so much.

I realize that PIMCO does take more risk than a bond index and that runs counter to what I would prefer to do with my bond funds, but I'm 46 and 16 years from retirement at 62 so I do have some time.

Whether Mr. Goss will still be running the fund for those 16 years, I don't know but I would hope that his understudies are learning/have learned from him.

Curious if any other Bogleheads that have ICMA accounts have any thoughts or what they are doing with the bond portion of their funds whether within ICMA or outside as part of their overall portfolio.
Infinity
Posts: 95
Joined: Thu Aug 08, 2013 1:58 pm

Re: PIMCO Total Return (PTRAX) vs. Vantagepoint Bond Inx (VQ

Post by Infinity »

One other possibility is ditching the index fund in favor of active bonds + stable value (if you have access to a stable value fund).

In my 401k, I have about 2/3rds of my bonds in stable value currently yielding just above 2%, and 1/3rd in PTTDX.
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