What %age short/intermediate bonds do you hold now?

[invhelpme]

Just curious what other Bogleheads percentage of short and intermediate bonds you hold. Our Ira's are 50/50 stock/bond with Vangaurd. We hold 14% Short Term Bond Index Admiral, 67% of both Total Bond Market Admiral and Intermediate Admiral, and 19% TIPS. We are thinking of selling some Total Bond and Intermediate for more Short Term Bond to achieve closer to 50% Short term bond instead of 14%. We are 15 years away from retirement. We reinvest all dividends. We all know interest rates will be rising sometime (no one knows when) but wonder if our duration of about 5.4 is too risky in a rising rate environment. Is anyone out there in the same situation? Thanks in advance. Daren

[Sbashore]

I follow your reasoning, but don't understand your concern. If your duration is 5.4 and you aren't retiring for 15 years, what is the problem? Are you afraid of short term fluctuations? Are you trying to posture yourself based on guesses about the future? Personally I adjust my holdings to keep the duration of my total holdings within an acceptable range. It looks like you are there. I'm in retirement so am in a different situation than you.

[Toons]

60 short term investment grade/40 total bond ,buying monthly in efforts to achieve proper asset allocation.
I don't give interest rates much thought at all,who knows? I surely don't

[livesoft]

Looks like this:

The 11% is Vanguard's BIV which is intermediate-term bond index ETF.

[Johm221122]

I'm 20 years from retirement and just rebalancd my portfolio.According to my plan. I'm 7% savings bonds (all over 10years old) 5% income fund and 18% stable value.For a total of 30% fixed income.
John

[Doc]

We all know interest rates will be rising sometime (no one knows when) but wonder if our duration of about 5.4 is too risky in a rising rate environment. Is anyone out there in the same situation?

If you think 5.4 years is too risky because of a "rising rate environment" I think your reasoning is wrong. You should think of your FI in terms of your total portfolio and not the FI in isolation. That being said I think your 5.4 years is too long. The Bar Cap Intermediate Term Bond Index which has 1 to 10 year maturity bonds has a duration of about 4.3 years and is ~ 50% 1-5 year (short) and 50% 5-10 (intermediate). Since you are already slicing and dicing your FI portfolio anyway I think it makes sense to use the index as a guide. IThis approach not only lowers your interest rate sensitivity a little but also gives you more benefits to counter equity fluctuations.

[Van]

I'm not sure the % breakdown is important compared to the weighted average duration.

For me that would be 4.2 years.

[ResNullius]

I'm around 60% fixed allocation, with it roughly divided between intermediate (40%) and short (40%) investment grade, and also GNMA (20%). I also have around 4 years of living expenses (over and above SS) in MM.

[midareff]

Roughly 5.5% ST IG, 5.5% GNMA, 20% IT IG 12.5% HiYield... all VG in IRA + 6% T Muni in taxable. I'd be cautious about jumping the gun to a heavy ST IG allocation before unemployment drops further, inflation increases or some other strong indicator such as an impending dumping of Bernanke. Somewhere out there you have to weigh the benefits of a shorter duration and faster recovery rate in an increasing rate environment with the present lack of yield. ST IG is presently paying out maybe 1.9% annualized vs. very slightly lower inflation rates. Par + a couple of pennies to be exposed to the Black Swan risk. IMHO I like GNMA's as much or bit more with their slightly higher payout, and Black Swan opportunity risk. Run some M* charts to see what I mean. Right now my mix (x muni) has a 3.7% weighted actual (current) monthly annualized yield and 4.4 years of duration. It will stay this way until I have a reason to change it. I am much more stay the course on the equity side than the bond side.

[peppers]

Style Sector
Your bond style is Intermediate Investment Grade. The bond style of the Barclays U.S. Aggregate Bond Index is Intermediate Investment Grade

Total Bond Market 79%
GNMA 21%

[invhelpme]

Thanks to all who replied. It sounds like I should ignore the noise and stay the course since we are 15 years from retirement.

[chaz]

55%TBF, 10%TIPS.

[bottomfisher]

Short term 15%, intermediate term 15%, long term 70%. I think the long term percentage is misleading though. A good portion of that is VG Long term Municiple Bond fund. The average duration of that fund is 6.1 years; so I consider it more like intermediate duration

[scrabbler1]

I have an intermediate-term bond fund in my IRA and an intermediate-term muni bond fund in my taxable account. Together, they are about 19% of my overall portfolio.

[gkaplan]

100% TSP G Fund

[Johm221122]

Thanks to all who replied. It sounds like I should ignore the noise and stay the course since we are 15 years from retirement.

You probably should ignore the noise and stay the course unless you have something thats better.I realized my stable value fund was paying the same yields as bond funds without having downside of capital losses if rate rises.You may also want to check CD rates if you want to seek highest yields. Savings bonds are a good option in taxable
John

[ddunca1944]

We're retired. Our AA is divided vetween Wellesley, LifeStrategy Modrate Growth and VG short term Investment Grade (the latter is 5% of our combined IRA accounts)

[jidina80]

. . . . We all know interest rates will be rising sometime (no one knows when) but wonder if our duration of about 5.4 is too risky in a rising rate environment. Is anyone out there in the same situation? . . .

We are all in this situation. However, I'm optimistic that U.S. interest rates will remain low for a long time. Here's why: The U.S. government can't afford rising interest rates. Interest expense is a cost in the federal budget just like any other, but it's HUGE. As politicians bicker about raising revenues and cutting costs to balance the federal budget, there's one cost almost all enlightened federal congressmen will agree on: Keep Interest Rates Low. It would be a disaster to the government if interest rates rose a few points because they'd have to make up the difference with additional revenues and/or cutting other real costs. Okay, maybe I'm pessimistic instead of optimistic, and I don't invest entirely on my foresight, but this I do believe.

[Bustoff]

According to Larry Swedroe's Bond book, finding the most efficient maturity depends on the investors overall asset allocation.

Swedroe claims that for 60/40 stock bond allocation (where stocks are 60/40 domestic/intl.), the highest Sharpe ratio was achieved with five-year Treasuries.

*His book also suggests implementing your bond allocations without regard to current events.

[SpringMan]

Our average bond fund duration is 4.58 years and we are tilted toward corporate. Ratio is 35% equity/65% fixed income, includes some of Vanguard's high yield corporate. We are both 65 yo retirees, 4.5 years away from RMDs.

[Bustoff]

Our average bond fund duration is 4.58 years and we are tilted toward corporate. Ratio is 35% equity/65% fixed income, includes some of Vanguard's high yield corporate. We are both 65 yo retirees, 4.5 years away from RMDs.

How do you determine your average duration ?
I checked my Portfolio Watch but didn't see it there ?

[SpringMan]

I use the T. Rowe Price website which provides free Morningstar tools. You need to register your email to get an ID and password but do not need to have any money invested at TRP. There is a tab called MY VIEW which shows your holdings, at the bottom it shows the average duration of bond funds.
edit: In case its a concern, I have NEVER received any spam email from TRP after registering.

[Bustoff]

Thanks SpringMan !

[midareff]

Bustoff..... If you put your portfolio into M*'s tracker it will automatically calculate it for you.

[Bustoff]

Bustoff..... If you put your portfolio into M*'s tracker it will automatically calculate it for you.

Thanks. I need to do something because Vanguard's Portfolio Watch is not correctly reflecting my holdings.

I just tried TRowes M* X-Ray for the Total Bond Fund but it didn't break it down very well. Is X-Ray the wrong tool ?

[midareff]

Bustoff..... If you put your portfolio into M*'s tracker it will automatically calculate it for you.

Thanks. I need to do something because Vanguard's Portfolio Watch is not correctly reflecting my holdings.

I just tried TRowes M* X-Ray for the Total Bond Fund but it didn't break it down very well. Is X-Ray the wrong tool ?

I like M*'s for a variety of reasons. You can easily set up several different views of your portfolio to obtain different data and then use that data, exported as an excel sheet, to update your own excel portfolio tracker, which I do. I don't use X-ray at all. When you customize your views include duration as one of those items displayed.

[kenyan]

I don't trust my ability to time the bond market any more than I trust my ability to time the stock market. As a result, I continue to hold the same allocation, which includes intermediate bond index (TBM substituted in one employer account) and VIPSX.