Intermediate TIPS fund
- abuss368
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Intermediate TIPS fund
What does everyone think of the Vanguard Intermediate TIPS fund YTD? Big difference from the 9% loss last year. The year to date dividend income is .12 through June 2014.
Thoughts? has anyone taken a position or sold one this year?
Thoughts? has anyone taken a position or sold one this year?
John C. Bogle: “Simplicity is the master key to financial success."
Re: Intermediate TIPS fund
VIPSX 4.34% YTD, ..... IT IG 6.23% YTD, ...... IT Tax-Ex 5.26 YTD. Nothing exciting there except it's 8 year duration. About 70% of my income is cola'd between SS and pension so AFAIK I don't need the inflation protection, the return has been nothing special and the duration is not to my liking. No Thanks, but other opinions will differ..
- abuss368
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Re: Intermediate TIPS fund
The duration and low dividend income has always bothered me!
John C. Bogle: “Simplicity is the master key to financial success."
Re: Intermediate TIPS fund
I think it's about the best intermediate TIPS fund out there. But if course, if apples don't suit you, get something else. -- Tet
Re: Intermediate TIPS fund
If I want an intermediate term bond fund I prefer one with intermediate term bonds not one with just an intermediate term average duration.tetractys wrote:I think it's about the best intermediate TIPS fund out there. But if course, if apples don't suit you, get something else. -- Tet
For example FlexShares iBoxx 5Yr Target Dur TIPS ETF TDTF
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: Intermediate TIPS fund
What are folks thoughts on AIANX? It's available in my 401K and I'm thinking about taking a position in it...
Re: Intermediate TIPS fund
I'm still invested in my employer-sponsored intermediate TIPS index fund by SSgA (ER 0.06%). I'm still ignoring it, too. It's still less than 4% of our entire portfolio. It's effective duration is 7 years and serves to provide Treasury-issued bonds to the mix I've cobbled together in my employer plan. Combining the Intermediate TIPS fund with a nominal bond fund (mostly corporates and MBS) and a stable value fund, the average duration comes to a hint over 5 years. Those three make up the account minimum that must remain on the employer-side side of the plan, Then, I use my employer's self-directed brokerage feature to access the Schwab Intermediate-Term Treasury ETF (SCHR), since the Schwab Total Bond Fund is 3x more expensive. It's good enough for me, but I'm in the accumulation phase and income from investments is not yet a cause for, well, preoccupation.
Last edited by pingo on Wed Jul 09, 2014 3:06 am, edited 3 times in total.
Re: Intermediate TIPS fund
Edited below in red.
It might be a wee off-topic, but I would have no problem using AIANX if I simply had to have inflation-protected bonds. I haven't read much on the subject, but I *think* there is practically zero alpha to be had by active management in the inflation-protected bond arena, so costs are even more crucial. So, I could live with ER 0.26% if TIPS were a must-have or if I had to hold bonds in the 401k and AIANX were the most reasonable 401k bond option.feh wrote:What are folks thoughts on AIANX? It's available in my 401K and I'm thinking about taking a position in it...
Last edited by pingo on Mon Jul 07, 2014 8:48 am, edited 5 times in total.
Re: Intermediate TIPS fund
I hold 4% (20% of my bonds) in DIPSX, an int term TIPS fund similar to VIPSX that's available In my 401k. The two funds track very closely. Rebalanced into It recently actually. I suppose that's easier to do given that it's such a small part of my portfolio. If I was closer to retirement and/or held more than 20% bonds I might be more concerned, but for now I'm staying the course.
Re: Intermediate TIPS fund
I'm considering it because I'm 2 years from retirement (when folks seem to think TIPS start to make sense), and I don't have any TBM funds in my 401K.pingo wrote:Edited below in red.
It might be a wee off-topic, but I would have not problem using AIANX if I just had to have inflation-protected bonds. I haven't read much on the subject, but I *think* there is practically zero alpha to be had by active management in the inflation-protected bond arena, so costs are even more crucial than ever. I could live with ER 0.26% if TIPS were a must-have or if I had to hold bonds in the 401k and AIANX were the only reasonable option when compared to the 401k's other bond options..feh wrote:What are folks thoughts on AIANX? It's available in my 401K and I'm thinking about taking a position in it...
Re: Intermediate TIPS fund
Thanks for mentioning this fund, Doc; I hadn't been aware of it. Its holdings are unlike any other TIPS fund I know of. I wouldn't want to invest in it; but it's interesting.Doc in [url=http://www.bogleheads.org/forum/viewtopic.php?p=2108977#p2108977]this post[/url] wrote:If I want an intermediate term bond fund I prefer one with intermediate term bonds not one with just an intermediate term average duration. For example FlexShares iBoxx 5Yr Target Dur TIPS ETF TDTF
Currently the fund holds 12 TIPS maturing in 3 - 8 years from July 2017 to January 2022 weighted as follows:the Index tab wrote:The Fund reflects the performance of a selection of ... "TIPS," with a target average duration of approximately five years and specific maturity dates of at least three years but not more than 20 years. The Fund seeks to provide investment results that ... correspond generally to ... the iBoxx 5-Year Target Duration TIPS Index.
…
The iBoxx 5-Year Target Duration TIPS Index measures the performance of Treasury Inflation Protected Securities (TIPS) as determined by Markit iBoxx's proprietary index methodology. (underlines added)
Code: Select all
Year Count Pct
---- ----- -----
2017 1 2.4 XX
2018 3 22.1 XXXXXXXXXXXXXXXXXXXXXX
2019 3 38.0 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
2020 2 20.6 XXXXXXXXXXXXXXXXXXXXX
2021 2 11.1 XXXXXXXXXXX
2022 1 5.8 XXXXXX
--- -----
12 100.0
Code: Select all
Mkt Fund
Matures Coupon Pct Pct Life Yield
-------- ------ ----- ----- ---- -------
07/15/17 2.625 5.1 2.4 3.0 (1.150)
01/15/18 1.625 5.8 2.7 3.5 (0.813)
04/15/18 0.125 15.0 7.1 3.8 (0.653)
07/15/18 1.375 5.1 12.2 4.0 (0.807)
01/15/19 2.125 5.2 12.4 4.5 (0.542)
04/15/19 0.125 5.3 12.7 4.8 (0.410)
Code: Select all
07/15/19 1.875 5.4 12.9 5.0 (0.499)
01/15/20 1.375 6.5 15.4 5.5 (0.267)
07/15/20 1.250 10.9 5.2 6.0 (0.236)
01/15/21 1.125 12.2 5.8 6.5 (0.053)
07/15/21 0.625 11.2 5.3 7.0 (0.036)
01/15/22 0.125 12.3 5.8 7.5 0.131
----- ----- ---- -------
Avg wtd by Mkt Pct 100.0 5.4 (0.359)
Avg wtd by Fund Pct 100.0 5.1 (0.429)
* The individual yields are from WSJ TIPS Quotes 7/3/2014. I don't know why the Overview tab of the fund's web page reports a "Weighted Avg Real Yield" of -0.35% as of 7/3/14, some 0.08% points higher than the actual weighted average of -0.43%.
Re: Intermediate TIPS fund
[/quote]
feh wrote:What are folks thoughts on AIANX? It's available in my 401K and I'm thinking about taking a position in it...
pingo wrote:It might be a wee off-topic, but I would have no problem using AIANX if I simply had to have inflation-protected bonds. I haven't read much on the subject, but I *think* there is practically zero alpha to be had by active management in the inflation-protected bond arena, so costs are even more crucial. So, I could live with ER 0.26% if TIPS were a must-have or if I had to hold bonds in the 401k and AIANX were the most reasonable 401k bond option.
Those sound like perfectly good reasons to consider AIANX in your 401k.feh wrote:I'm considering it because I'm 2 years from retirement (when folks seem to think TIPS start to make sense), and I don't have any TBM funds in my 401K.
Last edited by pingo on Wed Jul 09, 2014 3:04 am, edited 2 times in total.
- Phineas J. Whoopee
- Posts: 9675
- Joined: Sun Dec 18, 2011 5:18 pm
Re: Intermediate TIPS fund
Demonstrate for us your time machine and there's a possible answer.
Don't you, as a paid investment adviser, of all people, know past performance does not guarantee future results?
If your clients need inflation protection over the very long term Vanguard's TIPS fund can be a good choice. If they need it to be closer to year-by-year you could consider the short-term TIPS fund for them.
If you, as you've repeatedly asserted, tell them to spend all the dividends you may as well just put them in Treasuries because they'll be spending and not compounding the inflation protection. You know that. You and I have discussed it, publicly and in PMs, again and again.
How TIPS performed in the past eighteen months is irrelevant. How they relate to the other components of a portfolio is of utmost importance. You, of all compensated-for-advice people, must know that, after all your threads, by now.
If they fit the objectives in the context of a portfolio, yes. If not, no. Of course. What's the point of starting thread after thread always asking the same question? What answer are you waiting for you've not received yet?
PJW
Don't you, as a paid investment adviser, of all people, know past performance does not guarantee future results?
If your clients need inflation protection over the very long term Vanguard's TIPS fund can be a good choice. If they need it to be closer to year-by-year you could consider the short-term TIPS fund for them.
If you, as you've repeatedly asserted, tell them to spend all the dividends you may as well just put them in Treasuries because they'll be spending and not compounding the inflation protection. You know that. You and I have discussed it, publicly and in PMs, again and again.
How TIPS performed in the past eighteen months is irrelevant. How they relate to the other components of a portfolio is of utmost importance. You, of all compensated-for-advice people, must know that, after all your threads, by now.
If they fit the objectives in the context of a portfolio, yes. If not, no. Of course. What's the point of starting thread after thread always asking the same question? What answer are you waiting for you've not received yet?
PJW
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Re: Intermediate TIPS fund
You could combine with the ST TIPS Fund to lower the overall weighted duration. Vg uses the ST TIPS Fund in the Target Retirement Income Fund.
VT 60% / VFSUX 20% / TIPS 20%
Re: Intermediate TIPS fund
I like abuss368's threads.
I think abuss368 is searching for something elusive, whether it's a satisfying assurance or some knowledge and perspective that is not commonly expressed. You don't always know what it'll be, but when you finally see it, everything falls into place. I, too, try to find answers to vexing questions directly (and indirectly) and all-too-often come up empty...so I persist. Sometimes, luck brings me to find what I didn't expect. Sometimes I find it where I didn't expect it. I often fear that the number of times I have posted on this forum will bring reproach for not knowing answers that others think I should know, but simply don't.
I believe that most things have fallen into place for abuss368 in what is basically a 3-fund portfolio plus REITs.
As I see it, income/dividends are an important part of how Jack Bogle and abuss368 view bonds, but then TIPS funds came into play: for some time, they appeared to offer bond diversification and income diversification which complemented and even improved upon a plain vanilla "total" bond fund (and/or tax-exempt bonds for a taxable account). At the same time, there were a few theoretically risk-reducing advantages to adding TIPS.
The problem now is that the "income diversification" of TIPS funds has become doubtful, if not disappeared, for the foreseeable future. (Yes, there has been decent capital appreciation lately, but we often mention how the best indicator of a bond's future returns are it's yield.) The "bond diversification" story was convenient and nice to have, but does it trump a lack of income when a single "total" bond fund was always a solid choice and it offers a relatively-respectable dividend? When dividends all-but disappear and one considers that the bond diversification wasn't critical, one is left to re-visit the importance (or reality) of any theoretical, risk-reducing advantage they may provide by being inflation-adjusted.
Rather than being the *pop* of a bubble or a devastating loss, the oft-labeled bond crisis may turn out to be a crisis of conviction and the one we suffer because we need more of what we cannot squeeze from an anemic asset class.
I think abuss368 is searching for something elusive, whether it's a satisfying assurance or some knowledge and perspective that is not commonly expressed. You don't always know what it'll be, but when you finally see it, everything falls into place. I, too, try to find answers to vexing questions directly (and indirectly) and all-too-often come up empty...so I persist. Sometimes, luck brings me to find what I didn't expect. Sometimes I find it where I didn't expect it. I often fear that the number of times I have posted on this forum will bring reproach for not knowing answers that others think I should know, but simply don't.
I believe that most things have fallen into place for abuss368 in what is basically a 3-fund portfolio plus REITs.
As I see it, income/dividends are an important part of how Jack Bogle and abuss368 view bonds, but then TIPS funds came into play: for some time, they appeared to offer bond diversification and income diversification which complemented and even improved upon a plain vanilla "total" bond fund (and/or tax-exempt bonds for a taxable account). At the same time, there were a few theoretically risk-reducing advantages to adding TIPS.
The problem now is that the "income diversification" of TIPS funds has become doubtful, if not disappeared, for the foreseeable future. (Yes, there has been decent capital appreciation lately, but we often mention how the best indicator of a bond's future returns are it's yield.) The "bond diversification" story was convenient and nice to have, but does it trump a lack of income when a single "total" bond fund was always a solid choice and it offers a relatively-respectable dividend? When dividends all-but disappear and one considers that the bond diversification wasn't critical, one is left to re-visit the importance (or reality) of any theoretical, risk-reducing advantage they may provide by being inflation-adjusted.
Rather than being the *pop* of a bubble or a devastating loss, the oft-labeled bond crisis may turn out to be a crisis of conviction and the one we suffer because we need more of what we cannot squeeze from an anemic asset class.
Last edited by pingo on Tue Jul 08, 2014 11:47 am, edited 7 times in total.
- Phineas J. Whoopee
- Posts: 9675
- Joined: Sun Dec 18, 2011 5:18 pm
Re: Intermediate TIPS fund
We might have common ground, pingo, except for one thing. Abuss charges clients for investment advice. He presents himself as an expert, tells them to act in what can only be a manner contrary to their interests because it's based on logical fallacies, then asks us for validation. Under those circumstances, in my opinion, he can't have any.
If he was a seeker, that would be fine. He isn't. He charges people money.
PJW
If he was a seeker, that would be fine. He isn't. He charges people money.
PJW
Re: Intermediate TIPS fund
I got out of this fund and transferred to the ST TIPS find. The IT fund is just too volitale for me. Also, since Vanguard thinks the ST Fund is good enough for their Target funds then it is good enough for me.
Plus, in the longer term I think equities provide decent inflation protection. Not so great in the shorter term, however. I think the ST fund can cover this gap.
Plus, in the longer term I think equities provide decent inflation protection. Not so great in the shorter term, however. I think the ST fund can cover this gap.
Last edited by Leif on Mon Jul 07, 2014 4:24 pm, edited 1 time in total.
Re: Intermediate TIPS fund
I own LTPZ. That actually has a positive real yield (I'm patient, so I don't worry much about what it does in the meantime). And it's indexed...what's with Vanguard anyway? Do they really think they can outperform the TIPS market with active management?
Last edited by baw703916 on Wed Jul 09, 2014 9:48 pm, edited 1 time in total.
Most of my posts assume no behavioral errors.
- abuss368
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Re: Intermediate TIPS fund
Hilarious! I do? I can not recall noting that I am an "investment advisor"! How does "clients" translate into "investment advisor"?Phineas J. Whoopee wrote:We might have common ground, pingo, except for one thing. Abuss charges clients for investment advice. He presents himself as an expert, tells them to act in what can only be a manner contrary to their interests because it's based on logical fallacies, then asks us for validation. Under those circumstances, in my opinion, he can't have any.
If he was a seeker, that would be fine. He isn't. He charges people money.
PJW
Priceless!
John C. Bogle: “Simplicity is the master key to financial success."
Re: Intermediate TIPS fund
This may be off topic, but this seems like an area where you could easily just roll your own.
If buying riskier sorts of bonds, a fund is good because it can diversify across issuers, say across corporations.
But for treasuries of any sort why not just put together whatever ladder floats your boat?
If buying riskier sorts of bonds, a fund is good because it can diversify across issuers, say across corporations.
But for treasuries of any sort why not just put together whatever ladder floats your boat?
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
- Phineas J. Whoopee
- Posts: 9675
- Joined: Sun Dec 18, 2011 5:18 pm
Re: Intermediate TIPS fund
http://www.bogleheads.org/forum/viewtop ... 1#p1307595abuss368 wrote: Hilarious! I do? I can not recall noting that I am an "investment advisor"! How does "clients" translate into "investment advisor"?
Priceless!
PJW
Re: Intermediate TIPS fund
I don't pay any attention to YTD performance. I select investments based on expected return and risk, as best I can assess them. I don't like the risk/return prospects of the int-term TIPS fund, and sold my holdings of it and my individual TIPS some time ago. I do continue to like I Bonds though.
Kevin
Kevin
If I make a calculation error, #Cruncher probably will let me know.
- abuss368
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Re: Intermediate TIPS fund
Thanks pingo!pingo wrote:I like abuss368's threads.
That was a nice complement and made my night!
This is a great forum dedicated to the investment advice inspired by Jack Bogle!
John C. Bogle: “Simplicity is the master key to financial success."