Vanguard Claims Title of World’s Largest Bond Fund

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
mlebuf
Posts: 1916
Joined: Tue Feb 20, 2007 7:27 pm
Location: Paradise Valley, Arizona

Vanguard Claims Title of World’s Largest Bond Fund

Post by mlebuf »

Just read this in "The Wall Street Journal" online:
Pacific Investment Management Co.’s flagship Total Return fund ceded its title as largest bond mutual fund to rival Vanguard Group, according to April data released by both companies.
Link: http://www.wsj.com/articles/pimcos-tota ... 1430769693
Best wishes, | Michael | | Invest your time actively and your money passively.
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by nisiprius »

I hope this is reporter Kirsten Grind's discovery. I hope Vanguard isn't issuing press releases about this... "Pride goeth before destruction, and an haughty spirit before a fall."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by 555 »

nisiprius wrote:I hope this is reporter Kirsten Grind's discovery. I hope Vanguard isn't issuing press releases about this... "Pride goeth before destruction, and an haughty spirit before a fall."
Is there a taboo against merely stating facts? :wink:
Professor Emeritus
Posts: 2628
Joined: Mon Aug 13, 2012 6:43 am

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by Professor Emeritus »

My shoe size is 11 . That's a fact. If I put it in a press release people would properly think i am a moron.
z3r0c00l
Posts: 3809
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by z3r0c00l »

Possibly the best mutual fund out there. About time people noticed!
70% Global Stocks / 30% Bonds
User avatar
Archie Sinclair
Posts: 413
Joined: Sun Mar 06, 2011 1:03 am

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by Archie Sinclair »

nisiprius wrote:I hope this is reporter Kirsten Grind's discovery. I hope Vanguard isn't issuing press releases about this... "Pride goeth before destruction, and an haughty spirit before a fall."
I respectfully disagree. Press releases are free advertising to get more investors in the door. I think it would be haughty to pass up a free opportunity to decrease ERs for everyone.
TradingPlaces
Posts: 1245
Joined: Sun Nov 09, 2014 12:19 pm
Location: 30.286029, -97.530011

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by TradingPlaces »

About time. About time.

Here is to the future:

- may PIMCO total returns fund lose another 50% of assets, and may 100% of that end up parked at Vanguard.
TradingPlaces
Posts: 1245
Joined: Sun Nov 09, 2014 12:19 pm
Location: 30.286029, -97.530011

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by TradingPlaces »

Professor Emeritus wrote:My shoe size is 11 . That's a fact. If I put it in a press release people would properly think i am a moron.
You just put up a press release about that.
User avatar
JMacDonald
Posts: 2386
Joined: Mon Feb 19, 2007 4:53 pm

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by JMacDonald »

Here is an article about this in the LA Times: http://www.latimes.com/business/la-fi-p ... story.html
Pimco's flagship fund loses status as world's largest bond fund
Best Wishes, | Joe
Beat The Street
Posts: 336
Joined: Wed Sep 26, 2012 3:09 pm

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by Beat The Street »

It's funny to me though that PTTRX has outperformed VBTLX the last 15 years, 10 years, 5 years, 3 years, 1 year, and YTD.
“Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have—or don’t have—in their portfolio.” -Taleb
Professor Emeritus
Posts: 2628
Joined: Mon Aug 13, 2012 6:43 am

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by Professor Emeritus »

TradingPlaces wrote:
Professor Emeritus wrote:My shoe size is 11 . That's a fact. If I put it in a press release people would properly think i am a moron.
You just put up a press release about that.
Its not a press release. It's a teaching example to a membership group
User avatar
Doc
Posts: 10607
Joined: Sat Feb 24, 2007 12:10 pm
Location: Two left turns from Larry

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by Doc »

Beat The Street wrote:It's funny to me though that PTTRX has outperformed VBTLX the last 15 years, 10 years, 5 years, 3 years, 1 year, and YTD.
And all but one rolling three year period for the last ten years at least. :?
http://quotes.morningstar.com/chart/fun ... 22%3A36%7D
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.
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by nisiprius »

Despite headline writers Vanguard is not claiming "titles:"UPDATE 2-Pimco Total Return Fund loses world's biggest bond fund title
"We do not view this as an asset gathering horse race," said John S. Woerth, spokesman at the Valley Forge, Pennsylvania-based Vanguard Group. "It is, however, representative of the popularity of low-cost, broadly diversified index funds."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
stratton
Posts: 11085
Joined: Sun Mar 04, 2007 4:05 pm
Location: Puget Sound

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by stratton »

It's not like Vanguard had much to do with it. From the WSJ:

Image

Paul
...and then Buffy staked Edward. The end.
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by nisiprius »

stratton wrote:It's not like Vanguard had much to do with it. From the WSJ:

Image

Paul
It is, however, tempting to quote what Charles D. Ellis wrote in the influential essay, The Loser's Game. He argued in 1975 that institutional investing had become a "loser's game," not in the sense that everyone who plays it loses, but in the sense that it is a game won not by making brilliant winning plays, but by avoiding mistakes. His analogy is to tennis, when played at the amateur level, as analyzed by Simon Ramo:
Dr. Ramo explains that if you choose to win at tennis--as opposed to having a good time--the strategy for winning is to avoid mistakes. The way to avoid mistakes is to be conservative and keep the ball in play, letting the other fellow have plenty of room in which to blunder his way to defeat, because he, being an amateur (and probably not having read Ramo's book) will play a losing game and not know it.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by 555 »

Professor Emeritus wrote:
TradingPlaces wrote:
Professor Emeritus wrote:My shoe size is 11 . That's a fact. If I put it in a press release people would properly think i am a moron.
You just put up a press release about that.
Its not a press release. It's a teaching example to a membership group
Professor (striding into lecture hall): Class, I'll have you know that my shoe size is 11!
Student (looking baffled): Is that gonna be on the test?
John Z
Posts: 521
Joined: Sun Nov 14, 2010 4:42 pm

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by John Z »

Beat The Street wrote:It's funny to me though that PTTRX has outperformed VBTLX the last 15 years, 10 years, 5 years, 3 years, 1 year, and YTD.
Yes, PTTRX has outperformed VBTLX for all periods, but after I read the prospectus for PTTRX years ago I was sure I didn't want to invest my money in that fund. Way too much risk. As it turned out all went well for PTTRX but I didn't want to take a chance. I sleep very well with VBTLX.
denovo
Posts: 4808
Joined: Sun Oct 13, 2013 1:04 pm

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by denovo »

Beat The Street wrote:It's funny to me though that PTTRX has outperformed VBTLX the last 15 years, 10 years, 5 years, 3 years, 1 year, and YTD.

Isn't Vanguard Interm-Bond Index Fund the more appropriate benchmark?

Even then, PIMCO still wins, but its much closer, 5.9 v 5.6 over 10 years.
"Don't trust everything you read on the Internet"- Abraham Lincoln
User avatar
Doc
Posts: 10607
Joined: Sat Feb 24, 2007 12:10 pm
Location: Two left turns from Larry

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by Doc »

Regarding PTTRX,
denovo wrote:Isn't Vanguard Interm-Bond Index Fund the more appropriate benchmark?
No. The duration is too long. Both PIMCO and Morningstar analyst use the BarCap Agg Index as the benchmark. If you want to get closer to the average credit quality while maintaining the duration the best choice may be the BarCap Government/Credit (1-10) Index (use GVI) but you don't have data longer than five years for GVI. Also remember that the PTTRX duration is going to move around more than an index fund does.
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.
denovo
Posts: 4808
Joined: Sun Oct 13, 2013 1:04 pm

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by denovo »

Doc wrote:Regarding PTTRX,
denovo wrote:Isn't Vanguard Interm-Bond Index Fund the more appropriate benchmark?
No. The duration is too long. Both PIMCO and Morningstar analyst use the BarCap Agg Index as the benchmark. If you want to get closer to the average credit quality while maintaining the duration the best choice may be the BarCap Government/Credit (1-10) Index (use GVI) but you don't have data longer than five years for GVI. Also remember that the PTTRX duration is going to move around more than an index fund does.

Thanks. Looking at the numbers, Gross deserves his reputation as bond king. The expense ratio on PTTRX looks to be around .6 which is significantly higher than the Vanguard Bond funds, but less than the one percent that is average.
"Don't trust everything you read on the Internet"- Abraham Lincoln
User avatar
Doc
Posts: 10607
Joined: Sat Feb 24, 2007 12:10 pm
Location: Two left turns from Larry

Re: Vanguard Claims Title of World’s Largest Bond Fund

Post by Doc »

The wide use of derivatives lets a fund reduce transaction costs and therefore take advantage of well known bond trading techniques like "riding the yield curve". An index fund can't do that. Moreover any large fund that has to or wants to make large moves without affecting the market probably can't do that without using derivatives. How much of PTTRX's past performance was due to the bond king's correct guesses and how much is due to its institutional trading expertise may never be known.
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.
Post Reply