What is the Bernstein PW argument?I must admit that I moved about 1/3 of my holding out of tips and tbm into short term bond index after reading the Bernstein PW argument.
Which Vanguard bond funds are you currently using, and why?
- Opponent Process
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There are a couple flaws, but that's a whole different discussion! :lol:Opponent Process wrote:incidentally, it has the exact same flaw as the original PW.Scott S wrote:It took me a minute or two, but I think it means "Pascal's Wager."
- Scott
- Scott
"Old value investors never die, they just get their fix from rebalancing." -- vineviz
Re: Which Vanguard bond funds are you currently using, and
VIPSX (Vanguard Inflation Protected Securities).tc101 wrote:Which Vanguard bond funds are you currently using? What are your reasons for selecting these particular funds for your bond investments?
Last edited by Gmaloof on Sun May 29, 2011 1:51 pm, edited 1 time in total.
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Total Bond Market Index for wide diversification, stability, and deflation protection.
TIPS Fund for negative correlation with equities and inflation protection.
Short Term Bond Index for a future expenses 'bucket', and to shorten the duration of my bond portfolio as a whole.
TIPS Fund for negative correlation with equities and inflation protection.
Short Term Bond Index for a future expenses 'bucket', and to shorten the duration of my bond portfolio as a whole.
"Optimum est pati quod emendare non possis." |
-Seneca
I've had VG Total Bond Mkt IDX (VBTLX) for years, but after evaluating Harbor, I have recently switched to HARDX, which beat VG quite a bit in ytd, 1, 3, 5 and 10 year returns. The yield, duration, maturity and quality are about the same. Harbor has a slightly higher expense (0.55%).
I also have TIPS (vaipx) and intend to increase that amount.
I also have a lesser amount of VWEHX High Yield, and Convertible Securities (VCVSX)
I am retired, 68 yrs old and will soon liquidate the VWEHX and VCVSX.
I also have TIPS (vaipx) and intend to increase that amount.
I also have a lesser amount of VWEHX High Yield, and Convertible Securities (VCVSX)
I am retired, 68 yrs old and will soon liquidate the VWEHX and VCVSX.
- Taylor Larimore
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- Location: Miami FL
HARDX ?
HARDX is a Target Fund with a 2009 Inception Date ?kenepp1 wrote:I've had VG Total Bond Mkt IDX (VBTLX) for years, but after evaluating Harbor, I have recently switched to HARDX, which beat VG quite a bit in ytd, 1, 3, 5 and 10 year returns.
"Simplicity is the master key to financial success." -- Jack Bogle
25% TIPs
25% Total Bond Market
25% Intermediate Bond Index
25% Tax-Exempt Limited-Term Bond Index
It's probably sliced & diced more than what's necessary, but:
1) I'm very comfortable holding this broadly diversified mix, and
2) I like that it's overall tilted slightly towards intermediate-term bonds which from what I've read have the best mix of return vs interest rate sensitivity.
25% Total Bond Market
25% Intermediate Bond Index
25% Tax-Exempt Limited-Term Bond Index
It's probably sliced & diced more than what's necessary, but:
1) I'm very comfortable holding this broadly diversified mix, and
2) I like that it's overall tilted slightly towards intermediate-term bonds which from what I've read have the best mix of return vs interest rate sensitivity.
Re: HARDX ?
Perhaps he meant the Harbor Bond Fund HABDX? It's a clone of the Pimco Total Return Bond Fund.Taylor Larimore wrote:HARDX is a Target Fund with a 2009 Inception Date ?kenepp1 wrote:I've had VG Total Bond Mkt IDX (VBTLX) for years, but after evaluating Harbor, I have recently switched to HARDX, which beat VG quite a bit in ytd, 1, 3, 5 and 10 year returns.
I don't currently own a Vanguard Bond fund right now. I also use PIMCO total return because it's expense ratio is cheaper in my employer retirement account than a competing account which offers the Total Bond Index. I'd be happy to own the Index if I could get it anywhere near it's Vanguard ER.
Never underestimate the power of the force of low cost index funds.
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As we're in retirement (71 & 74) and in the distribution phase, we've allocated much of our fixed income into laddered CDs.earning from 3% to 6%. In different institutions so not going over the $250000 FDIC insurance.tc101 wrote:Why would anyone buy individual treasuries rather than individual CDs? I understand that you only get $250K of govt guarantee for each bank, but even for people with a few million to invest, and even limiting yourself to the CDs available from the Vanguard brokerage, you can still do better with CDs than treasuries;.Dr. Bill Bernstein recommended that individual treasuries are better than even a skinny Vanguard expense ratio fund.
Our current allocation is 31% equity and 69% fixed income.
All our equity's are in Vanguard Admiral
L C Index ----------------- 68%
M Cap Index -----------------18%
Total International Index ---14%
Of the fixed income portion we have in bonds -------42%
S T Investment grade bonds ------------- 36% (our entire IRA's )
S T Bond Index --------------------------- 6% (it is in our taxable)
Our CD portion is 58% of fixed income
1 yr earning 3% ----8.5%
2 yr earning 5% -----12%
3 yr earning 5% -----12%
4 yr. earning 5.15% ---11%
5 yr. earning 3 % -----8%
10 yr Cd earning 5%-----6%
- ruralavalon
- Posts: 26351
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- Location: Illinois
FIXED half of portfolio, age 66, retired --
70% Treasury STRIPS, laddered 1 - 8 yrs, sure return at maturity
14% Total Bond Market Adm, VBTLX, broad diversification
12% Short Term Investment Grade Adm, VFSUX, better return & less sensitive to changes in interest rate
04% cash
70% Treasury STRIPS, laddered 1 - 8 yrs, sure return at maturity
14% Total Bond Market Adm, VBTLX, broad diversification
12% Short Term Investment Grade Adm, VFSUX, better return & less sensitive to changes in interest rate
04% cash
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Only VIPSX (in IRAs) at Vanguard.
The account housing our biggest chunk of sheltered investments is a 401K offering Pimco Total Return (luckily, the Inst version with expenses of "only" 0.47%), so we've held that for years.
We had the chance to invest in Fido's Spartan US Bond Index (FBIDX) not too long ago in the 401K and, after agonizing a little, decided to split the 401K-bond-baby and go halfsies (halvsies?) with FBIDX and PTRAX. Don't know if that's anti-Boglehead b/c it's not "simple," or whether it's not-too-terribly-dumb (what with Gross so down on the US and FBIDX offering a more standard diversified portfolio).
The account housing our biggest chunk of sheltered investments is a 401K offering Pimco Total Return (luckily, the Inst version with expenses of "only" 0.47%), so we've held that for years.
We had the chance to invest in Fido's Spartan US Bond Index (FBIDX) not too long ago in the 401K and, after agonizing a little, decided to split the 401K-bond-baby and go halfsies (halvsies?) with FBIDX and PTRAX. Don't know if that's anti-Boglehead b/c it's not "simple," or whether it's not-too-terribly-dumb (what with Gross so down on the US and FBIDX offering a more standard diversified portfolio).
Don't reach for yield.
Re: HARDX ?
Yes, it was a typo. It is HABDXofcmetz wrote:Perhaps he meant the Harbor Bond Fund HABDX? It's a clone of the Pimco Total Return Bond Fund.Taylor Larimore wrote:HARDX is a Target Fund with a 2009 Inception Date ?kenepp1 wrote:I've had VG Total Bond Mkt IDX (VBTLX) for years, but after evaluating Harbor, I have recently switched to HARDX, which beat VG quite a bit in ytd, 1, 3, 5 and 10 year returns.
I don't currently own a Vanguard Bond fund right now. I also use PIMCO total return because it's expense ratio is cheaper in my employer retirement account than a competing account which offers the Total Bond Index. I'd be happy to own the Index if I could get it anywhere near it's Vanguard ER.
4-way split VCSH, BND, VIPSX, BSV?
Any thoughts on a Vanguard bond fund/ETF portfolio that is evenly split into four funds or ETFs?
25% -- Inflation Protected Securities (VIPSX)
25% -- Short Term Bond Index (VBIRX, BSV, or VBISX)
25% -- Short Term Corporate (VFSUX, VCSH, or VFSTX)
25% -- Total Bond Market (VBTLX, BND, or VBMFX)
25% -- Inflation Protected Securities (VIPSX)
25% -- Short Term Bond Index (VBIRX, BSV, or VBISX)
25% -- Short Term Corporate (VFSUX, VCSH, or VFSTX)
25% -- Total Bond Market (VBTLX, BND, or VBMFX)
Bonds result is loss of purchasing power
Bond investors
The probability of loss of purchasing power is much greater than the probability of loss of principle over many years. Bonds result is loss of purchasing power.
The probability of loss of purchasing power is much greater than the probability of loss of principle over many years. Bonds result is loss of purchasing power.
Re: Which Vanguard bond funds are you currently using, and
My wife has a goodly chunk of VBTSX in her 401K. It was the best bond fund offered by the plan admin.tc101 wrote:Which Vanguard bond funds are you currently using? What are your reasons for selecting these particular funds for your bond investments?
Basically none.
I attempt to use a modified TBM approach for our bond portfolio with underweight in LT and MBS using index funds where possible. We also have to split our bonds between taxable and tax advantaged because of space limitations and it is advantageous to put Treasuries in taxable because of state income tax.
Vanguard, the index fund company, has no bond index funds that meet these relatively simple criteria so I have to go elsewhere. Ironically we originally chose Vg because of their good low cost bond funds.
(Edit: fix typos)
I attempt to use a modified TBM approach for our bond portfolio with underweight in LT and MBS using index funds where possible. We also have to split our bonds between taxable and tax advantaged because of space limitations and it is advantageous to put Treasuries in taxable because of state income tax.
Vanguard, the index fund company, has no bond index funds that meet these relatively simple criteria so I have to go elsewhere. Ironically we originally chose Vg because of their good low cost bond funds.
(Edit: fix typos)
Last edited by Doc on Wed Aug 03, 2011 10:10 am, edited 1 time in total.
- Taylor Larimore
- Posts: 32842
- Joined: Tue Feb 27, 2007 7:09 pm
- Location: Miami FL
A stay-the-course bond allocation
Pat and I have held 50% TIPS and 50% Total Bond Market since 2000 when Vanguard first introduced its TIPS (Inflation-Protected Securities) Fund. This is our bond history:Which Vanguard bond funds are you currently using, and why?
YEAR--CPI----TIPS---TBM
2001---2.8%---7.7%---8.4%
2002---1.6%--16.6%---8.3%
2003---2.3%---8.0%---4.0%
2004---2.7%---8.3%---4.2%
2005---3.4%---2.6%---2.4%
2006---3.2%---0.4%---4.3%
2007---2.8%--11.6%---6.9%
2008---0.1%--(2.8%)--5.1%
2009---2.7%--10.8%---5.9%
2010---1.5%---6.7%---6.4%
It is notable that annual Inflation (CPI-U) fluctuated between 0.1% to 3.4% during this period but our 2-bond fund combination always enjoyed a gain.
Past performance is no guarantee of future performance.
"Simplicity is the master key to financial success." -- Jack Bogle
I'm not Taylor but know his answer.fishdrzig wrote:Hello Taylor
I don't know why, but I find it interesting that your portfolio is just 50%TIPS and 50% TBM.
1. Is the TIPS VIPSX with Vanguard?
2. Was any of your AA devoted to equities prior to the year 2000?
3. If you don't mind, what is your current age?
Thanks for the help
This is for the fixed income portion of his portfolio.
Yes it is in Vanguard Tips (Don't know if Admiral if available)
and Total Bond fund Admiral.
How is that Taylor? Age? in your 80s?
- Mel Lindauer
- Moderator
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- Location: Daytona Beach Shores, Florida
- Contact:
Yes, that's the breakdown of Taylor's fixed income holdings.greetje wrote:I'm not Taylor but know his answer.
This is for the fixed income portion of his portfolio.
Yes it is in Vanguard Tips (Don't know if Admiral if available)
and Total Bond fund Admiral.
How is that Taylor? Age? in your 80s?
And, yes, VAIPX is the Admiral version of Vanguard's TIPS fund (VIPSX).
Finally, Taylor was in the Battle of the Bulge in WWII, so he's definitely in his 80s. (I think he's 86 or 87.)
Best Regards - Mel |
|
Semper Fi
None.
I buy individual bonds to save the expense ratio, get higher yields and more uniformly high credit quality with munis and longer duration with the TIPS.
VG funds have about 30-40% of A and BBB and junk and unrated bonds, some more than others, though the shorter ones tend to have higher quality than that.
However, the yields are pathetic and ridiculous. If you buy lots of only 5,000 municipals, you get higher yields, even for pre-refunded and highly rated issues. Also you can only buy those AA/AAA bonds which the VG funds do not always buy. And some of those AA/AAA bonds the VG fund has might have a slightly higher yield. Remember the market is smarter than you are, so a AA bond with a BBB yield is considered BBB by the market and should be treated that way. This way, you get the lowest yielding but least risky issues to fulfil the purpose of risk control, which is why you buy bonds in the first place: to offset equity risk and provide you with appreciating ballast and dry powder, a -1 correlation to equity risk when the equity risk rears its ugly head and all risky assets have an equity correlation of 1.
TIPS wise it's better to buy them individually. There is no need to diversify the treasury, and as a younger investor with equity heavy portfolio longer durations tend to increase return without appreciably increasing risk. With TIPS there is no inflation risk (but there is a risk that real rates may rise which leads to price risk etc). Still, given the research, I prefer longer tips, and this year it served me very, very, very well for rebalancing ballast back into the falling equity of the last few weeks.
Also realize at the shorter end of the curve, even in taxable accounts, CD's with nominal early withdrawal penalty, high yield money markets or agency bonds that are AAA may have an after tax yield than municipals. Now it is true. 6 moths ago you could buy a pre-refunded muni that went 1 to 1 1/2 year out and make 2%. Now you need to go out like 6-7 years for a highly rated municipal to yield that much and you take the price, inflation and interest rate risks. You can currently buy 5 year CD's paying 2.5% with 6mo interest early withdrawal penalty. Even in high tax bracket the returns of the muni are more or less equal to the FDIC insured CD with nominal early withdrawal penalty. The latter is safer. *AND*, if you want to go even shorter, the yields drop even more, while the CD itself is nominally 5 years, but in reality the early withdrawal option gives you the duration you desire, so in reality it is a 6 month-5 year, up to you kind of bond in your favor. Going 5y or less, the individual CD you get directly from a bank gives you the same to higher return, even after tax is paid (depending on the maturity of muni to which you are comparing), but less risk.
I buy individual bonds to save the expense ratio, get higher yields and more uniformly high credit quality with munis and longer duration with the TIPS.
VG funds have about 30-40% of A and BBB and junk and unrated bonds, some more than others, though the shorter ones tend to have higher quality than that.
However, the yields are pathetic and ridiculous. If you buy lots of only 5,000 municipals, you get higher yields, even for pre-refunded and highly rated issues. Also you can only buy those AA/AAA bonds which the VG funds do not always buy. And some of those AA/AAA bonds the VG fund has might have a slightly higher yield. Remember the market is smarter than you are, so a AA bond with a BBB yield is considered BBB by the market and should be treated that way. This way, you get the lowest yielding but least risky issues to fulfil the purpose of risk control, which is why you buy bonds in the first place: to offset equity risk and provide you with appreciating ballast and dry powder, a -1 correlation to equity risk when the equity risk rears its ugly head and all risky assets have an equity correlation of 1.
TIPS wise it's better to buy them individually. There is no need to diversify the treasury, and as a younger investor with equity heavy portfolio longer durations tend to increase return without appreciably increasing risk. With TIPS there is no inflation risk (but there is a risk that real rates may rise which leads to price risk etc). Still, given the research, I prefer longer tips, and this year it served me very, very, very well for rebalancing ballast back into the falling equity of the last few weeks.
Also realize at the shorter end of the curve, even in taxable accounts, CD's with nominal early withdrawal penalty, high yield money markets or agency bonds that are AAA may have an after tax yield than municipals. Now it is true. 6 moths ago you could buy a pre-refunded muni that went 1 to 1 1/2 year out and make 2%. Now you need to go out like 6-7 years for a highly rated municipal to yield that much and you take the price, inflation and interest rate risks. You can currently buy 5 year CD's paying 2.5% with 6mo interest early withdrawal penalty. Even in high tax bracket the returns of the muni are more or less equal to the FDIC insured CD with nominal early withdrawal penalty. The latter is safer. *AND*, if you want to go even shorter, the yields drop even more, while the CD itself is nominally 5 years, but in reality the early withdrawal option gives you the duration you desire, so in reality it is a 6 month-5 year, up to you kind of bond in your favor. Going 5y or less, the individual CD you get directly from a bank gives you the same to higher return, even after tax is paid (depending on the maturity of muni to which you are comparing), but less risk.
1. Do not confuse strategy with outcome |
2. Those who fail to plan plan to fail |
3. Do not assume the unlikely is impossible, and |
4. Be ready to deal with the consequences if you do.
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I like the "pristine" quality of Treauries.
70% Fidelity Short Term Treasury Bond Index fund.
30% Fidelity Intermediate Treasury Index fund.
I don't have access to Vanguard for fixed income, but I help my mom invest and she's got...
32% Short Term Investment Grade.
20% TIPS fund.
20% Intermediate Treasury.
28% GNMA.
70% Fidelity Short Term Treasury Bond Index fund.
30% Fidelity Intermediate Treasury Index fund.
I don't have access to Vanguard for fixed income, but I help my mom invest and she's got...
32% Short Term Investment Grade.
20% TIPS fund.
20% Intermediate Treasury.
28% GNMA.
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- Location: San Jose
asset allocation: 20 equity, 80 bonds
30% Wellesley Vwiax- M* growth of $ chart
30% Target Retirement Income Vtinx-Add diversity
10% Short Term Federal Vsgbx- M* growth of $ chart
10% Vang. Inflationary Protected Vaipx- Usual reason
20% Vang. Intermediate Term Index Vbilx-M* growth of $ chart
Thinking of increasing % of Vaipx
30% Wellesley Vwiax- M* growth of $ chart
30% Target Retirement Income Vtinx-Add diversity
10% Short Term Federal Vsgbx- M* growth of $ chart
10% Vang. Inflationary Protected Vaipx- Usual reason
20% Vang. Intermediate Term Index Vbilx-M* growth of $ chart
Thinking of increasing % of Vaipx
I'm 69 and retired, and I do not need to take the increased risk of investing very much in stocks. So I'm heavily into bonds, as follows:
AS A % OF MY TOTAL PORTFOLIO (all Vanguard)
Total Bond Index 15
TIPS (IPS fund) 15
Corporate (via Wellesey) 6
Short-Term Tax-Exempt 10
Limited-Term T-E 17.5
Intermediate-Term T-E 17.5
I recently moved my GNMAs to Total Bond, mainly for the diversification. However, I owned the GNMA fund for many years and it did very well.
[/u]
AS A % OF MY TOTAL PORTFOLIO (all Vanguard)
Total Bond Index 15
TIPS (IPS fund) 15
Corporate (via Wellesey) 6
Short-Term Tax-Exempt 10
Limited-Term T-E 17.5
Intermediate-Term T-E 17.5
I recently moved my GNMAs to Total Bond, mainly for the diversification. However, I owned the GNMA fund for many years and it did very well.
[/u]