However, we don't have the full range of Vanguard bond funds available. We only have the following three bond funds:
BlackRock High Yield Bond (BRHYX, ER 0.58%)
- Junk bonds, mostly B and below.
PIMCO Total Return Fund Instl (PTTRX, ER 0.46%)
- Actively managed, seems to be well diversified.
Vanguard Inflation-Protected Securities Fund Investor Shares (VIPSX, ER 0.20%)
- Vanguard TIPS fund.
How shall I divide up the bond portion of my 401(k)? My two thoughts are:
- 100% into Vanguard Inflation-Protected.
- Slice & Dice for diversification, weighted heavily to Vanguard Inflation-Protected. (Example: 20% BlackRock, 20% PIMCO, 60% Vanguard TIPS.)
- Slice & Dice, equal weighting. (33% BlackRock, 33% PIMCO, 34% Vanguard TIPS.)
- Slice & Dice, without junk bonds. (20-50% PIMCO, 80-50% Vanguard TIPS.)
Another relevant data point: I have one other IRA with American Funds from a previous employer. Its bond portion is 100% Bond Fund of America (ABNDX, ER 0.6%).
I suppose my other option would be to junk my entire lazy portfolio plan, and simply go with the Vanguard Balanced Index Fund Investor Shares (VBINX, ER 0.24%). However, there is no international exposure with that fund, so I'd at least have to add a slice of the Vanguard Total International Index fund. That would be perfectly acceptable if the bond portion of the Balanced Index Fund is significantly better than some combination of the three bond funds listed above.
Your feedback is appreciated.