Webfoot wrote: ↑Sun Sep 16, 2018 12:19 pm
**8% Bonds Short Term**
- VMLUX Limited Tax Exempt (Short term Muni) 6%

- VBISX Short Term Bond Index 2%

**18% Bonds Intermediate Term**
- VBILX Intermediate Term Bond Index (Invest grade 5-10 yrs) 10%

- VWIUX Intermediate Term Tax Exempt (Fed Tax Ex) 8%

**7% Long Term Bonds**
- VWLUX Long Term Tax Exempt (municipals 6-10 yrs) 6%

- VBLTX Long Term Bond Index (Corps & US > 10 yrs) 1%

**6% International Bonds **
- VTABX Total International Bond Index 6%

**2% Other**
- Other Treasury Note (TIPS)...previously had 2%

Whose classification comments are these:

- 'Short term Muni',

- 'Fed Tax Ex',

- 'Municipals 6-10 yrs'.

If advisor's: I would say by just showing such inconsistent terms to describe the funds he shows lack of consistency and professionalism.

For example:

- why use 3 different terms to describe the products: (a) 'munis', (b) 'fed tax ex', (c) 'municipals'.

- why use inconsistent adjectives to describe duration: (a) 'short term', (b) 'nothing', (c) '6-10 years'.

IMO, investment strategy requires rigor.

Rigor is achieved at the beginning: by describing things using consistent terms.

In my opinion:

- VMLUX, VWIUX, VWLUX are all tracking the same risk, of different duration.

A simple PCA (principal components analysis) of these 3, using

https://www.portfoliovisualizer.com/pri ... t-analysis, demonstrates that:

- first principal component explains 94% of the variance,

- second principal component explains 6% of the variance,

- third principal component explains 0%.

Thus, there are ONLY 2 factors tracked by these 3 funds.

Conclusion: 3rd fund is COMPLETELY unnecessary.

In fact, a 94% first PCA, to me, means, that even the 2nd fund is COMPLETELY unnecessary (although someone managing an overly large portfolio might fund the nickel somewhat meaningful).

If you needed only 2 of those, you can do a bit of a study, and see WHICH one you need.

I suspect that HOLDING the middle one (VWIUX) is COMPLETELY sufficient, GIVEN the percentages that you own (or the advisor proposes that you own). Because you have positive and roughly equal weights, you are probably tracking JUST the first PCA.

"A Republic, if you can keep it". Benjamin Franklin. 1787. |
Party affiliation: Vanguard. Religion: low-cost investing.