Stay with Fidelity Bond Funds or use Vanguard BND?

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AllMostThere
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Stay with Fidelity Bond Funds or use Vanguard BND?

Post by AllMostThere »

Now that Vanguard Total Bond (BND) can be purchased now via Fidelity fee free EFT's, does is make sense for me to purchase? DW and I are invested in Fidelity (401k & Roth IRA) with a 60/40 AA. We are VERY close to declaring "a win of the game" and we have been very happy with this AA, so not looking to make a change to percentage mix. We are curious if it makes sense to trade in our Fidelity US Bond Index (FXNAX - 0.025% ER) & Fidelity Intermediate Treasury Index (FUAMX - 0.03% ER) for BND. Many on this forum praise the BND, so what are the real benefits compared to the two above bond funds? Is the increased ER of BND worth it or just stay with what we have?
Alchemist
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by Alchemist »

There is no real difference. The only consideration would be mutual fund vs ETF's in general. There is nothing wrong with Fidelity's bond index funds. In fact they are cheaper than Vanguard's.

If you prefer ETF's then go ahead and swap out your MF's for ETFs. Either BND or AGG would be fine. But again this is choice about preference for ETFs or mutual funds, no real advantage/disadvantage between the Fidelity or Vanguard bond index funds.
sycamore
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by sycamore »

BND and FXNAX follow very similar indexes (if not the same) so you also having the Intermediate Treasury fund just tilts you slightly more toward "safer" bonds. I don't think there's any benefit to switching to BND; it doesn't get you anything special.

Why do you have the Treasury fund? If you still feel it's important to own, stick with your two Fidelity funds. Otherwise consider consolidating to just FXNAX.

Cheers
dbr
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by dbr »

AllMostThere wrote: Sat Dec 21, 2019 8:14 am Many on this forum praise the BND, so what are the real benefits compared to the two above bond funds? Is the increased ER of BND worth it or just stay with what we have?
It isn't a question of people praising things. It is a question of having a plan and then finding funds to implement that plan. The requirement in this case is a diversified, low cost, intermediate term bond fund. Both of those funds meet those requirements and are available from serviceable brokerages either as ETFs or Mutual Funds. There is no reason to dance around among bond funds. Also, at those costs the difference means nothing at all.

As to Treasuries, some people prefer all their bonds in Treasuries. The point is arriving at a stock/bond asset allocation that meets one's objectives and then selecting funds appropriately. Lots of answers serve the same purpose.

As to the specific funds "recommended" in the three fund portfolio, those selections are one specific answer that works so a person does not have to think more about it. Of course, no less than Mr. Bogle himself has been heard to ruminate on the deficiencies in the total bond market funds, in his opinion. That is not the same as advice to do something else.
snailderby
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by snailderby »

FXNAX is virtually identical to BND, VBTLX, and AGG. See https://www.portfoliovisualizer.com/bac ... ion3_3=100. FUAMX is also a great fund if you prefer to only hold intermediate term treasury bonds rather than a mix of treasury and investment grade corporate bonds.
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1789
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by 1789 »

Just keep FXNAX for bond portion. I am a big fan of MFs over ETFs
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
annu
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by annu »

1789 wrote: Sat Dec 21, 2019 11:01 am Just keep FXNAX for bond portion. I am a big fan of MFs over ETFs
Can you please elaborate? I am new bit was under the impression they are the same
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1789
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by 1789 »

annu wrote: Sat Dec 21, 2019 11:07 am
1789 wrote: Sat Dec 21, 2019 11:01 am Just keep FXNAX for bond portion. I am a big fan of MFs over ETFs
Can you please elaborate? I am new bit was under the impression they are the same
You can assume they are same. But for me the advantages in order are

1) Automated investments
2) I think ETFs as passive investments for active traders :) so knowing MFs can be traded only after trading window closed is a good thing,imo.
3) Buying partial shares

ETFs are only better in taxable for better tax implications (exception Is Vanguard - which they are equal)
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
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Taylor Larimore
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by Taylor Larimore »

AllMostThere wrote: Sat Dec 21, 2019 8:14 am Now that Vanguard Total Bond (BND) can be purchased now via Fidelity fee free EFT's, does is make sense for me to purchase? DW and I are invested in Fidelity (401k & Roth IRA) with a 60/40 AA. We are VERY close to declaring "a win of the game" and we have been very happy with this AA, so not looking to make a change to percentage mix. We are curious if it makes sense to trade in our Fidelity US Bond Index (FXNAX - 0.025% ER) & Fidelity Intermediate Treasury Index (FUAMX - 0.03% ER) for BND. Many on this forum praise the BND, so what are the real benefits compared to the two above bond funds? Is the increased ER of BND worth it or just stay with what we have?
AllMostThere:

Any small advantage of Vanguard Total Bond Market Index Fund (BND) over a similar Fidelity fund is overwhelmed by the simplicity of keeping all our investments in one good company:

1. One familiar statement.
2. Less paperwork.
3. Easier tax preparation.
4. Avoidance of low-balance and other small fees.
5. It's much easier to learn only one company's policies, fees, regulations, etc.
6. With larger holdings it may be possible to qualify for lower costs and premium services.
7. Rebalancing and exchanges are easier.
8. Eliminates 3rd party brokerage.
9. A loyal customer is appreciated and usually treated better.
10. Less chance of errors.
11. More free time for ourselves.
12. In event of death or disability, it will be much easier for others.

Happy Holiday!
Taylor
Jack Bogle's Words of Wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
"Simplicity is the master key to financial success." -- Jack Bogle
dbr
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by dbr »

1789 wrote: Sat Dec 21, 2019 11:11 am
annu wrote: Sat Dec 21, 2019 11:07 am
1789 wrote: Sat Dec 21, 2019 11:01 am Just keep FXNAX for bond portion. I am a big fan of MFs over ETFs
Can you please elaborate? I am new bit was under the impression they are the same
You can assume they are same. But for me the advantages in order are

1) Automated investments
2) I think ETFs as passive investments for active traders :) so knowing MFs can be traded only after trading window closed is a good thing,imo.
3) Buying partial shares

ETFs are only better in taxable for better tax implications (exception Is Vanguard - which they are equal)
The one other difference that is often the actual driver for people here using ETFs is that that transaction costs at brokers not Vanguard may be way less or free, which is actually the fact that caused the question in the first place.

I tend to agree that if your account is at Vanguard, Vanguard mutual funds make sense, and at Fidelity, Fidelity funds, as long as you get the low cost ones.
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ruralavalon
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by ruralavalon »

AllMostThere wrote: Sat Dec 21, 2019 8:14 am Now that Vanguard Total Bond (BND) can be purchased now via Fidelity fee free EFT's, does is make sense for me to purchase? DW and I are invested in Fidelity (401k & Roth IRA) with a 60/40 AA. We are VERY close to declaring "a win of the game" and we have been very happy with this AA, so not looking to make a change to percentage mix. We are curious if it makes sense to trade in our Fidelity US Bond Index (FXNAX - 0.025% ER) & Fidelity Intermediate Treasury Index (FUAMX - 0.03% ER) for BND. Many on this forum praise the BND, so what are the real benefits compared to the two above bond funds? Is the increased ER of BND worth it or just stay with what we have?
Just stay with what you have.

Fidelity® US Bond Index (FXNAX) uses the Bloomberg Barclays U.S. Aggregate Bond Index, and is essentially the same as Vanguard Total Bond Market ETF (BND). BND uses a version of the same index, the Bloomberg Barclays U.S.Aggregate Float Adjusted Bond Index.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
AllMostThere
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by AllMostThere »

I must admit that the perceived view of Vanguard is always best is not always true. Overwhelming feedback is that my current Fidelity Bond funds are great, so no real benefit by switching to BND EFT. No need for the added complexity, so looks like I'll stay the course for now. As always, thanks for the quick responses and wealth of knowledge. :beer
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Leif
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by Leif »

I think Dr. Bernstein recommended against using bond ETFs. As I recall he said that during a turbulent market the bid/ask spread could increase. A turbulent market may be the time you want to rebalance. I did buy some VTIP in Fidelity, but in general I avoid ETFs in favor of mutual funds.

I would stay with your Fidelity bond fund. That is what I use.
Last edited by Leif on Fri Dec 27, 2019 4:36 pm, edited 1 time in total.
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abuss368
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Re: Stay with Fidelity Bond Funds or use Vanguard BND?

Post by abuss368 »

I would consider one simple low cost and diversified short or intermediate term bond fund. Keeping everything at one investment house makes the most sense. I have never understood the need for more than one bond fund.
John C. Bogle: “Simplicity is the master key to financial success."
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Taylor Larimore
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One Bond Fund?

Post by Taylor Larimore »

abuss368 wrote: Fri Dec 27, 2019 4:06 pm I would consider one simple low cost and diversified short or intermediate term bond fund. Keeping everything at one investment house makes the most sense. I have never understood the need for more than one bond fund.
Bogleheads:

Owning only one good quality, diversified bond fund (Vanguard Total Bond Market Index Fund) has worked well for me.

Happy Holiday!
Taylor
Jack Bogle's words of wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: One Bond Fund?

Post by abuss368 »

Taylor Larimore wrote: Fri Dec 27, 2019 8:44 pm
abuss368 wrote: Fri Dec 27, 2019 4:06 pm I would consider one simple low cost and diversified short or intermediate term bond fund. Keeping everything at one investment house makes the most sense. I have never understood the need for more than one bond fund.
Bogleheads:

Owning only one good quality, diversified bond fund (Vanguard Total Bond Market Index Fund) has worked well for me.

Happy Holiday!
Taylor
Jack Bogle's words of wisdom: "Simplicity is the master key to financial success. -- We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
Thanks Taylor!
John C. Bogle: “Simplicity is the master key to financial success."
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