Managed bonds - run? Stay the course? Invest more?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
boglemed
Posts: 4
Joined: Sat Jul 25, 2015 1:20 am

Managed bonds - run? Stay the course? Invest more?

Post by boglemed »

I put some of my retirement portfolio into a managed bonds account in 2014. Now eight years later
it's worth just 5% more than when I started including all the reinvestment of the interest. I'm concerned
if interest rates keep rising it will go down even more in value. I get that the face value of the bonds
stays constant if held to maturity. The income generated from the bonds year is now about 5% of
the value of the original investment per year. Does it make sense to keep re-investing
the interest into more bonds which presumably will be paying higher interest rates? Does it make any
sense to invest still more money into bonds at this juncture?

I'm trying also to figure out how my bond fund management team has performed relative to others.

Sorry for the rambling. Any thoughts on bonds appreciated!
User avatar
PicassoSparks
Posts: 346
Joined: Tue Apr 28, 2020 5:41 am

Re: Managed bonds - run? Stay the course? Invest more?

Post by PicassoSparks »

What’s the name of the fund?

If you had put that $10,000 in a low cost bond index fund like Vanguard total bond market BND or iShares Core US Aggregate Bond AGG you would have ~$11,900. That’s a significant difference from the $10,500 that your reported 5% would have gotten. But I may not be making the right comparison. I’m just picking a sort of generic fund.
Topic Author
boglemed
Posts: 4
Joined: Sat Jul 25, 2015 1:20 am

Re: Managed bonds - run? Stay the course? Invest more?

Post by boglemed »

Thank you. How do you come to that calculation? I was going to make this point
to the bond managers next week. Looking at the chart of say LSSAX LOOMIS SAYLES SECURITIZE
D ASSET - it's showing a yield of 6.7%. And the 10 year chart shows $10,000 in 2012 would have
grown to just shy of $13k. And in 2014 when I entered that line was at about $10,500.
If they'd just reinvested in this mutual instead of making their own buys - if the graph is
right I'd be 25% up not 5%.

Thank you for helping me think this through. There are so many variables when I
get on the call and it helps to be prepared.
Topic Author
boglemed
Posts: 4
Joined: Sat Jul 25, 2015 1:20 am

Re: Managed bonds - run? Stay the course? Invest more?

Post by boglemed »

The "fund" is a Schwab managed account which contains two mutuals and
a bunch of individual bonds. The two mutuals are Loomis Sayles Securitized Asset Fund
(LSSAX) and Loomis Sayles High Income Opportunities Fund Institutional Class
(LSIOX). I think they must have just withdrawn funds and put the money into
individual bond because show a loss whereas their graph shows considerable
gain.
User avatar
PicassoSparks
Posts: 346
Joined: Tue Apr 28, 2020 5:41 am

Re: Managed bonds - run? Stay the course? Invest more?

Post by PicassoSparks »

boglemed wrote: Thu Aug 04, 2022 8:57 pm Thank you. How do you come to that calculation?
I just went to https://www.portfoliovisualizer.com/backtest-portfolio and plugged in the funds and set it to a 2014 start date as a rough and ready estimate.
Topic Author
boglemed
Posts: 4
Joined: Sat Jul 25, 2015 1:20 am

Re: Managed bonds - run? Stay the course? Invest more?

Post by boglemed »

Thanks!
dbr
Posts: 41904
Joined: Sun Mar 04, 2007 9:50 am

Re: Managed bonds - run? Stay the course? Invest more?

Post by dbr »

boglemed wrote: Thu Aug 04, 2022 10:15 pmThanks!
You can also enter the different funds in Portfolio Visualizer and do comparisons.

It isn't possible to have a net gain in a reasonable bond portfolio of no more than 5% from 2014 to now with interest reinvested without doing something really stupid. The CAGR for LSSAX has been 2.65% compounded per year for that period. Had you been in Vanguard total bond 2014 to now you would have returned 1.96%/year compound growth. 2% compounded for 9 years is a gain of almost 20%.

Do you have paperwork to show all the transactions and all the holdings over the years to see what they have done?
Post Reply