Which bond fund for 401k?

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texas_archer
Posts: 425
Joined: Wed Dec 01, 2010 11:20 am

Which bond fund for 401k?

Post by texas_archer »

These are my 3 choices:

Fidelity GNMA Fund (FGMNX)http://quote.morningstar.com/fund/f.aspx?t=FGMNX

Fidelity U.S. Bond Index Fund (FBIDX) http://quote.morningstar.com/fund/f.aspx?t=FBIDX

PIMCO Total Return Fund Administrative Class (PTRAX) http://quote.morningstar.com/fund/f.aspx?t=ptrax


Thanks
livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Post by livesoft »

I don't think it matters.

My spouse's 401(k) is invested 100% in PIMCO total return.

I use FBIDX as the bond fund in my 401(k).

My spouse has Vanguard GNMA in one of her rollover IRAs.

So I don't think any of your choices are bad. If you want simple, pick one (roll the dice).

However, if you want to guarantee that you pick the top performing fund from these choices, then pick them all. You will not be disappointed.
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tsturbo
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Post by tsturbo »

I am 50% total bond, 1/4 tips and 1/4 int treasuries and feel good about this allocation in my bond portion.

My equity position is very simple also, 2/3 TSM & 1/3 Total Int. All VG of course, in admiral and institutional.
Simplicity at it's best.
grberry
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Location: Boston, MA

Post by grberry »

Since you gave us Morningstar links, I used them. Flipped to the chart tab, and put all three funds on the same chart.
1) PTRAX (Pimco Total Return) has the best results over the 10 year and 20 year periods. It also has the lowest average credit quality. This is a candidate, but having the lowest quality means that it is not a clear winner.
2) The Fidelity US Bond Index has the lowest expense ratio. It has outperformed the Fidelity GNMA Fund. This is also a candidate.
3) The Fidelity GNMA fund is sector specific in mortgage bonds, has the lowest performance, and the middle expense ratio. I can't recommend it.

I'd say the best candidates are Pimco Total Return and the Fidelity US Bond Index. If you want to derisk your portfolio, go for Fidelity. If you want better returns with a little more risk, go Pimco.
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tsturbo
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Post by tsturbo »

grberry wrote:Since you gave us Morningstar links, I used them. Flipped to the chart tab, and put all three funds on the same chart.
1) PTRAX (Pimco Total Return) has the best results over the 10 year and 20 year periods. It also has the lowest average credit quality. This is a candidate, but having the lowest quality means that it is not a clear winner.
2) The Fidelity US Bond Index has the lowest expense ratio. It has outperformed the Fidelity GNMA Fund. This is also a candidate.
3) The Fidelity GNMA fund is sector specific in mortgage bonds, has the lowest performance, and the middle expense ratio. I can't recommend it.

I'd say the best candidates are Pimco Total Return and the Fidelity US Bond Index. If you want to derisk your portfolio, go for Fidelity. If you want better returns with a little more risk, go Pimco.
Or go with Vanguard equivalents and get the best of both worlds.
Topic Author
texas_archer
Posts: 425
Joined: Wed Dec 01, 2010 11:20 am

Post by texas_archer »

tsturbo wrote:
grberry wrote:Since you gave us Morningstar links, I used them. Flipped to the chart tab, and put all three funds on the same chart.
1) PTRAX (Pimco Total Return) has the best results over the 10 year and 20 year periods. It also has the lowest average credit quality. This is a candidate, but having the lowest quality means that it is not a clear winner.
2) The Fidelity US Bond Index has the lowest expense ratio. It has outperformed the Fidelity GNMA Fund. This is also a candidate.
3) The Fidelity GNMA fund is sector specific in mortgage bonds, has the lowest performance, and the middle expense ratio. I can't recommend it.

I'd say the best candidates are Pimco Total Return and the Fidelity US Bond Index. If you want to derisk your portfolio, go for Fidelity. If you want better returns with a little more risk, go Pimco.
Or go with Vanguard equivalents and get the best of both worlds.
not offered with my 401k plan, however my wife's 401k is invested in Vanguards Total Bond Market Index (VBTIX).
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