Emerging Market Bond Fund Choice

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an_asker
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Emerging Market Bond Fund Choice

Post by an_asker » Fri Dec 15, 2017 4:24 pm

For this category, I've been using the Payden emerging market bond fund for a while. I recently learned that Vanguard has its own offering - the Vanguard Emerging Bond Fund. Neither of the funds is an index fund - which I like because I think there is some value in having a professional go to bat for me. A comparison on Morningstar yielded the following:

- VEMBX - expense ratio 0.60%; turnover = 261%; total return since inception (03/2016) ~ 21%
- PYEMX - expense ratio 0.75%; turnover = 46%; total return for same timeframe ~ 20%

While I see that Vanguard has a lower expense ratio, that turnover difference is staggering. Note that this would not be in a taxable account.

My question: should I stick with Payden or switch to Vanguard?

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Re: Emerging Market Bond Fund Choice

Post by RadAudit » Sat Dec 16, 2017 11:31 am

How much of the turnover in VG is due to the asset growth in the fund since its inception?
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not4me
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Re: Emerging Market Bond Fund Choice

Post by not4me » Sat Dec 16, 2017 1:37 pm

I would expect the relatively "young age" of the Vanguard fund to account for at least some of the turnover. It is also about one fifth the size of the Payden fund which has been around almost 20 years. I'm not familiar with either & so took a quick look. One thing that stuck out was that their larger holdings were in different countries. That raised the possibility they may have different approaches and/or objectives. Depending upon your objective in owning, I'd look into the prospectus to see which I expected to best fit my need/want. Especially if you have been ok with Payden, I'd take my time & see how Vanguard deals with growing pains. I wouldn't personally switch to save on expense ratio only.

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Dale_G
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Re: Emerging Market Bond Fund Choice

Post by Dale_G » Sun Dec 17, 2017 12:19 am

Wow, this is a surprise. I own VWOB, the ETF class of Vanguard Emerging Markets Bond Index Fund, but VEMBX Investor and VEGBX Admiral Vanguard Emerging Markets Bond Fund) slipped in under my radar.

The Investor shares show 32.4 million of assets as of 11/30/17 and the Admiral shares show dashes for assets. I've been interested in an non-index Emerging Markets bond fund with at least some corporates. Maybe I will buy on Monday just so Vanguard can show 0.05 million in Admiral class assets. :D

I am surprised at how small this fund is given that is more than 1-1/2 years old. I'd buy in an IRA, so no tax harm if they end up killing the fund.

I just did a practice trade, the Admiral class fund VEGBX does not come up when I search for funds to exchange into by name, but entering VEGBX does work.

This might not be a good fund for someone chasing income. As a diversifier - maybe.

Dale
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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Sun Dec 17, 2017 8:02 am

Dale_G wrote:
Sun Dec 17, 2017 12:19 am
Wow, this is a surprise. I own VWOB, the ETF class of Vanguard Emerging Markets Bond Index Fund, but VEMBX Investor and VEGBX Admiral Vanguard Emerging Markets Bond Fund) slipped in under my radar.

The Investor shares show 32.4 million of assets as of 11/30/17 and the Admiral shares show dashes for assets. I've been interested in an non-index Emerging Markets bond fund with at least some corporates. Maybe I will buy on Monday just so Vanguard can show 0.05 million in Admiral class assets. :D

I am surprised at how small this fund is given that is more than 1-1/2 years old. I'd buy in an IRA, so no tax harm if they end up killing the fund.

I just did a practice trade, the Admiral class fund VEGBX does not come up when I search for funds to exchange into by name, but entering VEGBX does work.

This might not be a good fund for someone chasing income. As a diversifier - maybe.

Dale
It's not really that old. It opened to retail investors two weeks ago: viewtopic.php?t=233938

It was open for a long time without really being open. We had a thread discussing the fact that it was announced (December 2015) and then launched (March 2016), but a year later was still not really open to investors. The Investor Shares finally opened this month, and the Admiral Shares launched.

Edited to add: Here's a link to the Vanguard fund announcement from December 6, 2017. It opens with the following explanation:
Vanguard today opened Vanguard Emerging Markets Bond Fund to all investors, offering broad, actively managed exposure to emerging fixed income markets.

The fund was launched in March 2016, with Vanguard as its sole investor. It invests predominantly in U.S. dollar-denominated debt issued by governments in emerging markets and government-owned enterprises in those markets.

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Re: Emerging Market Bond Fund Choice

Post by tibbitts » Sun Dec 17, 2017 11:35 am

The turnover given the fund's circumstances doesn't matter.

I asked in another thread for expense ratio forecasts for both share classes but nobody made any. Emerging Markets Select has been persistently expensive so far but I haven't looked into the compensation scheme it uses - maybe it has outperformed, etc.

I'd be into the Bond fund at .45% but $50k to get there is a lot. I do have $30k in the Fidelity fund at .86%(!) and have no complaints about it except the expense ratio.

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Dale_G
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Re: Emerging Market Bond Fund Choice

Post by Dale_G » Sun Dec 17, 2017 11:08 pm

Thanks jhfenton for providing the true scoop. I missed the earlier threads about the fund - so yup, this fund was totally below my radar.

Back in the very early 80's (when Vanguard was about 1/5000th of its present size I owned a bit more than 1% of one of their funds. It felt like I was a meaningful owner :) Those days are over, but maybe I can own 1/10th of 1% of the International Emerging Markets bond fund for a short time - until it shrinks to .0001% of the fund. Meaningless I know, but WTH.

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an_asker
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Re: Emerging Market Bond Fund Choice

Post by an_asker » Mon Dec 18, 2017 4:23 pm

tibbitts wrote:
Sun Dec 17, 2017 11:35 am
The turnover given the fund's circumstances doesn't matter.

I asked in another thread for expense ratio forecasts for both share classes but nobody made any. Emerging Markets Select has been persistently expensive so far but I haven't looked into the compensation scheme it uses - maybe it has outperformed, etc.

I'd be into the Bond fund at .45% but $50k to get there is a lot. I do have $30k in the Fidelity fund at .86%(!) and have no complaints about it except the expense ratio.
Don't know which fund you're talking about but the Payden fund is available at Schwab for a minimum of (IIRC) $2500 and you can have an automatic investment plan (forget what the minimum for that is).

an_asker
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Re: Emerging Market Bond Fund Choice

Post by an_asker » Mon Dec 18, 2017 4:23 pm

jhfenton wrote:
Sun Dec 17, 2017 8:02 am
Dale_G wrote:
Sun Dec 17, 2017 12:19 am
Wow, this is a surprise. I own VWOB, the ETF class of Vanguard Emerging Markets Bond Index Fund, but VEMBX Investor and VEGBX Admiral Vanguard Emerging Markets Bond Fund) slipped in under my radar.

The Investor shares show 32.4 million of assets as of 11/30/17 and the Admiral shares show dashes for assets. I've been interested in an non-index Emerging Markets bond fund with at least some corporates. Maybe I will buy on Monday just so Vanguard can show 0.05 million in Admiral class assets. :D

I am surprised at how small this fund is given that is more than 1-1/2 years old. I'd buy in an IRA, so no tax harm if they end up killing the fund.

I just did a practice trade, the Admiral class fund VEGBX does not come up when I search for funds to exchange into by name, but entering VEGBX does work.

This might not be a good fund for someone chasing income. As a diversifier - maybe.

Dale
It's not really that old. It opened to retail investors two weeks ago: viewtopic.php?t=233938

It was open for a long time without really being open. We had a thread discussing the fact that it was announced (December 2015) and then launched (March 2016), but a year later was still not really open to investors. The Investor Shares finally opened this month, and the Admiral Shares launched.

Edited to add: Here's a link to the Vanguard fund announcement from December 6, 2017. It opens with the following explanation:
Vanguard today opened Vanguard Emerging Markets Bond Fund to all investors, offering broad, actively managed exposure to emerging fixed income markets.

The fund was launched in March 2016, with Vanguard as its sole investor. It invests predominantly in U.S. dollar-denominated debt issued by governments in emerging markets and government-owned enterprises in those markets.
I missed the original threads here, but I did - like I said - receive a targeted email from one of my mailing lists that informed me about the fund... and that it recently got opened to individual investors.

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SpringMan
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Re: Emerging Market Bond Fund Choice

Post by SpringMan » Sun Jan 07, 2018 1:01 pm

I bought VEGBX last week in a Roth. Our stock/bond target needed to be rebalanced due to the recent equity run up. Morningstar does not recognize VEGBX (admiral shares) but does recognize VEMBX (investor shares). They have been notified, in the meantime I use VEMBX for portfolio xray purposes.
Best Wishes, SpringMan

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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Sun Jan 07, 2018 3:19 pm

SpringMan wrote:
Sun Jan 07, 2018 1:01 pm
I bought VEGBX last week in a Roth. Our stock/bond target needed to be rebalanced due to the recent equity run up. Morningstar does not recognize VEGBX (admiral shares) but does recognize VEMBX (investor shares). They have been notified, in the meantime I use VEMBX for portfolio xray purposes.
And M* still doesn’t have most of the usual portfolio statistics for VEMBX. It leaves a gap in the fixed income style box. I’m hoping the December 31, 2017 data will show up soon and fill in the gaps. I’m also curious what it added in assets in the three weeks in December after its official opening.

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spdoublebass
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Re: Emerging Market Bond Fund Choice

Post by spdoublebass » Sun Jan 07, 2018 3:25 pm

Just to be clear:

VEGBX/VEMBX= Is an emerging market bond fund made up of corporate bonds. This fund does not hold Government bonds.

VWOB/VGAVX= is emerging market Government Bonds only.



I read the overview and breakdown at Vanguard, but it just lists them both as foreign.
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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Sun Jan 07, 2018 3:34 pm

spdoublebass wrote:
Sun Jan 07, 2018 3:25 pm
VWOB/VGAVX= is emerging market Government Bonds only.
Yes. Only government. And it's an index fund.
spdoublebass wrote:
Sun Jan 07, 2018 3:25 pm
Just to be clear:

VEGBX/VEMBX= Is an emerging market bond fund made up of corporate bonds. This fund does not hold Government bonds.
No. This fund holds both corporate and government bonds, depending on the choices of the managers. At the moment, a majority of the holdings are government bonds. The top two holdings are corporate, Petrobras and Pemex, but only five of the top 20. 14 of the top 20 are sovereign. One holding was issued by the West African Development Bank, a multistate NGO.

RetireBy55
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Re: Emerging Market Bond Fund Choice

Post by RetireBy55 » Sun Jan 07, 2018 6:43 pm

FNMIX has an only slightly higher ER, significantly greater assets, TTM yield > 5% and - most importantly - a long term track record of top 15% performance over 3, 5 and 10 year periods..we have a fairly decent holding in it..

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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Sun Jan 07, 2018 7:01 pm

RetireBy55 wrote:
Sun Jan 07, 2018 6:43 pm
FNMIX has an only slightly higher ER, significantly greater assets, TTM yield > 5% and - most importantly - a long term track record of top 15% performance over 3, 5 and 10 year periods..we have a fairly decent holding in it..
I agree that FNMIX is an excellent fund. But...it has an ER of 83 bp with $6.4 billion in assets. VEGBX (Admiral Shares) has an ER of 45 bp with $34 million in assets, and I have no doubt that it will drop as assets increase. VEMBX at 60 bp is closer, but even 23 bp is large enough that it will take a significant increase in risk to make up the difference in yield.

Given Vanguard's tendencies, I expect VEGBX/VEMBX to be a bit tamer than FNMIX over the long haul. I wouldn't be surprised if their returns ended up quite similar, with FNMIX having a bit more volatility along the way.

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Re: Emerging Market Bond Fund Choice

Post by SlowMovingInvestor » Sun Jan 07, 2018 7:10 pm

I own some EMB (iShares JPMorgan USD ETF) . I haven't really compared it much to other emerging market bond ETFs or MFs. I'd be interest in hearing comments on EMB vs. VWOB.

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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Sun Jan 07, 2018 8:16 pm

SlowMovingInvestor wrote:
Sun Jan 07, 2018 7:10 pm
I own some EMB (iShares JPMorgan USD ETF) . I haven't really compared it much to other emerging market bond ETFs or MFs. I'd be interest in hearing comments on EMB vs. VWOB.
EMB and VWOB have tracked very closely since VWOB was launched (see chart). EMB appears to be slightly riskier. EMB has a slightly higher yield despite a slightly higher ER (40 bp vs 32 bp), and it appears to be a bit more volatile in the chart. It drops below VWOB slightly during downturns, but catches back up and inches head during upturns.

Image

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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Mon Jan 08, 2018 9:04 pm

jhfenton wrote:
Sun Jan 07, 2018 3:19 pm
SpringMan wrote:
Sun Jan 07, 2018 1:01 pm
I bought VEGBX last week in a Roth. Our stock/bond target needed to be rebalanced due to the recent equity run up. Morningstar does not recognize VEGBX (admiral shares) but does recognize VEMBX (investor shares). They have been notified, in the meantime I use VEMBX for portfolio xray purposes.
And M* still doesn’t have most of the usual portfolio statistics for VEMBX. It leaves a gap in the fixed income style box. I’m hoping the December 31, 2017 data will show up soon and fill in the gaps. I’m also curious what it added in assets in the three weeks in December after its official opening.
I submitted a help request too. With what I added today to VEMBX, I'll be able to convert to the Admiral Shares tomorrow. It'll actually be the first time I've ever done an Investor to Admiral conversion. All my other funds have always either started out Admiral or don't have Admiral (e.g., Vanguard OH Long-Term Tax Exempt and Vanguard FTSE All-World ex-US Small Cap).

I was actually able to add VEGBX to the Portfolio Manager as a test. It pulls the correct price, name, and the bond/cash breakdown for the fund, but nothing else. And there is no quote page.

I also discovered that VEGBX is a recycled ticker. It used to belong to Van Kampen Equity Growth B (2008 M* PDF). Van Kampen Equity Growth is still around (VEGAX), but not the B share class. If you search for VEGBX in Yahoo Finance, you also get the correct current price, but the old name.

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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Wed Jan 10, 2018 8:12 pm

SpringMan wrote:
Sun Jan 07, 2018 1:01 pm
I bought VEGBX last week in a Roth. Our stock/bond target needed to be rebalanced due to the recent equity run up. Morningstar does not recognize VEGBX (admiral shares) but does recognize VEMBX (investor shares). They have been notified, in the meantime I use VEMBX for portfolio xray purposes.
A M* rep got back to me today and said that at my request he had escalated the missing classification details for VEMBX. He also offered this gem on VEGBX:
However, I have Confirmed [sic] with data analyst <name redacted> that the (VEGBX) share class is not public at this time. Vanguard has no plans to make it availiable [sic] to retail investors as this time. For future inquiries, please reach out to vanguard_media_relations@vanguard.com.
I responded people that I currently owned VEGBX, so I knew in fact that it was available. I provided a link to Vanguard's December 6 press release.

He said he would re-escalate the issue. :)

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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Thu Feb 01, 2018 10:40 am

SpringMan wrote:
Sun Jan 07, 2018 1:01 pm
I bought VEGBX last week in a Roth. Our stock/bond target needed to be rebalanced due to the recent equity run up. Morningstar does not recognize VEGBX (admiral shares) but does recognize VEMBX (investor shares). They have been notified, in the meantime I use VEMBX for portfolio xray purposes.
SpringMan, Did you receive your dividends on VEGBX last night? I did not. I have dividends set to reinvest, so I should have received a little over 5.5 shares via reinvested dividends. I also did not receive any cash. All four of my other bond funds in various accounts reinvested dividends. According to the VEGBX fund profile page Record Date was 01/30/18, Reinvest Date was 01/31/18, and Payable Date is today, all the same as my bond index funds (VSIGX, VICSX, VSCSX) that showed reinvested dividends today.

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SpringMan
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Re: Emerging Market Bond Fund Choice

Post by SpringMan » Thu Feb 01, 2018 7:15 pm

jhfenton wrote:
Thu Feb 01, 2018 10:40 am
SpringMan wrote:
Sun Jan 07, 2018 1:01 pm
I bought VEGBX last week in a Roth. Our stock/bond target needed to be rebalanced due to the recent equity run up. Morningstar does not recognize VEGBX (admiral shares) but does recognize VEMBX (investor shares). They have been notified, in the meantime I use VEMBX for portfolio xray purposes.
SpringMan, Did you receive your dividends on VEGBX last night? I did not. I have dividends set to reinvest, so I should have received a little over 5.5 shares via reinvested dividends. I also did not receive any cash. All four of my other bond funds in various accounts reinvested dividends. According to the VEGBX fund profile page Record Date was 01/30/18, Reinvest Date was 01/31/18, and Payable Date is today, all the same as my bond index funds (VSIGX, VICSX, VSCSX) that showed reinvested dividends today.
No, I did not see my dividend. No sign of it under Transaction History or Pending tabs either. I have Vanguard looking into it. This kind of thing does not instill confidence.
Best Wishes, SpringMan

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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Thu Feb 01, 2018 7:18 pm

SpringMan wrote:
Thu Feb 01, 2018 7:15 pm
jhfenton wrote:
Thu Feb 01, 2018 10:40 am
SpringMan wrote:
Sun Jan 07, 2018 1:01 pm
I bought VEGBX last week in a Roth. Our stock/bond target needed to be rebalanced due to the recent equity run up. Morningstar does not recognize VEGBX (admiral shares) but does recognize VEMBX (investor shares). They have been notified, in the meantime I use VEMBX for portfolio xray purposes.
SpringMan, Did you receive your dividends on VEGBX last night? I did not. I have dividends set to reinvest, so I should have received a little over 5.5 shares via reinvested dividends. I also did not receive any cash. All four of my other bond funds in various accounts reinvested dividends. According to the VEGBX fund profile page Record Date was 01/30/18, Reinvest Date was 01/31/18, and Payable Date is today, all the same as my bond index funds (VSIGX, VICSX, VSCSX) that showed reinvested dividends today.
No, I did not see my dividend. No sign of it under Transaction History or Pending tabs either. I have Vanguard looking into it. This kind of thing does not instill confidence.
Thanks. I'm glad it's not a "me" problem. :beer I was going to wait until tomorrow to see if it showed up before I called them.

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jhfenton
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Re: Emerging Market Bond Fund Choice

Post by jhfenton » Fri Feb 02, 2018 7:49 am

SpringMan wrote:
Thu Feb 01, 2018 7:15 pm
jhfenton wrote:
Thu Feb 01, 2018 10:40 am
SpringMan wrote:
Sun Jan 07, 2018 1:01 pm
I bought VEGBX last week in a Roth. Our stock/bond target needed to be rebalanced due to the recent equity run up. Morningstar does not recognize VEGBX (admiral shares) but does recognize VEMBX (investor shares). They have been notified, in the meantime I use VEMBX for portfolio xray purposes.
SpringMan, Did you receive your dividends on VEGBX last night? I did not. I have dividends set to reinvest, so I should have received a little over 5.5 shares via reinvested dividends. I also did not receive any cash. All four of my other bond funds in various accounts reinvested dividends. According to the VEGBX fund profile page Record Date was 01/30/18, Reinvest Date was 01/31/18, and Payable Date is today, all the same as my bond index funds (VSIGX, VICSX, VSCSX) that showed reinvested dividends today.
No, I did not see my dividend. No sign of it under Transaction History or Pending tabs either. I have Vanguard looking into it. This kind of thing does not instill confidence.
My VEGBX dividends were posted this morning, dated yesterday, but with the correct reinvestment price from Wednesday. The dividend amount and share count matched my calculations perfectly. :beer

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SpringMan
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Re: Emerging Market Bond Fund Choice

Post by SpringMan » Fri Feb 02, 2018 8:35 am

My VEGBX dividend just showed up too.
Best Wishes, SpringMan

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