Is there a relatively stable junk bond fund?

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mark_in_denver
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Is there a relatively stable junk bond fund?

Post by mark_in_denver »

Looking for a junk bond fund that provides some resemblance of stability and income. Is the vanguard junk bond fund a worthy contender? Is there something better? Is there a bond fund that mixes junk and investment grade?
dbr
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Re: Is there a relatively stable junk bond fund?

Post by dbr »

You can enter various funds into Portfolio Visualizer and look at the mean (CAGR) return and the standard deviation of annual returns to put numbers on stability and "income." You can use a measure such as Sharpe Ratio reported there as a figure of merit comparison.

The CAGR and SD of total bond and Vanguard high yield bond are 5.82%/3.81% and 7.11%/6.94% respectively. The respective Sharpe Ratios are 0.72 and 0.58 making total bond a better trade off by that measure.

This is, of course, historical performance.
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Kenkat
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Re: Is there a relatively stable junk bond fund?

Post by Kenkat »

The Vanguard High Yield fund tends to invest in the higher grades of junk bonds, so it is probably more stable in terms of price and yield than other funds in the same category on average.
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Re: Is there a relatively stable junk bond fund?

Post by dbr »

An option for mixing risk and return is to invest in a mixture of safer bonds and riskier stocks.
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alpenglow
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Re: Is there a relatively stable junk bond fund?

Post by alpenglow »

Kenkat wrote: Fri Apr 05, 2019 1:11 pm The Vanguard High Yield fund tends to invest in the higher grades of junk bonds, so it is probably more stable in terms of price and yield than other funds in the same category on average.
VWEHX (Vanguard High Yield) tends to have less junky junk.
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Phineas J. Whoopee
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Re: Is there a relatively stable junk bond fund?

Post by Phineas J. Whoopee »

mark_in_denver wrote: Fri Apr 05, 2019 12:50 pm Looking for a junk bond fund that provides some resemblance of stability and income. Is the vanguard junk bond fund a worthy contender? Is there something better? Is there a bond fund that mixes junk and investment grade?
If you want a fixed income portfolio with characteristics between investment-grade and high-yield you can always roll your own, in any proportion you like, by holding one of each type of fund.

PJW
alex_686
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Re: Is there a relatively stable junk bond fund?

Post by alex_686 »

Short answer is no. What is your goal?
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
rasta
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Re: Is there a relatively stable junk bond fund?

Post by rasta »

VWEHX
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Phineas J. Whoopee
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Re: Is there a relatively stable junk bond fund?

Post by Phineas J. Whoopee »

rasta wrote: Fri Apr 05, 2019 1:55 pmVWEHX
If I may assist in the politeness department, rasta is referring to Vanguard's High-Yield Corporate Fund, VWEHX.

Few of us have the tickers memorized. It's generally regarded around here as more polite to include both a fund name and a ticker.

Happy to help out this time. Next time you'll know.

PJW
travlinman561
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Re: Is there a relatively stable junk bond fund?

Post by travlinman561 »

Vwehx had a max drawdown of 29% in 2007-2008 if you want to call that stability.
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steve roy
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Re: Is there a relatively stable junk bond fund?

Post by steve roy »

Perhaps a better option would be Vanguard's Target Date Income fund ... or Vanguard's Life-Strategy Income fund.

High quality, broad-based bonds mixed with equities.
Last edited by steve roy on Sat Apr 06, 2019 6:15 pm, edited 1 time in total.
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arcticpineapplecorp.
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Re: Is there a relatively stable junk bond fund?

Post by arcticpineapplecorp. »

just found a new oxymoron:

stable junk
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Re: Is there a relatively stable junk bond fund?

Post by whodidntante »

You're basically asking if you get the returns of something loaded with risk for not so much risk.
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Re: Is there a relatively stable junk bond fund?

Post by averagedude »

I would recommend VWEHX also, but there is no such thing as a stable junk bond fund. I would recommend that you never put over 20% of your fixed income in junk bonds. The only way to get higher yields in the bond market is to take higher risk.
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Re: Is there a relatively stable junk bond fund?

Post by nisiprius »

mark_in_denver wrote: Fri Apr 05, 2019 12:50 pm Looking for a junk bond fund that provides some [semblance] of stability and income. Is the vanguard junk bond fund a worthy contender? Is there something better? Is there a bond fund that mixes junk and investment grade?
It's pretty hard to answer unless you tell us what you consider to be "some semblance of stability."

Vanguard's junk bond fund, VWEHX, fell -28.90%, June 2007 to September 2009. It also lost -21.29% in calendar year 2009.

Your best bet for mixing junk and investment grade is the obvious one: buy two funds, one of each, and mix them to taste, yourself.
Last edited by nisiprius on Sat Apr 06, 2019 5:03 pm, edited 1 time in total.
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Spinola
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Re: Is there a relatively stable junk bond fund?

Post by Spinola »

Not sure about stable, but maybe slightly more stable..

LBNYX
Holds approx 48% junk bonds, and the rest is investment grade bonds, small amount of foreign bonds. Since I am currently 38 % TIAA traditional, bondlike returns with virtually no bond risk, I figured a small slice of bonds would add some better returns to my bond alloctation.

https://www.marketwatch.com/investing/fund/lbnyx

FIHBX is another that may be worth a look..

https://www.marketwatch.com/investing/fund/fihbx
ThreeBears
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Re: Is there a relatively stable junk bond fund?

Post by ThreeBears »

This is a good question, and you have received good answers.

The question that you did not ask (but maybe should have) is this: Will junk bonds approximate safe bonds or stocks in the next market downturn?

To the extant I have researched this, junk bonds approximate stocks when a recession starts, so they do not provide a counter-cycle advantage for your overall portfolio. This is one reason to limit junk bonds. This is just one opinion.
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Re: Is there a relatively stable junk bond fund?

Post by Quickfoot »

travlinman561 wrote: Fri Apr 05, 2019 5:16 pm Vwehx had a max drawdown of 29% in 2007-2008 if you want to call that stability.
That's actually not bad, considering that stock market dropped 50%, so VWENX dropped a comparable amount as a 50/50 portfolio, and VWENX SEC yield is 5.63%. Junk bonds are somewhat like REITS, a different kind of asset class that could be used to achieve a goal. If your goal was to generate income and not draw down principle VWENX could be a useful tool. Holding equities and relying on junk bonds to moderate volatility is probably a mistake but I would imagine most people that hold junk bond funds don't expect them to behave like treasuries (and that is probably precisely why they hold them).

Just for fun I back-tested 3 portfolios from 2006 - 2019

#1:

50% Vanguard High Yield Corporate Bond (Junk)
50% Vanguard Intermediate Term Bond

#2

50% Vanguard Intermediate Term Bond
30% Vanguard Total Stock Market
20% Vanguard Total International Stock (40% of equities)

#3

100% Vanguard Intermediate Term Bond

Results:

Portfolio #2 (50/50) won total return with a CAGR of 6.36% while #3 (100% bond) had a CAGR of 4.82% BUT the 50% bond / 50% junk had a CAGR of 5.71% AND had a standard deviation that was 33% lower than the 50/50 portfolio and was only 11% higher than the 100% bond portfolio.

The junk bond portfolio also did MUCH better than 50/50 for worst year, having a worst year of -8.18% vs -17.47% for the traditional 50/50 portfolio and -3.54% for the 100% bond portfolio.

So a 50% traditional bond / 50 % junk bond portfolio provided nearly all the gains of a 50% bond / 50% equity portfolio with SIGNIFICANTLY less volatility and a LOT more yield. In retirement I could see doing a 50% bond fund, 25% equity, 25% junk bond to tame a 50/50 portfolio andgenerate higher yield while still maintaining some exposure to equities.

Portfolio #4

50% Vanguard Intermediate Term Bond Fund
25% Vanguard High Yield Bond Fund (junk)
15% Vanguard Total Stock Market
10% Vanguard Total International Stock (40% equity)

This portfolio came even closer to matching the 50/50 portfolio with a CAGR of 6.07% (achieving 96% of the return of the 50/50 portfolio) but had 22% lower volatility AND only had a -12.82% worst year vs a -17.47% worst year for the 50/50 (26% smaller drop).
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Re: Is there a relatively stable junk bond fund?

Post by nisiprius »

I forget IUSB, the iShares Core Total USD Bond Market ETF, which tracks the Bloomberg Barclay's US Universal Bond Index. This index tries to track the total US bond market, investment-grade and junk, as shown below. It may not make you happy because 87% of it is the regular (investment-grade) US Aggregate index, and only 13% is other things:

Image

And its behavior (blue line) hasn't been dramatically different from that of AGG, the iShares Core US Aggregate Index ETF (orange line), which is investment-grade only.

Source

Image

Anyway, it's a very-low-cost index ETF that tracks a broader bond index that reaches down to include junk bonds.

Here's the description of what it does and does not include:

Image
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3funder
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Re: Is there a relatively stable junk bond fund?

Post by 3funder »

averagedude wrote: Fri Apr 05, 2019 5:31 pm I would recommend VWEHX also, but there is no such thing as a stable junk bond fund. I would recommend that you never put over 20% of your fixed income in junk bonds. The only way to get higher yields in the bond market is to take higher risk.
+1
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Re: Is there a relatively stable junk bond fund?

Post by gtwhitegold »

I don't know if it's what you're looking for, but fallen angel bonds are one of the better options for junk bonds. Below is an old thread about them.

viewtopic.php?t=99492
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Re: Is there a relatively stable junk bond fund?

Post by Trader Joe »

mark_in_denver wrote: Fri Apr 05, 2019 12:50 pm Looking for a junk bond fund that provides some resemblance of stability and income. Is the vanguard junk bond fund a worthy contender? Is there something better? Is there a bond fund that mixes junk and investment grade?
Not really "stable", but I used to invest in Vanguard High-Yield Corporate Fund Investor (VWEHX). I was very happy with this investment, until I decided to become much more aggressive given my age and risk tolerance.
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Re: Is there a relatively stable junk bond fund?

Post by Socrates »

Pimco Income PIMIX.....I have PONAX shares
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Re: Is there a relatively stable junk bond fund?

Post by Socrates »

Pimco Income PIMIX.....I have PONAX shares
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Re: Is there a relatively stable junk bond fund?

Post by Fungible Fred »

nisiprius wrote: Fri Apr 05, 2019 5:44 pm Vanguard's junk bond fund, VWEHX, fell -28.90%, June 2007 to September 2009. It also lost -21.29% in calendar year 2009.
There were also dividends to help offset the drop in share price in 2008, and there was positive return in 2009, not negative:

Share price of VWEHX in calendar year 2008 went from 5.90 to 4.28 (-27.5%) and dividends of +8.2%

In calendar year 2009 share price went from 4.28 to 5.48 (+28.0%) and dividends of +10.1%
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Re: Is there a relatively stable junk bond fund?

Post by nisiprius »

Fungible Fred wrote: Sun Apr 07, 2019 8:52 pm
nisiprius wrote: Fri Apr 05, 2019 5:44 pm Vanguard's junk bond fund, VWEHX, fell -28.90%, June 2007 to September 2009. It also lost -21.29% in calendar year 2009.
There were also dividends to help offset the drop in share price in 2008, and there was positive return in 2009, not negative:

Share price of VWEHX in calendar year 2008 went from 5.90 to 4.28 (-27.5%) and dividends of +8.2%

In calendar year 2009 share price went from 4.28 to 5.48 (+28.0%) and dividends of +10.1%
You are right, I indeed screwed up by saying "calendar year 2009," when I should have said 2008. :oops:

The figures I quoted were total return figures, including dividends. The price declines were worse.

Total return for calendar year 2008 was $10,000 -> $7,871.08 = -21.29%, as I stated (but stated for the wrong year).
NAV decline for calendar year 2008 was -27.63%

Source

Image

Image
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Re: Is there a relatively stable junk bond fund?

Post by Time2Quit »

Socrates wrote: Sun Apr 07, 2019 7:54 pm Pimco Income PIMIX.....I have PONAX shares
I don’t know why people keep saying PIMIX is a junk bond fund? At times they may hold junk but they at times they could be 70+ percent treasury. “Go anywhere” is a term I have seen used and it fits.
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Re: Is there a relatively stable junk bond fund?

Post by jegp »

Maybe if you try some of the "SHORT TERM high yield".
They must be more stable. But I don't really check that.
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Re: Is there a relatively stable junk bond fund?

Post by Socrates »

I don’t know why people keep saying PIMIX is a junk bond fund? At times they may hold junk but they at times they could be 70+ percent treasury. “Go anywhere” is a term I have seen used and it fits.
Found this in summary:

It may invest up to 50% of its total assets in high yield securities rated below investment grade by Moody's, S&P or Fitch, or if unrated, as determined by PIMCO. That may explain it's incredible returns of over 10% over the last 10 years.
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Re: Is there a relatively stable junk bond fund?

Post by jhfenton »

gtwhitegold wrote: Sun Apr 07, 2019 5:37 pm I don't know if it's what you're looking for, but fallen angel bonds are one of the better options for junk bonds. Below is an old thread about them.

viewtopic.php?t=99492
+1 There have been a few subsequent discussions as well. In addition to the original Van Eck fund (ANGL), there is a smaller, slightly cheaper iShares fund (FALN). Both have dramatically outperformed most other high yield bond funds despite generally having a somewhat higher credit quality.
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Re: Is there a relatively stable junk bond fund?

Post by ralph124cf »

Junk bond funds today are paying what investment grade bond funds were paying ten years ago.

I have owned junk bonds in the past, but the rewards are just not there at this time.

Ralph
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Re: Is there a relatively stable junk bond fund?

Post by BJJ_GUY »

ralph124cf wrote: Wed Apr 10, 2019 11:58 am Junk bond funds today are paying what investment grade bond funds were paying ten years ago.

I have owned junk bonds in the past, but the rewards are just not there at this time.

Ralph
Agree with this comment... also, when HY bonds have lower coupons and trade at elevated prices there is mathematically more downside risk. Fundamentally, I'd say the same low yield scenario typically does also occur when the HY market has above average hidden or latent risk pent up.

On HY investing I'd say the goal should be for total return rather than income (or stability). I look at HY exposure as equity risk as it is closest to equity in a capital structure, and behaves that way in bear markets. So, unfortunately, HY is hard to have as a permanent allocation, because I (personally) see it as an opportunistic investment that makes sense when it's dislocated and can therefore offer equity like returns from investment date. Also, this won't be a popular opinion in this group, I'm guessing, but I'd avoid - or at least strongly prefer - active management in the credit space. (Credit and Fixed Income indices are cap weighted, and im not sure it makes much sense to own most exposure to those who borrow the most - at least not blindly).
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Re: Is there a relatively stable junk bond fund?

Post by fennewaldaj »

BJJ_GUY wrote: Wed Apr 10, 2019 12:28 pm

Agree with this comment... also, when HY bonds have lower coupons and trade at elevated prices there is mathematically more downside risk. Fundamentally, I'd say the same low yield scenario typically does also occur when the HY market has above average hidden or latent risk pent up.

Shouldn't the lower yields mean that these companies are less likely to default? I am not sure how it shakes out but I would have to assume a company paying 4% real (6% nominal) is going to more easily be able to service its debt than if it was say 8 % real.
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Re: Is there a relatively stable junk bond fund?

Post by BJJ_GUY »

fennewaldaj wrote: Thu Apr 11, 2019 12:08 am
BJJ_GUY wrote: Wed Apr 10, 2019 12:28 pm

Agree with this comment... also, when HY bonds have lower coupons and trade at elevated prices there is mathematically more downside risk. Fundamentally, I'd say the same low yield scenario typically does also occur when the HY market has above average hidden or latent risk pent up.

Shouldn't the lower yields mean that these companies are less likely to default? I am not sure how it shakes out but I would have to assume a company paying 4% real (6% nominal) is going to more easily be able to service its debt than if it was say 8 % real.
I think we're confusing two things to start. When I'm saying yield I mean yield-to-maturity (sometimes in context I may use differently so hope I didn't here)... and all else equal, if a bond has a 4% coupon it would be easier to service than a 6% coupon... and because the HY issuers count on new issuance to satisfy the expiring paper, a rising rate will indeed start to squeeze companies who may already have weak coverage ratios. This is why I believe credit underwriting is so important in this space, and isn't one I'd recommend going passive absent some giant dislocation in price. There is just too much more to the story than what a benchmark/ETFs current yield and TYM are at a given date.... which is supported by...

This is big reason the FED is hesitant to raise rates, and went dovish. HY debt outstanding is historical. BBB debt is massively historical as the % of 'investment quality' debt.

And if HY debt, and close being downgraded issuers, is a concern for investors, it's also important to be aware of the degradation in the creditor protections in these bonds (including the loan market which can basically sell anything written in crayon into the CLO market). So life bond covenants are lite (less protection for bond holders), the implication is that default recoveries will be materially lower once the cycle turns.
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Re: Is there a relatively stable junk bond fund?

Post by sixtyforty »

BJJ_GUY wrote: Thu Apr 11, 2019 12:23 am
fennewaldaj wrote: Thu Apr 11, 2019 12:08 am
BJJ_GUY wrote: Wed Apr 10, 2019 12:28 pm

Agree with this comment... also, when HY bonds have lower coupons and trade at elevated prices there is mathematically more downside risk. Fundamentally, I'd say the same low yield scenario typically does also occur when the HY market has above average hidden or latent risk pent up.

Shouldn't the lower yields mean that these companies are less likely to default? I am not sure how it shakes out but I would have to assume a company paying 4% real (6% nominal) is going to more easily be able to service its debt than if it was say 8 % real.
I think we're confusing two things to start. When I'm saying yield I mean yield-to-maturity (sometimes in context I may use differently so hope I didn't here)... and all else equal, if a bond has a 4% coupon it would be easier to service than a 6% coupon... and because the HY issuers count on new issuance to satisfy the expiring paper, a rising rate will indeed start to squeeze companies who may already have weak coverage ratios. This is why I believe credit underwriting is so important in this space, and isn't one I'd recommend going passive absent some giant dislocation in price. There is just too much more to the story than what a benchmark/ETFs current yield and TYM are at a given date.... which is supported by...

This is big reason the FED is hesitant to raise rates, and went dovish. HY debt outstanding is historical. BBB debt is massively historical as the % of 'investment quality' debt.

And if HY debt, and close being downgraded issuers, is a concern for investors, it's also important to be aware of the degradation in the creditor protections in these bonds (including the loan market which can basically sell anything written in crayon into the CLO market). So life bond covenants are lite (less protection for bond holders), the implication is that default recoveries will be materially lower once the cycle turns.

BJJ_GUY:
You seem to know this stuff pretty well. If you wanted to generate income what investment vehicles would you look into ? Or, if you don't mind sharing, I would be curious to know what type of bond investments you have now.
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Re: Is there a relatively stable junk bond fund?

Post by scrabbler1 »

You might consider Fidelity Focused High Income Fund (FHIFX). It's mostly BB but has some B and BBB bonds. I think of it as "cream of the crap."
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Re: Is there a relatively stable junk bond fund?

Post by TN_Boy »

nisiprius wrote: Sat Apr 06, 2019 5:17 pm I forget IUSB, the iShares Core Total USD Bond Market ETF, which tracks the Bloomberg Barclay's US Universal Bond Index. This index tries to track the total US bond market, investment-grade and junk, as shown below. It may not make you happy because 87% of it is the regular (investment-grade) US Aggregate index, and only 13% is other things:

stuff deleted
Nisprisus,

Thanks for mentioning IUSB. It's my core bond holding. I think it's an excellent choice for those wishing for the broadest possible bond market exposure in one low cost vehicle.

As your graph showed, in good times it will typically beat the return of total bond market (AGG). In bad times, it will underperform somewhat. How much? At one point I thought I'd seen a backtest of the index (the fund has only been around for five years or so). going back to 2008 but I can't find that now.

And though I hold it, I often second guess myself on this choice versus holding a bit more equities and just owning treasuries as my bond holding ....

To the OP,

There is no such thing as a stable junk bond fund. When equities take a beating, so will junk bonds.
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Re: Is there a relatively stable junk bond fund?

Post by grayfox »

mark_in_denver wrote: Fri Apr 05, 2019 12:50 pm Looking for a junk bond fund that provides some resemblance of stability and income. Is the vanguard junk bond fund a worthy contender? Is there something better? Is there a bond fund that mixes junk and investment grade?
According to portviz if you had bought $10,000 VWEHX back in Jan 1985, and spent the dividends your principle would be down to $6,915. CAGR was -1.07% per year without the dividend. There was a steady decline in principle.

Code: Select all

	Initial	Final	CAGR	Stdev	Best	Worst	Max. DD	Sharpe	Sortino	US Mkt Correlation
VFINX	$10,000	$133,996 7.87% 	14.81%	37.42%	-37.03%	-52.40% 0.56	0.81	0.99
VWEHX	$10,000	$6,915 	-1.07% 	6.85%	39.09%	-21.29%	-57.86% 0.65	0.93	0.62
VWESX	$10,000	$12,868 0.74% 	8.00%	26.40%	-6.23%	-28.14% 0.63	1.01	0.16
Another words, if you spent the whole dividend, you were spending down capital. You would have had to reinvest some of the dividend to maintain the original principle. Most BHs here already know this.

Right now Vanguard High-Yield Corporate Fund Investor Shares (VWEHX) has SEC Yield = 5.56%. But, unlike Treasury or Investment Grade bond funds, SEC is not a good forecast for Expected Return with VWEHX. Maybe subtract off about 1 to 2% and that would be better estimate. Say 5.56 - 1.5 = 4.06%. That would be about my estimate of future return for VWEHX.

If you had re-invested the dividend, things don't look so bad. CAGR was 7.79%.

Code: Select all

	Initial	Final		CAGR	Stdev	Best	Worst	Max. DD	Sharpe	Sortino	US Mkt Correlation
VFINX	$10,000	$357,818 	11.01% 	14.82%	37.45%	-37.02%	-50.97% 	0.56	0.81	0.99
VWEHX	$10,000	$130,547 	7.79% 	6.85%	39.09%	-21.29%	-28.90% 	0.65	0.93	0.62
VWESX	$10,000	$153,897 	8.31% 	8.00%	26.40%	-6.23%	-16.82% 	0.63	1.01	0.16
Riskwise, Max drawdown is not as bad as stocks, but worse than LT Investment Grade bonds.
So it's somewhere between stocks and LT Investment Grade Corporates.

:arrow: Just don't spend the whole dividend an expect the original principle to be maintained. For withdrawal purposes, you could re-invest the dividend and then sell the amount of shares to make the withdrawal.
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Re: Is there a relatively stable junk bond fund?

Post by grayfox »

Here is something you might find useful. I looked up the Max Drawdown and CAGR of several Vanguard finds on portviz. Then I made a column of an estimate of the current expected return, E(R). E(R) is the center of the probability distribution of outcomes.
For the bond funds E(R) is SEC Yield, except for Junk which is SEC - 1.5%. For stocks, 1/CAPE + 2% inflation.

Code: Select all

			Jan-1994 to Mar-2019			
Fund		Symbol	Max DD	CAGR	E(R)	
S&P 500		VFINX	-50.97%	9.43%	5.22%	
HY Bond		VWEHX	-28.90%	7.79%	4.08%	Since 1985
LT InvGr	VWESX	-16.82%	6.92%	3.79%	
IT InvGr	VFICX	-14.11%	5.60%	3.15%	
ST InvGr	VFSTX	 -7.61%	4.19%	2.86%	
Prime MMF	VMMXX	  0.00%	2.38%	2.45%	
	
You can invest in Prime MMF with zero drawdown and get about 2.45%
You can invest in S&P500 with -50% drawdown and potential is maybe 5 to 5.5%
You can invest in VG Junk Bond fund with -30% drawdown and potential is about 4%.
Or somewhere in between.

Meager return environment.
Observe that, except for Prime MMF, expected returns are roughly half actual returns 1994-2019.

Pick your poison!
BJJ_GUY
Posts: 313
Joined: Wed Mar 13, 2019 7:45 am

Re: Is there a relatively stable junk bond fund?

Post by BJJ_GUY »

sixtyforty wrote: Thu Apr 11, 2019 7:08 am
BJJ_GUY:
You seem to know this stuff pretty well. If you wanted to generate income what investment vehicles would you look into ? Or, if you don't mind sharing, I would be curious to know what type of bond investments you have now.
Sorry, I don't know much about mutual fund and ETF options. I personally don't have any bond investments. That said, HY debt in a passive strategy hardly makes sense to me. I think a decent active manager would be worth the higher fees. (Market cap weighting debt issuance flips logic on its head.)
Thesaints
Posts: 3464
Joined: Tue Jun 20, 2017 12:25 am

Re: Is there a relatively stable junk bond fund?

Post by Thesaints »

mark_in_denver wrote: Fri Apr 05, 2019 12:50 pm Looking for a junk bond fund that provides some resemblance of stability and income. Is the vanguard junk bond fund a worthy contender? Is there something better? Is there a bond fund that mixes junk and investment grade?
Take any junk bond fund you can think of and put half of your money in there and the other half in a short term treasuries fund. Call that "junk-bonds-fund-that-provides-higher-stability-than-standard-junk-bond-funds". Periodically rebalance between the two as needed.
stimulacra
Posts: 787
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: Is there a relatively stable junk bond fund?

Post by stimulacra »

I use Vanguard Intermediate-Term Corporate Bond Index Fund Admiral Shares (VICSX) for my corporate bonds. It's done ok. The .25% purchase fee leave a bit to be desired but haven't actually had the need to rebalance too much with it set to re-invest all interests and distributions.
Corgitodd
Posts: 53
Joined: Thu Mar 09, 2017 2:45 pm

Re: Is there a relatively stable junk bond fund?

Post by Corgitodd »

I inherited some Fidelity Cap and Income.It’s doing pretty well lately, maybe I replace it with Total Bond Fund before it goes south?
Dottie57
Posts: 9178
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Is there a relatively stable junk bond fund?

Post by Dottie57 »

alex_686 wrote: Fri Apr 05, 2019 1:46 pm Short answer is no. What is your goal?
Stable junk bond fund = unknown creature. Junk bonds are risky and volatile b definition.
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