VBILX and VBLAX; Hybrid Treasury/corporate funds?

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OSUperu
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VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by OSUperu » Tue May 14, 2019 11:42 pm

Can anyone give some insight/opinion on the two bond funds that seems to carry a % of govt bonds; roughly 53% for the intermediate (VBILX) and 42% for the long (VBLAX adm/VBLTX invs closed)?

These two bond funds seems like "hybrids" between the pure treasury bond funds (VSIGX and VLGSX) and the pure investment grade ( VFICX and VWESX) funds. Although these hybrids seem to have much more B grade than in the investment grade only funds. How are the bond grades weighted and how does their default risk compare?

Aside from term length are these funds (VBILX and VBLAX/VBLTX) just happy mediums between all treasury or all corporate? What are the reasonings/strategies for these "some of both" bond funds?

Thanks!

depressed
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Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by depressed » Wed May 15, 2019 9:21 am

OSUperu wrote:
Tue May 14, 2019 11:42 pm
Can anyone give some insight/opinion on the two bond funds that seems to carry a % of govt bonds; roughly 53% for the intermediate (VBILX) and 42% for the long (VBLAX adm/VBLTX invs closed)?

These two bond funds seems like "hybrids" between the pure treasury bond funds (VSIGX and VLGSX) and the pure investment grade ( VFICX and VWESX) funds. Although these hybrids seem to have much more B grade than in the investment grade only funds. How are the bond grades weighted and how does their default risk compare?

Aside from term length are these funds (VBILX and VBLAX/VBLTX) just happy mediums between all treasury or all corporate? What are the reasonings/strategies for these "some of both" bond funds?

Thanks!
This is a good question. Yes, you are right that these funds are just a mix of treasuries and corporate bonds. I think of them as similar to Vanguard's total bond fund (VBTLX), which tries to match the entire bond market at all term-lengths and all qualities. Here is a chart for the Vanguard mutual funds (Admiral class):

Code: Select all

[Scroll down to see all funds]

Treasuries           Ave. Dur.   Treasuries   Inv. Grade    BBB or less
VSBSX/VGSH           1.9y        100%         0%            0%
VSIGX/VGIT           5.1y        100%         0%            0%
VLGSX/VGLT           17.1y       100%         0%            0%
VUSUX                17.2y(*)    100%         0%            0%
--/EDV               23.9y       100%         0%            0%

Investment Grade     Ave. Dur.   Treasuries   Inv. Grade    BBB or less
VUSFX	   	     0.9y        5%           72%           23%
VSCSX/VCSH           2.5y        0%           54%           46%
VFIDX/VCIT           5.8y        0%           43%           57%
VTC                  6.9y(*)     0%           48%           52%
VWETX/VCLT           13.5y       0%           47%           53%

High-Yield           Ave. Dur.   Treasuries   Inv. Grade    BBB or less
VWEAX                3.6y        4%           0%            96%

Total Bond Market    Ave. Dur.   Treasuries   Inv. Grade    BBB or less
VBIRX/BSV            2.6y        66%          21%           13%
VBILX/BIV            6.1y        54%          21%           25% 
VBTLX/BND            6.0y (*)    64%          19%           17%
VBLAX/BLV            14.9y       42%          28%           30%

* This fund includes all durations, resulting in an average duration
that is similar to an intermediate-term fund
Undoubtedly, people's reasons for investing in one kind of fund or another vary. Treasuries provide a better hedge against a downturn in the equity market; corporate bonds provide a higher interest rate. If you want both, you may choose to buy one of the total bond market funds, or you may buy separate funds to better control the duration or the allocation between treasury and corporate bonds.

Topic Author
OSUperu
Posts: 61
Joined: Fri Apr 05, 2019 4:27 pm

Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by OSUperu » Wed May 15, 2019 2:55 pm

Thanks. Where/how did you create this data? Very helpful and easier than looking at multiple fund data links.

Explorer
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Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by Explorer » Wed May 15, 2019 5:15 pm

I too love the way data is displayed. I am curious what tool you used and if it will work for other (bond) funds too?

depressed
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Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by depressed » Thu May 16, 2019 10:58 am

OSUperu wrote:
Wed May 15, 2019 2:55 pm
Thanks. Where/how did you create this data? Very helpful and easier than looking at multiple fund data links.
Explorer wrote:
Wed May 15, 2019 5:15 pm
I too love the way data is displayed. I am curious what tool you used and if it will work for other (bond) funds too?
Thank you for the compliments :) I'm old-school: I typed the data into a text file using an editor called vi. (No, my monitor was not green letters on a black background.) The data came from the Portfolio & Management tab of Vanguard's fund pages. For example:

Vanguard's Page for VBILX

The Treasury percentage is listed on those pages as "U.S. Government" in a table of "credit quality," although I think I rounded the treasury funds up to 100%, even if they weren't. I counted Investment Grade as having a credit quality of A, Aa, and Aaa in the credit table (I think those are Moody ratings), and anything with a lower rating I list in my table as "BBB or less." (That's a little bit of apples and oranges, because BBB is an S&P rating, I think, roughly equivalent to the Baa Moody rating.)

The average duration is listed on the Vanguard page under "fixed income characteristics," and lower down you can see a more precise distribution of effective maturities. I think it would be useful to add the SEC yield and expense ratio to my table; you can find those numbers on the Vanguard Overview tab. Perhaps the table could also include a link to the Vanguard page.

Any other users of vi still alive?

I'm glad you found the data useful; I actually built the table for my own use last week because I'd been dealing with similar questions, so your question was timely for me.

Valuethinker
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Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by Valuethinker » Thu May 16, 2019 12:03 pm

depressed wrote:
Thu May 16, 2019 10:58 am
OSUperu wrote:
Wed May 15, 2019 2:55 pm
Thanks. Where/how did you create this data? Very helpful and easier than looking at multiple fund data links.
Explorer wrote:
Wed May 15, 2019 5:15 pm
I too love the way data is displayed. I am curious what tool you used and if it will work for other (bond) funds too?
Thank you for the compliments :) I'm old-school: I typed the data into a text file using an editor called vi. (No, my monitor was not green letters on a black background.) The data came from the Portfolio & Management tab of Vanguard's fund pages. For example:

Vanguard's Page for VBILX

The Treasury percentage is listed on those pages as "U.S. Government" in a table of "credit quality," although I think I rounded the treasury funds up to 100%, even if they weren't. I counted Investment Grade as having a credit quality of A, Aa, and Aaa in the credit table (I think those are Moody ratings), and anything with a lower rating I list in my table as "BBB or less." (That's a little bit of apples and oranges, because BBB is an S&P rating, I think, roughly equivalent to the Baa Moody rating.)

The average duration is listed on the Vanguard page under "fixed income characteristics," and lower down you can see a more precise distribution of effective maturities. I think it would be useful to add the SEC yield and expense ratio to my table; you can find those numbers on the Vanguard Overview tab. Perhaps the table could also include a link to the Vanguard page.

Any other users of vi still alive?

I'm glad you found the data useful; I actually built the table for my own use last week because I'd been dealing with similar questions, so your question was timely for me.
It won't hold bonds below BBB (Baa in Moody's) - those are sub investment grade/ HY bonds. It will have to sell them within a certain period post downgrade (strictly, below BBB-).

11cents
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Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by 11cents » Thu May 16, 2019 1:26 pm

depressed wrote:
Thu May 16, 2019 10:58 am

Any other users of vi still alive?
I'm a user of vi and a holder of VBILX; this topic was meant for me!

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oldcomputerguy
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Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by oldcomputerguy » Thu May 16, 2019 3:32 pm

depressed wrote:
Thu May 16, 2019 10:58 am
Thank you for the compliments :) I'm old-school: I typed the data into a text file using an editor called vi. (No, my monitor was not green letters on a black background.)
Glad to see another old-school computer user here. (Hint: see my username and avatar. I've put in my share of years on "green screens".)
:beer
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

depressed
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Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by depressed » Thu May 16, 2019 5:32 pm

11cents wrote:
Thu May 16, 2019 1:26 pm
depressed wrote:
Thu May 16, 2019 10:58 am

Any other users of vi still alive?
I'm a user of vi and a holder of VBILX; this topic was meant for me!
Ah! Must be an omen for you to buy a lottery ticket today. Be sure to include the number VI among your picks. Thanks for helping me to feel included today!

depressed
Posts: 132
Joined: Sun Oct 14, 2018 4:07 pm

Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by depressed » Thu May 16, 2019 5:33 pm

oldcomputerguy wrote:
Thu May 16, 2019 3:32 pm
depressed wrote:
Thu May 16, 2019 10:58 am
Thank you for the compliments :) I'm old-school: I typed the data into a text file using an editor called vi. (No, my monitor was not green letters on a black background.)
Glad to see another old-school computer user here. (Hint: see my username and avatar. I've put in my share of years on "green screens".)
:beer
For the green screen. I just want to know what that beast of a machine is in your profile pic. Thanks for saying hi.

User avatar
oldcomputerguy
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Location: In the middle of five acres of woods in East Tennessee

Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by oldcomputerguy » Thu May 16, 2019 5:59 pm

depressed wrote:
Thu May 16, 2019 5:33 pm
oldcomputerguy wrote:
Thu May 16, 2019 3:32 pm
depressed wrote:
Thu May 16, 2019 10:58 am
Thank you for the compliments :) I'm old-school: I typed the data into a text file using an editor called vi. (No, my monitor was not green letters on a black background.)
Glad to see another old-school computer user here. (Hint: see my username and avatar. I've put in my share of years on "green screens".)
:beer
For the green screen. I just want to know what that beast of a machine is in your profile pic. Thanks for saying hi.
My avatar used to be a green-screen sign-on prompt from a functional Xerox Sigma 9 computer. I recently changed it to what you see now, a model 33 Teletype machine. Both the Teletype terminal and the Sigma 9 mainframe are at the Living Computer Museum in Seattle WA.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

depressed
Posts: 132
Joined: Sun Oct 14, 2018 4:07 pm

Re: VBILX and VBLAX; Hybrid Treasury/corporate funds?

Post by depressed » Fri May 17, 2019 9:43 am

oldcomputerguy wrote:
Thu May 16, 2019 5:59 pm
My avatar used to be a green-screen sign-on prompt from a functional Xerox Sigma 9 computer. I recently changed it to what you see now, a model 33 Teletype machine. Both the Teletype terminal and the Sigma 9 mainframe are at the Living Computer Museum in Seattle WA.
That's very cool. I miss the days when I could carry around my programs on spools of paper tape with endless rows of punched holes, probably at a density of about six bytes per linear inch. The wise programmer left plenty of blank space at the end of the spool where corrections could be appended. Of course, there were punch cards, too, but they were humdrum, while paper tape provided automatic entry to the cool club.

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