Bonds beyond Total Bond Market - Anyone ?

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confusedinvestor
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Bonds beyond Total Bond Market - Anyone ?

Post by confusedinvestor » Thu May 16, 2019 8:44 pm

Folks,
Anyone using any fixed income asset class beside Total Bond Market ?

- If Yes, What and Why ? (eg TIPS)

- If Not, Why not ?

Just had a portfolio review with a firm and they recommend "diversification" of Total Bond Market with TIPS, Floats, High Yield, etc....

skierrex
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by skierrex » Thu May 16, 2019 9:00 pm

I have BND, some CD's, a couple of things at Treasury Direct, and some random managed bond fund that's offered in my 401(k).

I have not figured out BND, not sure if it is making me money or not. I do agree it it not correlated with the stock market.

CD's are wonderful, you put your money in, you get money + 2.x% back: LOVELY!

Treasury Direct is also wonderful, buy for $99.xx, wait, it's worth $100: LOVELY!

The random managed bond fund also clearly makes money. I suspect it's correlated with stocks and it's not really my friend, in a bond kind of way.

It's not clear to me which is more complicated, stocks or bonds.

BJJ_GUY
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by BJJ_GUY » Thu May 16, 2019 9:16 pm

My Fixed Income allocation is some cash, and UST (which used to be long-dated as a deflation hedge and is now combined with cash as under 12 month USTs only

If I want credit risk, ill take it very opportunistically via closed-end HY and levered loan funds when at steep discounts, and I'll also invest with active HY managers when the time is appealing (not now, and hasn't been attractive with breadth for a while). I've yet to do Closed End muni funds when the trade to historically wide spread to NAV, so looking for ideas

I also own GLD which is obviously not a favorite of many. I don't trust the efficacy of owning TIPs through a fund/ETF because you lose the pure exposure to inflation protection, but also the benefit of deflation protection as long as purchased below par, and held to maturity.

So for me, might be the most boring investment line-up in here:
Global Equity Index
Cash
Gold

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Dialectical Investor
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by Dialectical Investor » Thu May 16, 2019 9:18 pm

If considering floating rate notes because of concern about term risk, I'd add more short-term bonds instead. If desiring more credit risk found in high-yield/junk, I'd add more equities instead. I think TIPS are worthy of consideration, depending on other factors pertaining to the investor's individual situation.

fennewaldaj
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by fennewaldaj » Thu May 16, 2019 9:20 pm

I have quite a few
TIPs, US high yield, EM bonds, and hedged developed market bonds. I divided my bonds into safe bonds (which include the things in total bond plus Tips and hedged developed) and less safe bonds (HY, EM bonds).

Explorer
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by Explorer » Thu May 16, 2019 9:23 pm

I agree with what the firm said, bonds need diversification too..

Multisector bond funds... many available...

I use BND/VBTLX too in my index strategy where I have VT/VTWAX paired with BND/VBTLX. But I also hold funds like PIMIX (multisector) for additional diversification.

pdavi21
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by pdavi21 » Thu May 16, 2019 9:35 pm

1. No corporate bonds. I'd rather switch out corporates for more stock and gov't bonds...although corporate bonds did okay after 2000 crash, they usually fall when stocks get hit hard and may reduce the risk adjusted return of a portfolio.

2. Long as possible durations. I have a long investment horizon and a high risk tolerance.

3. Globally weighted. I would hold 100% BNDW or BNDX + BND if they didn't violate 1+2 for me.

I hold 100% EDV, but have always been looking to add foreign long gov't bonds. As I derisk my portfolio, I plan on adding BNDX (replacing stock and EDV) if no better options come up by then. After that I might switch out EDV for Intermediate and eventually Short Term Treasuries (assuming there isn't a ZIRP or NIRP at that time).
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

BJJ_GUY
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by BJJ_GUY » Thu May 16, 2019 9:39 pm

Dialectical Investor wrote:
Thu May 16, 2019 9:18 pm
If considering floating rate notes because of concern about term risk, I'd add more short-term bonds instead. If desiring more credit risk found in high-yield/junk, I'd add more equities instead. I think TIPS are worthy of consideration, depending on other factors pertaining to the investor's individual situation.
I hear you. I bought loan exposure in 2009 when they had become entirely dislocated because so much of that market place didn't understand them. If a money market fund breaks the buck, it has to be bank debt!

I wouldn't touch loans for anything today. CLOs are just gobbling up nearly garbage issuance, and indentures that make the 2007 cov-lite deals look creditor friendly

ionball
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by ionball » Thu May 16, 2019 9:57 pm

Using TIPS for a liability matching portfolio until social security claim date.

nesdog
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by nesdog » Thu May 16, 2019 10:03 pm

T-Bills via Treasury Direct.
California Muni Bond funds...no state tax
Individual muni issues. Stuff my parents starting investing for me years ago and I continue with.
Insert clever comment here...

Ferdinand2014
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by Ferdinand2014 » Thu May 16, 2019 10:07 pm

Fixed income allocation is 100% U.S. Treasury 4 week zero coupon T-Bills on auto-roll plan through Fidelity

I like simplicity, extreme liquidity and an expense ratio of zero

I don't like credit risk or term risk
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columbia
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by columbia » Thu May 16, 2019 10:09 pm

I prefer treasuries, but total bond market is (also) a great choice.

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onthecusp
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by onthecusp » Thu May 16, 2019 10:29 pm

I use FUAMX Fidelity Intermediate Treasury Bond Index fund. ER 0.03%
and FUMBX Fidelity Short Term Treasury Bond Index fund. ER 0.03%

They are a snooze. :happy

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confusedinvestor
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by confusedinvestor » Thu May 16, 2019 10:50 pm

+1

I'm thinking to keep 50 TIPS (10 yrs of my expenses) and 50 BND (next 10 yrs of my expenses) vs currently 100 BND

Dialectical Investor wrote:
Thu May 16, 2019 9:18 pm
If considering floating rate notes because of concern about term risk, I'd add more short-term bonds instead. If desiring more credit risk found in high-yield/junk, I'd add more equities instead. I think TIPS are worthy of consideration, depending on other factors pertaining to the investor's individual situation.

Topic Author
confusedinvestor
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by confusedinvestor » Thu May 16, 2019 10:51 pm

What is your mix of Int vs Short term ?
onthecusp wrote:
Thu May 16, 2019 10:29 pm
I use FUAMX Fidelity Intermediate Treasury Bond Index fund. ER 0.03%
and FUMBX Fidelity Short Term Treasury Bond Index fund. ER 0.03%

They are a snooze. :happy

Topic Author
confusedinvestor
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by confusedinvestor » Thu May 16, 2019 10:52 pm

+100

thanks.
ionball wrote:
Thu May 16, 2019 9:57 pm
Using TIPS for a liability matching portfolio until social security claim date.

hoping
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by hoping » Thu May 16, 2019 11:22 pm

I use Vanguard Total Bond Market Index Fund, the GNMA Fund, Inflation Protected Securities Fund and the Total International Bond Index Fund.

AerialWombat
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by AerialWombat » Thu May 16, 2019 11:29 pm

I hold no Total Bond at all, despite being heavy in bonds (my AA is 30/70 stocks/bonds for securities). In taxable, I'm 100% Vanguard High Yield Muni. In 401k, I have some short and intermediate corporate junk, as well as quite a bit of Wellesley, which holds 65% corporate bonds. In equities, I'm heavy in REITs, especially one mortgage REIT. In Roth IRA, it's mostly in a floating rate fund. I also invest in private fix/flip notes through Groundfloor.

If I were only "allowed" to have one fund across all tax-advantaged accounts, I would most likely choose Vanguard High Yield Corporate (VWEHX). As I get closer to my "enough is enough" number in taxable, I'll start putting new money into Vanguard Intermediate Muni (VWITX).

I'm obviously OK with risk, I just can't stomach the daily price volatility of stocks. I also don't need the theoretical higher total return provided by a stock heavy portfolio, for a variety of reasons beyond the scope of this thread.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

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Sandtrap
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by Sandtrap » Thu May 16, 2019 11:45 pm

Diversification of fixed to include:
Vanguard Total Bond
Vanguard Tax Exempt Bond Fund
Wellesley
CD Ladder
Money Market

Why?
Diversification of fixed.
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MotoTrojan
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by MotoTrojan » Fri May 17, 2019 1:23 am

Total Bond is the most diverse. Other options may give you lower volatility, more efficiency, higher return (and risk) but not more diversity. I don't hold bonds in my core portfolio (I do have some leveraged treasury holdings as part of a side strategy some on here are playing with) but I had previously thought Total Bond would be the winner when I am ready for some, but my recent learning has pushed me to want long-treasuries to get some low correlation with equities. I'll probably start to introduce those on my 30th birthday.

UpperNwGuy
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by UpperNwGuy » Fri May 17, 2019 1:51 am

I have both Total Bond and Intermediate Tax Exempt. All the other bond funds seem too conservative or too risky for my needs.

dalbright
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by dalbright » Fri May 17, 2019 5:07 am

It depends on what your goal is with the bond portion of your portfolio I would say, and then go from there. I personally add in edv (long term treasury) and a mutisector bond fund (pimix). I live edv for its flight to quality nature as well as pimix for a bit more risk/return but greater performance typically. It can search for what it believes will be the better sectors of the bond market throughout the world, which is well beyond my skillset :). I also hold fxnax and vwinx. I find the bond market more interesting as compared to stocks where i prefer more index approaches and low volatility.

Dandy
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by Dandy » Fri May 17, 2019 5:58 am

I have many fixed income products. I am retired with about 57% of my portfolio in fixed income.

Tax advantaged - The fixed income from Balanced Index and Wellesley Income funds, Inflation Protected Securities Fund, CD ladder, Short Term Bond Index and Short Term Treasury Index funds, Intermediate Treasury Fund.

Taxable - Intermediate and Ltd Term Tax Exempt funds, Savings accounts, money market fund.

I roughly follow Dr. Wm Bernstein's idea of having X years worth of drawdown dollars in "safe" fixed income. I decided for me that means FDIC products and short term bond funds, etc. Equities and Intermediate bonds are in my "risk" portfolio.

As I age and take my RMD in proportion I am gradually increasing my intermediate bond allocation. That is because my "safe" portfolio is more like retirement insurance than an ATM i.e. I have enough "safe" fixed income to last to age 90 but I withdraw from both "safe" and "risk" portfolio (unless "risk" has a terrible year). So, my "safe" portfolio has "excess" since I didn't use all of it to support that year's drawdown. I could extend coverage beyond 90, spend it or invest it. So far I have added to Intermediate Treasury Fund.

dcabler
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by dcabler » Fri May 17, 2019 6:52 am

confusedinvestor wrote:
Thu May 16, 2019 8:44 pm
Folks,
Anyone using any fixed income asset class beside Total Bond Market ?

- If Yes, What and Why ? (eg TIPS)

- If Not, Why not ?

Just had a portfolio review with a firm and they recommend "diversification" of Total Bond Market with TIPS, Floats, High Yield, etc....
I prefer Intermediate Treasuries. Total Bond is good, too and I use it in those accounts where intermediate treasuries aren't available. Either are perfectly fine.
I also own TIPs. TIPs, together with Ibonds, will form an inflation adjusted income stream that together with Social Security that should cover my most basic spending for about 15 years, even after taxes. Rest of the portfolio will be for discretionary spending and those occasional unexpected bills.

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by midareff » Fri May 17, 2019 7:04 am

Intermediate Term Tax Exempt Muni Fund in taxable, Short Term Corporate Index, Intermediate Term Corporate Index and High Yield in IRA. Reasons include diversification and higher return for the slightly higher risk which includes greater volatility. Also hold cash and CDs from time to time. 71 and 8 years retired with a pension and SS that pay the monthly bills.

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by bearcub » Fri May 17, 2019 7:37 am

Retired. Most of my FI is in the two Vanguard TIPS Funds. Some Corp. bonds in my two balanced funds. Also have EE Savings bonds from when I was still working. They have matured + I can cash them in.

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by Doc » Fri May 17, 2019 7:44 am

midareff wrote:
Fri May 17, 2019 7:04 am
71 and 8 years retired with a pension and SS that pay the monthly bills.
This is just one of many reasons that a single TBM bond position is why one size does not fit all. Others include high equity positions, tax sheltered space and aversion to mortgage backed securities.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

dbr
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by dbr » Fri May 17, 2019 7:46 am

Well, a person who holds only Treasuries holds less than TBM rather than beyond TBM.

Seriously, almost everything about bonds is a difference without a distinction.

David Althaus
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by David Althaus » Fri May 17, 2019 8:23 am

I copied Jack Bogle and bought BIV. Carries a few more corporates assuming a little extra risk and if you are uncomfortable with the duration you can get a CD to lower it. The person above me was correct (I believe) that this bond stuff is all about distinctions without a difference. I would, however, stay US.


All the best

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fire5soon
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by fire5soon » Fri May 17, 2019 10:48 am

Does anyone with a low equity allocation utilize bond types like high yield or EM to hopefully increase returns slightly while trying to minimize the magnitude of the downside risk that equities can demonstrate during bear markets?
A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do. - Bob Dylan

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onthecusp
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by onthecusp » Fri May 17, 2019 1:11 pm

confusedinvestor wrote:
Thu May 16, 2019 10:51 pm
What is your mix of Int vs Short term ?
onthecusp wrote:
Thu May 16, 2019 10:29 pm
I use FUAMX Fidelity Intermediate Treasury Bond Index fund. ER 0.03%
and FUMBX Fidelity Short Term Treasury Bond Index fund. ER 0.03%

They are a snooze. :happy
It's about 60% Intermediate / 40% Short Term. I got the original allocation and suggestion from Paul Merriman's website a few years ago and have not found a reason to change. I read threads like this one to consider other ideas. I find my self agreeing with those who prefer a pure treasury allocation (confirmation bias? :shock:) since I'm still pretty over weighted to stocks for my age and nearness to retirement.

I don't have any strong feeling about the balance between the two.

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by Thesaints » Fri May 17, 2019 1:25 pm

confusedinvestor wrote:
Thu May 16, 2019 8:44 pm
Folks,
Anyone using any fixed income asset class beside Total Bond Market ?
Absolutely! In fact, it is hard to understand why most would use a TBM fund.
If you need money in X years, the best solution is probably getting a ZC maturing in X years, which maximizes yield.
If one wanted to diversify interest rate risk, maybe combining a few different maturities would work, but certainly not including anything exceeding X years.
Why would I want a mix of all maturities as determined by the market (i.e. by other people with different time horizons than mine) is a mystery.

If one wants to achieve an average credit risk, combining extremely safe bonds (as in treasuries, or FDIC-protected CD's) and the more riskier issues is probably the way to go: we know for sure what is "extremely safe" and what is "extremely risky" (on a bond's scale). What is "medium risk" instead is a lot fuzzier. Not to mention that treasuries stay "lowest risk" no matter what and junk bonds at worst remain "higher risk" and at best lower their risk. "Average risk" can instead go either way and in a crisis tends to go towards "riskier" rather than towards "safer".

Finally, as the OP points out, TBM does not include inflation-indexed bonds and those can very well be part of the safests portion of one's bonds mix.

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G12
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by G12 » Fri May 17, 2019 1:31 pm

In addition to total bond market we have foreign bonds contained in Vanguard target retirement and TR 2015, BIV, BCOIX, PIMIX, corporates held in Wellesley (VWIAX), short term investment grade, individual TIPS, CDs, old EEs, I's, and online savings. I think we are covered.

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by ThrustVectoring » Fri May 17, 2019 3:49 pm

confusedinvestor wrote:
Thu May 16, 2019 8:44 pm
Just had a portfolio review with a firm and they recommend "diversification" of Total Bond Market with TIPS, Floats, High Yield, etc....
A "portfolio review" is an euphemistic term for a sales pitch, usually. They get paid when they convince you to move investments into their products or use some paid services or something.

Bonds need to do exactly one thing - be a far more stable place to park your money than stocks are. You can get away with cash in an interest-bearing savings account, or individual treasury bonds, or I-bonds, or CDs, or whatever. Basically doesn't matter as long as you know the money is going to be there when you need it, largely unaffected by market movements.
Current portfolio: 60% VTI / 40% VXUS

Longtermgrowth
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by Longtermgrowth » Fri May 17, 2019 4:04 pm

Surprised IUSB (iShares Core Total USD Bond Market ETF) hasn't been mentioned:

"Exposure to potentially higher yielding bonds not included in the Bloomberg Barclays U.S. Aggregate Bond Index"

https://www.ishares.com/us/products/264 ... market-etf

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by DaftInvestor » Fri May 17, 2019 4:06 pm

I used to have some TIPS but then decided to go with iBonds.
I like iBonds because:
- They increase my tax-deferred space
- They take the place of TIPS (in my opinion) in that they are inflation protected
- They also serve as a 2nd-tier emergency fund for me

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by jeffyscott » Fri May 17, 2019 4:09 pm

fire5soon wrote:
Fri May 17, 2019 10:48 am
Does anyone with a low equity allocation utilize bond types like high yield or EM to hopefully increase returns slightly while trying to minimize the magnitude of the downside risk that equities can demonstrate during bear markets?
Yes, we have 40% equities and use pretty much all the riskier bond categories. We don't actually have a dedicated HY or EM fund, but some fund managers can go there, categorized as multi-sector and global bond funds. Also have floating rate fund. My preference is to use managed bond funds with reasonable costs. We have some in the new "core plus" category that are mostly investment grade but also dabble in the riskier areas.
Time is your friend; impulse is your enemy. - John C. Bogle

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confusedinvestor
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by confusedinvestor » Fri May 17, 2019 9:55 pm

thanks all, I am going to stick to AGG Total Bond Market for now and will add TIPS as I close to retirement in next 12 years....

pascalwager
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by pascalwager » Fri May 17, 2019 10:29 pm

Thesaints wrote:
Fri May 17, 2019 1:25 pm
confusedinvestor wrote:
Thu May 16, 2019 8:44 pm
Folks,
Anyone using any fixed income asset class beside Total Bond Market ?
Absolutely! In fact, it is hard to understand why most would use a TBM fund.
If you need money in X years, the best solution is probably getting a ZC maturing in X years, which maximizes yield.
If one wanted to diversify interest rate risk, maybe combining a few different maturities would work, but certainly not including anything exceeding X years.
Why would I want a mix of all maturities as determined by the market (i.e. by other people with different time horizons than mine) is a mystery.

If one wants to achieve an average credit risk, combining extremely safe bonds (as in treasuries, or FDIC-protected CD's) and the more riskier issues is probably the way to go: we know for sure what is "extremely safe" and what is "extremely risky" (on a bond's scale). What is "medium risk" instead is a lot fuzzier. Not to mention that treasuries stay "lowest risk" no matter what and junk bonds at worst remain "higher risk" and at best lower their risk. "Average risk" can instead go either way and in a crisis tends to go towards "riskier" rather than towards "safer".

Finally, as the OP points out, TBM does not include inflation-indexed bonds and those can very well be part of the safests portion of one's bonds mix.
Assuming TBM has a duration of six years, one situation where it might be suitable would be for a retiree with an actuarial life expectancy of six to 12 years.

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by pascalwager » Fri May 17, 2019 10:43 pm

I haven't pulled the trigger yet, but I'm considering the following fixed income AA for a 54/46 portfolio:

-Vg Variable Annuity acct: Total Bond Market fund*
-Vg IRA acct: Inflation Protected Securities fund
-Vg Individual acct: CA IT Tax-Exempt fund & IT Tax-Exempt fund (50/50)

*I don't particularly want credit risk, but TBM is the best available fund in the VA.

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by retiredflyboy » Sat May 18, 2019 12:47 am

Vanguard GNMA Admiral Fund. 100% US obligation with a higher yield then treasury. I have owned this fund for years and it is still the only bond fund I own. When rates drop, people refinance so net asset value may not rise as much as treasuries and when rates rise people hold on to their mortgages so net asset may drop more then treasuries but you get a higher yield to compensate. Negative convexity is the fancy name for this trait.
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by abuss368 » Sat May 18, 2019 7:58 am

We have one bond fund in each account: Intermediate Tax Exempt in taxable and Total Bond Index in tax advantage. We also have another account with Prime Money Market but cash is not considered in overall asset allocation.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Bonds beyond Total Bond Market - Anyone ?

Post by tibbitts » Sat May 18, 2019 8:02 am

confusedinvestor wrote:
Thu May 16, 2019 8:44 pm
Folks,
Anyone using any fixed income asset class beside Total Bond Market ?

- If Yes, What and Why ? (eg TIPS)

- If Not, Why not ?

Just had a portfolio review with a firm and they recommend "diversification" of Total Bond Market with TIPS, Floats, High Yield, etc....
I do foreign, emerging, high yield, I, EE, floating rate, gnma, short corp, intermediate corp, and something else I've forgotten (all in funds.)

petulant
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by petulant » Sat May 18, 2019 8:29 am

Agree with a poster above--this is not a review, it's a sales pitch. Look carefully at the funds they would like to diversify you into and consider any commissions or expense ratios. It's a little ludicrous to say you need to "diversify" more from total bond market.

That said, there's nothing wrong with supplementing or replacing BND with other funds based on 1) a desire to move your overall bond allocation away from or toward specific items in BND like agency MBS, corporates, or treasuries; 2) a desire to take on credit risk from high yield securities, which are not included in BND; or 3) a desire to shift duration, such as taking on a longer duration through a long-term fund.

But based on what you've said about the "portfolio review with a firm," though, I would not rely on or trust their advice.

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nedsaid
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by nedsaid » Sat May 18, 2019 3:16 pm

confusedinvestor wrote:
Thu May 16, 2019 8:44 pm
Folks,
Anyone using any fixed income asset class beside Total Bond Market ?

- If Yes, What and Why ? (eg TIPS)

- If Not, Why not ?

Just had a portfolio review with a firm and they recommend "diversification" of Total Bond Market with TIPS, Floats, High Yield, etc....
My bond funds are mostly either US Bond Index funds or Core Bond funds, investment grade and intermediate term. Also invest in TIPS and own a couple GNMA funds. I also own an International Bond fund and a US Dollar Hedged International Bond Index ETF. Very, very little in High Yield.
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by RadAudit » Sat May 18, 2019 3:41 pm

confusedinvestor wrote:
Thu May 16, 2019 8:44 pm
Anyone using any fixed income asset class beside Total Bond Market ?

- If Yes, What and Why ? (eg TIPS)
The fixed income side of the portfolio is primarily in total bond and total international bond. Total bond because it covers most of the domestic waterfront. International because it's hedged and diversified in to other countries, JIC. 10% of bonds is TIPS JIC something really gets out of hand in the US. And, a very little is in intermediate bonds just so I can buy an extra cup of coffee once a year on the interest rate differential between that fund and total bond.

And, of course, there's enough on the bond side to cover a number of years of SWR.

I wouldn't recommend that you copy my portfolio or try to follow my rationalizations.
Last edited by RadAudit on Sat May 18, 2019 3:47 pm, edited 1 time in total.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

ivk5
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by ivk5 » Sat May 18, 2019 3:47 pm

Mostly total bond mkt.

Started buying iBonds in 2018-19 - interesting to me due to their unusual combination of features (hedge unexpected inflation, hedge deflation, expand tax-deferred space). If I’m wrong, downside is modest.

Also some low-EWP CD, MM, ultrashort corporate fund but these are semi-earmarked funds so arguably not part of long-term AA.

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midareff
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Re: Bonds beyond Total Bond Market - Anyone ?

Post by midareff » Sat May 18, 2019 5:20 pm

fire5soon wrote:
Fri May 17, 2019 10:48 am
Does anyone with a low equity allocation utilize bond types like high yield or EM to hopefully increase returns slightly while trying to minimize the magnitude of the downside risk that equities can demonstrate during bear markets?
Roughly 50/50, equities to FI. 71 and 8 years retired. Short Term Corporate Index, Intermediate Term Corporate Index and High Yield in IRA with IT Tax-Exempt in taxable. Also hold 2%-4% cash.

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