Why not 100% PSLDX?

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Semantics
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Re: Why not 100% PSLDX?

Post by Semantics »

jibantik wrote: Thu Jul 09, 2020 11:12 am I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
Okay? If my lifetime earnings is 10x what I'd earn with VTWAX then I'll be happy to pay 30% in fees. And if you think that's expensive, I sure hope you don't have a mortgage.
muffins14
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Re: Why not 100% PSLDX?

Post by muffins14 »

Why have 70% of $1M when you could have 99% of $100k? :oops:
jibantik
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Re: Why not 100% PSLDX?

Post by jibantik »

You know, if you guys don't think > 1% ER is high should get a job at JP Morgan, you'd make a great sales people.
Semantics wrote: Tue Jul 14, 2020 2:47 pm
jibantik wrote: Thu Jul 09, 2020 11:12 am I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
Okay? If my lifetime earnings is 10x what I'd earn with VTWAX then I'll be happy to pay 30% in fees. And if you think that's expensive, I sure hope you don't have a mortgage.
Yes, IF you get higher returns NET fees then that is a better outcome. Easy statement to make with the "if".
RocketShipTech wrote: Tue Jul 14, 2020 2:20 pm This is nonsense.
Nothing I posted in regards to expenses is nonsense, it's just math.
RocketShipTech wrote: Tue Jul 14, 2020 2:20 pm The lifetime return on PSLDX is 15.6% CAGR (and that includes two massive crashes).

The expense ratio is 0.6% (excluding the borrowing cost which is part of the strategy).

What is the difference between 15.6% CAGR and 16.2% CAGR over let’s say 20 years?

If you started with $100k you’d end up with $1.8M or $2.0M. So that’s only 10% lifetime earnings lost to the ER.

Now let me ask you - are you able to earn 15.6% on any other comparably diversified investment?
If you are planning for 16% returns and you consider a lifetime to be only 20 years, then I don't know what to tell ya. We have VERY different outlooks on that.

I don't think I will be earning 15.6% on ANY investment.
Semantics
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Re: Why not 100% PSLDX?

Post by Semantics »

jibantik wrote: Tue Jul 14, 2020 4:09 pm You know, if you guys don't think > 1% ER is high should get a job at JP Morgan, you'd make a great sales people.
Context is everything my friend. 1% ER or for that matter even 0.1% would be prohibitively expensive to me for a fund with low returns, like say VTWAX. :wink:
jibantik wrote: Tue Jul 14, 2020 4:09 pm
Semantics wrote: Tue Jul 14, 2020 2:47 pm
jibantik wrote: Thu Jul 09, 2020 11:12 am I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
Okay? If my lifetime earnings is 10x what I'd earn with VTWAX then I'll be happy to pay 30% in fees. And if you think that's expensive, I sure hope you don't have a mortgage.
Yes, IF you get higher returns NET fees then that is a better outcome. Easy statement to make with the "if".
It's also easy to make because it's a highly likely outcome. A scenario in which PSLDX does not outperform something like VTWAX by >1% over multiple decades would probably mean I'd have bigger things to worry about than my portfolio, and in such a scenario I probably wouldn't be much happier having my money in VTWAX. In addition to my mortgage comment, companies are themselves leveraged, so if one thinks leverage is problematic, one shouldn't invest in equities at all. Think about how much of your lifetime earnings all these companies are throwing away paying interest on their debts!
BullHouse_BearMarket
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Re: Why not 100% PSLDX?

Post by BullHouse_BearMarket »

Man, people really are adverse to PSLDX. My thread I started asking about things completely unrelated to it, has become an anti-PSLDX thread. Not what I was hoping for, but should have known better.

viewtopic.php?f=1&t=320333&p=5376305#p5376305
jibantik
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Re: Why not 100% PSLDX?

Post by jibantik »

BullHouse_BearMarket wrote: Fri Jul 17, 2020 9:28 am Man, people really are adverse to PSLDX. My thread I started asking about things completely unrelated to it, has become an anti-PSLDX thread. Not what I was hoping for, but should have known better.

viewtopic.php?f=1&t=320333&p=5376305#p5376305
Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
sonosoldi3112
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Re: Why not 100% PSLDX?

Post by sonosoldi3112 »

Are the dividends qualified ? or do I earn interest. ... ? thanks much

Would it be ok if retired as the you would require lots of income to be cast off ..so that would be good ( I hope).
sonosoldi3112
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Re: Why not 100% PSLDX?

Post by sonosoldi3112 »

Are the dividends qualified ? or do I earn interest. ... ? thanks much

Would it be ok if retired as the you would require lots of income to be cast off ..so that would be good ( I hope).
AZAttorney11
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Re: Why not 100% PSLDX?

Post by AZAttorney11 »

jibantik wrote: Fri Jul 17, 2020 5:11 pm
BullHouse_BearMarket wrote: Fri Jul 17, 2020 9:28 am Man, people really are adverse to PSLDX. My thread I started asking about things completely unrelated to it, has become an anti-PSLDX thread. Not what I was hoping for, but should have known better.

viewtopic.php?f=1&t=320333&p=5376305#p5376305
Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Your stubborn refusal to listen to what others have posted in response to your comments about PSLDX’s fees are telling. I don’t know if you’re being deliberately obtuse, or simply don’t understand the fund. Either way, you’re flat out wrong on PSLDX and the fees. Why you seem to ignore / outright dismiss its past performance and potential role in a tax deferred account is beyond me.
ChrisBenn
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Re: Why not 100% PSLDX?

Post by ChrisBenn »

jibantik wrote: Fri Jul 17, 2020 5:11 pm
BullHouse_BearMarket wrote: Fri Jul 17, 2020 9:28 am Man, people really are adverse to PSLDX. My thread I started asking about things completely unrelated to it, has become an anti-PSLDX thread. Not what I was hoping for, but should have known better.

viewtopic.php?f=1&t=320333&p=5376305#p5376305
Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Where do you get 30% from? Back of the napkin looks closer to 20%? (Assuming we could get this with a zero expense ratio).

Jan 08 (inception) -> Jan 2020 had a cagr of 16%. So 17% if we had a 0% expense ratio. Over 30 years (~lifetime) with a 10k initial investment that gives us 1.1mil vs 860k So ~ 22%?

If we factor in 10k annual contributions it's ~18.5%. (7.6mil vs 6.2mil)
jibantik
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Re: Why not 100% PSLDX?

Post by jibantik »

AZAttorney11 wrote: Fri Jul 17, 2020 5:20 pm
jibantik wrote: Fri Jul 17, 2020 5:11 pm Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Your stubborn refusal to listen to what others have posted in response to your comments about PSLDX’s fees are telling. I don’t know if you’re being deliberately obtuse, or simply don’t understand the fund. Either way, you’re flat out wrong on PSLDX and the fees.
Image
AZAttorney11 wrote: Fri Jul 17, 2020 5:20 pm Why you seem to ignore / outright dismiss its past performance and potential role in a tax deferred account is beyond me.
https://www.bogleheads.org/forum/viewtopic.php?t=156573
AZAttorney11
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Re: Why not 100% PSLDX?

Post by AZAttorney11 »

jibantik wrote: Fri Jul 17, 2020 6:23 pm
AZAttorney11 wrote: Fri Jul 17, 2020 5:20 pm
jibantik wrote: Fri Jul 17, 2020 5:11 pm Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Your stubborn refusal to listen to what others have posted in response to your comments about PSLDX’s fees are telling. I don’t know if you’re being deliberately obtuse, or simply don’t understand the fund. Either way, you’re flat out wrong on PSLDX and the fees.
Image
AZAttorney11 wrote: Fri Jul 17, 2020 5:20 pm Why you seem to ignore / outright dismiss its past performance and potential role in a tax deferred account is beyond me.
https://www.bogleheads.org/forum/viewtopic.php?t=156573
And why might that fund have a higher expense ratio? What does that include?

The classic Taylor appeal to authority argument...
AZAttorney11
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Re: Why not 100% PSLDX?

Post by AZAttorney11 »

ChrisBenn wrote: Fri Jul 17, 2020 5:57 pm
jibantik wrote: Fri Jul 17, 2020 5:11 pm
BullHouse_BearMarket wrote: Fri Jul 17, 2020 9:28 am Man, people really are adverse to PSLDX. My thread I started asking about things completely unrelated to it, has become an anti-PSLDX thread. Not what I was hoping for, but should have known better.

viewtopic.php?f=1&t=320333&p=5376305#p5376305
Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Where do you get 30% from? Back of the napkin looks closer to 20%? (Assuming we could get this with a zero expense ratio).

Jan 08 (inception) -> Jan 2020 had a cagr of 16%. So 17% if we had a 0% expense ratio. Over 30 years (~lifetime) with a 10k initial investment that gives us 1.1mil vs 860k So ~ 22%?

If we factor in 10k annual contributions it's ~18.5%. (7.6mil vs 6.2mil)
He’s making it up.
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

If you all are going to have a thread about this you’re going to have to ignore this guy. You don’t have to just to suit me though.
A fool and your money are soon partners
jibantik
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Re: Why not 100% PSLDX?

Post by jibantik »

ChrisBenn wrote: Fri Jul 17, 2020 5:57 pm
jibantik wrote: Fri Jul 17, 2020 5:11 pm Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Where do you get 30% from? Back of the napkin looks closer to 20%? (Assuming we could get this with a zero expense ratio).

Jan 08 (inception) -> Jan 2020 had a cagr of 16%. So 17% if we had a 0% expense ratio. Over 30 years (~lifetime) with a 10k initial investment that gives us 1.1mil vs 860k So ~ 22%?

If we factor in 10k annual contributions it's ~18.5%. (7.6mil vs 6.2mil)
Explanation and chart on page 8 of this thread.
get_g0ing
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Re: Why not 100% PSLDX?

Post by get_g0ing »

AZAttorney11 wrote: Fri Jul 17, 2020 6:56 pm
ChrisBenn wrote: Fri Jul 17, 2020 5:57 pm
jibantik wrote: Fri Jul 17, 2020 5:11 pm
BullHouse_BearMarket wrote: Fri Jul 17, 2020 9:28 am Man, people really are adverse to PSLDX. My thread I started asking about things completely unrelated to it, has become an anti-PSLDX thread. Not what I was hoping for, but should have known better.

viewtopic.php?f=1&t=320333&p=5376305#p5376305
Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Where do you get 30% from? Back of the napkin looks closer to 20%? (Assuming we could get this with a zero expense ratio).

Jan 08 (inception) -> Jan 2020 had a cagr of 16%. So 17% if we had a 0% expense ratio. Over 30 years (~lifetime) with a 10k initial investment that gives us 1.1mil vs 860k So ~ 22%?

If we factor in 10k annual contributions it's ~18.5%. (7.6mil vs 6.2mil)
He’s making it up.
Even I was surprised at the 30% number, so I did some searching on it. Apparently for a 30 year time-frame, an expense ratio of 1.1 does reduce the return by ~30%. More accurately 28.24% according to this calculator:
https://www.buyupside.com/calculators/feesdec07.htm

(I am considering PSLDX myself)
Semantics
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Re: Why not 100% PSLDX?

Post by Semantics »

My expense ratio on my mortgage is much higher than 1.1%, and it doesn't return 20% per year.
RocketShipTech
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Re: Why not 100% PSLDX?

Post by RocketShipTech »

Allow me to distill this down.

As long as this metric is above the expense ratio (ex-borrowing cost), this fund will beat the S&P 500.

Image

The spread looks to be on the upswing, which is good news for the strategy.
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Re: Why not 100% PSLDX?

Post by jibantik »

AZAttorney11 wrote: Fri Jul 17, 2020 6:56 pm He’s making it up.
You are either being deliberately obtuse or you simply do not understand the effect of expense ratios.
AZAttorney11
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Re: Why not 100% PSLDX?

Post by AZAttorney11 »

jibantik wrote: Fri Jul 17, 2020 10:15 pm
AZAttorney11 wrote: Fri Jul 17, 2020 6:56 pm He’s making it up.
You are either being deliberately obtuse or you simply do not understand the effect of expense ratios.
Cute. I see I’ve hit a nerve and you’d rather not engage on the substance of the fund, its characteristics, or risk / reward profile with the others on this thread who do.
ChrisBenn
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Re: Why not 100% PSLDX?

Post by ChrisBenn »

jibantik wrote: Fri Jul 17, 2020 7:52 pm
ChrisBenn wrote: Fri Jul 17, 2020 5:57 pm
jibantik wrote: Fri Jul 17, 2020 5:11 pm Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Where do you get 30% from? Back of the napkin looks closer to 20%? (Assuming we could get this with a zero expense ratio).

Jan 08 (inception) -> Jan 2020 had a cagr of 16%. So 17% if we had a 0% expense ratio. Over 30 years (~lifetime) with a 10k initial investment that gives us 1.1mil vs 860k So ~ 22%?

If we factor in 10k annual contributions it's ~18.5%. (7.6mil vs 6.2mil)
Explanation and chart on page 8 of this thread.
It would have been a bit more helpful to say "they consider a lifetime 40 years, not 30 years, hence the difference". I'm sure you are aware of this, but you really aren't advancing your point or engaging in any useful dialog responding as you are.

That said, for your cost statement to be valid it assumes the "0% expense ratio" total earnings were yours to begin with; they weren't.

If there was a competitor to this fund that offered the same thing at a lower expense ratio - than absolutely, this would be a valid comparison. Hence with total market index funds paying 0.5% is ridiculous when you can get it for 0%.

You can't really claim you lost something that was never yours to begin with.

I think the real question about fees for this fund is "will the spread between ~long bonds and ~libor be greater than the management fees". I think most people here consider this as an equity replacement (hence the StockPLUS moniker), so to be considered a success it needs to return some amount over the S&P 500, since it's total return is S&P 500 + long bonds - borrowing - management fees. If the yield curve inverts (or even flattens enough) than those management fees are a good bit of headwind.
columbia
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Re: Why not 100% PSLDX?

Post by columbia »

In terms of the fees
1. It seems that there’s a disconnect is this discussion between some (one?) pointing to the gross fees and rest pointing to the net fees. That’s not a small difference of terms of a startling point for an analysis.
2. The expected return of this fund is higher than a total market fund, thus an investor can peel back total percentage of portfolio allocated to “equities”, thus reducing the impact of those fees on the overall cost of running a portfolio which includes PSLDX. (Instead of a 50/50, use 30/70.)

Whether using this fund is a good or bad idea is up to the individual investor.
RocketShipTech
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Re: Why not 100% PSLDX?

Post by RocketShipTech »

The best way to analyze the fees is to assess how the fund has actually performed against its benchmark since inception.

Inception through 6/30/2020 the fund has delivered 15.55% CAGR compared to the leveraged benchmark’s 15.81% CAGR.

Image

That’s an “experienced” expense ratio of 0.26%
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Re: Why not 100% PSLDX?

Post by jibantik »

columbia wrote: Sat Jul 18, 2020 6:11 am In terms of the fees
1. It seems that there’s a disconnect is this discussion between some (one?) pointing to the gross fees and rest pointing to the net fees. That’s not a small difference of terms of a startling point for an analysis.
2. The expected return of this fund is higher than a total market fund, thus an investor can peel back total percentage of portfolio allocated to “equities”, thus reducing the impact of those fees on the overall cost of running a portfolio which includes PSLDX. (Instead of a 50/50, use 30/70.)

Whether using this fund is a good or bad idea is up to the individual investor.
AFAIK the gross and net fees are the same, 1.11%. The "adjusted expense ratio" is different but that just classifies a subset of the ER; i.e., this % of the ER is used for X. This does not affect how much the investor is paying for the ER, and for this fund the gross/net is over 1%.

My role in this thread is simply providing perspective on two core boglehead perspectives in relation to some of the comments. And, based on what I have seen, I am really glad that I have.

First, ER matters and even just a 1% cost has a massive impact on your total returns over an investment lifetime. It's clear that many people do not understand the effect that even a 1% ER can have on total returns. There are people flat out denying it on this thread like it's some conspiracy theory. Ignorance is bliss I guess.

Second, past performance is not indicative of future returns. There are so many comments of people claiming that this fund will give them 15%-20% returns. A few more points and they can double Dave Ramsey's high score of 12%!

There are worse things you can do than invest in this fund + international, but to act like high ER does not matter or that past performance will guarantee 15% returns is simply absurd.
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

jibantik wrote: Sat Jul 18, 2020 8:52 am
AFAIK the gross and net fees are the same, 1.11%. The "adjusted expense ratio" is different but that just classifies a subset of the ER; i.e., this % of the ER is used for X. This does not affect how much the investor is paying for the ER, and for this fund the gross/net is over 1%.
It seems to me anyone who appoints themselves as the ER police force should take some time to learn how ERs are calculated for both leveraged and unleveraged funds.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
hdas
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Re: Why not 100% PSLDX?

Post by hdas »

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Last edited by hdas on Tue Jul 28, 2020 10:22 pm, edited 1 time in total.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

hdas wrote: Sat Jul 18, 2020 12:28 pm
vineviz wrote: Sat Jul 18, 2020 9:49 am
jibantik wrote: Sat Jul 18, 2020 8:52 am
AFAIK the gross and net fees are the same, 1.11%. The "adjusted expense ratio" is different but that just classifies a subset of the ER; i.e., this % of the ER is used for X. This does not affect how much the investor is paying for the ER, and for this fund the gross/net is over 1%.
It seems to me anyone who appoints themselves as the ER police force should take some time to learn how ERs are calculated for both leveraged and unleveraged funds.
True. The issue with this fund is the big chunk of money you leave on the table when you compare with a comparable implementation using futures contracts. I don’t understand what PIMCO is doing here to mess up with a simple recipe. H
Are you comparing this to NTSX or another fund, or rolling it yourself?
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

hdas wrote: Sat Jul 18, 2020 12:28 pm True. The issue with this fund is the big chunk of money you leave on the table when you compare with a comparable implementation using futures contracts. I don’t understand what PIMCO is doing here to mess up with a simple recipe. H
I'm quite sure PIMCO's target market is NOT made up of investors who are comfortable establishing and managing their own futures exposure. PIMCO funds are typically expensive, but PSLDX is far from the most expensive fund they offer AND they are pretty competent managers as far as active managers go.

For example, compare their long duration fund with Vanguard's version: PIMCO Extended Duration Instl (PEDIX) versus Vanguard Extended Duration Treasury Index Instl (VEDTX). At first blush PEDIX looks insane, with an expense ratio of 1.17% versus just 0.06% for VEDTX. Yet, despite the drag of the higher expense PIMCO has managed to outperform VEDTX fairly consistently without exhibiting noticeably more volatility.

I'm not arguing for either PSLDX or PEDIX. However, it seems to me that PIMCO have done a respectable job with both funds in applying enough additional risk that the returns offset the costs. Personally, I can't see myself paying over 100bps for any actively managed funds but it should be clear that a lot of actively managed funds miss their targets by much wider margins than these funds do and are more expensive to boot.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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randyharris
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Re: Why not 100% PSLDX?

Post by randyharris »

jibantik wrote: Fri Jul 17, 2020 6:23 pm
AZAttorney11 wrote: Fri Jul 17, 2020 5:20 pm
jibantik wrote: Fri Jul 17, 2020 5:11 pm Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Your stubborn refusal to listen to what others have posted in response to your comments about PSLDX’s fees are telling. I don’t know if you’re being deliberately obtuse, or simply don’t understand the fund. Either way, you’re flat out wrong on PSLDX and the fees.
Image
AZAttorney11 wrote: Fri Jul 17, 2020 5:20 pm Why you seem to ignore / outright dismiss its past performance and potential role in a tax deferred account is beyond me.
https://www.bogleheads.org/forum/viewtopic.php?t=156573
What is important is the net result, not the fees.
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Re: Why not 100% PSLDX?

Post by jibantik »

randyharris wrote: Sat Jul 18, 2020 1:59 pm What is important is the net result, not the fees.
Agreed. Of course only one of those is predictable...

I am not too willing to guarantee a loss of 30% of my lifetime returns to a > 1% ER.
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randyharris
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Re: Why not 100% PSLDX?

Post by randyharris »

jibantik wrote: Sat Jul 18, 2020 5:18 pm
randyharris wrote: Sat Jul 18, 2020 1:59 pm What is important is the net result, not the fees.
Agreed. Of course only one of those is predictable...

I am not too willing to guarantee a loss of 30% of my lifetime returns to a > 1% ER.
Then walk away why waste your time on a thread for an investment that you have zero interest in, this isn’t a religion, don’t be evangelical.
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

jibantik wrote: Sat Jul 18, 2020 5:18 pm
randyharris wrote: Sat Jul 18, 2020 1:59 pm What is important is the net result, not the fees.
Agreed. Of course only one of those is predictable...

I am not too willing to guarantee a loss of 30% of my lifetime returns to a > 1% ER.
Except that's not what you'd be doing (as people have, repeatedly, pointed out).
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
JamesDean44
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Re: Why not 100% PSLDX?

Post by JamesDean44 »

jibantik wrote: Sat Jul 18, 2020 5:18 pm
randyharris wrote: Sat Jul 18, 2020 1:59 pm What is important is the net result, not the fees.
Agreed. Of course only one of those is predictable...

I am not too willing to guarantee a loss of 30% of my lifetime returns to a > 1% ER.
Would you turn down an annual bonus because you'd have to pay more in taxes?

It isn't just about the ER, as has been said repeatedly.
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Re: Why not 100% PSLDX?

Post by jibantik »

JamesDean44 wrote: Sat Jul 18, 2020 8:39 pm Would you turn down an annual bonus because you'd have to pay more in taxes?

It isn't just about the ER, as has been said repeatedly.
I would not, but this fund isn't free money. Obviously if the fund is guaranteed to return 15-20%, like many here are planning on, then a 1% ER doesn't matter. We have no idea what this fund, or any fund, will return in the future, but we do know the negative returns an ER will produce.
vineviz wrote: Sat Jul 18, 2020 1:20 pm ...
Personally, I can't see myself paying over 100bps for any actively managed funds but it should be clear that a lot of actively managed funds miss their targets by much wider margins than these funds do and are more expensive to boot.
+1
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

jibantik wrote: Sun Jul 19, 2020 9:42 am
JamesDean44 wrote: Sat Jul 18, 2020 8:39 pm Would you turn down an annual bonus because you'd have to pay more in taxes?

It isn't just about the ER, as has been said repeatedly.
I would not, but this fund isn't free money. Obviously if the fund is guaranteed to return 15-20%, like many here are planning on, then a 1% ER doesn't matter. We have no idea what this fund, or any fund, will return in the future, but we do know the negative returns an ER will produce.
That’s not quite true. We know that , before expenses it will return the S&P 500 return PLUS the return of long duration Treasuries bonds.

What’s the cheapest way, besides this fund, to get that return?

That’s the become against which you should gauge the ER of this fund.
Last edited by vineviz on Sun Jul 19, 2020 11:47 am, edited 1 time in total.
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RocketShipTech
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Re: Why not 100% PSLDX?

Post by RocketShipTech »

vineviz wrote: Sun Jul 19, 2020 10:18 am
jibantik wrote: Sun Jul 19, 2020 9:42 am
JamesDean44 wrote: Sat Jul 18, 2020 8:39 pm Would you turn down an annual bonus because you'd have to pay more in taxes?

It isn't just about the ER, as has been said repeatedly.
I would not, but this fund isn't free money. Obviously if the fund is guaranteed to return 15-20%, like many here are planning on, then a 1% ER doesn't matter. We have no idea what this fund, or any fund, will return in the future, but we do know the negative returns an ER will produce.
That’s not quite true. We know that , before expenses it will return the S&P 500 return PLUS the return of long duration Treasuries.

What’s the cheapest way, besides this fund, to get that return?

That’s the become against which you should gauge the ER of this fund.
A small correction, it’s the return of the S&P 500 plus the return of the “Barclays Long Government/Credit Index”

Which “measures the investment return of all medium and larger public issues of U.S. Treasury, agency, investment-grade corporate, and investment-grade international dollar-denominated bonds with maturities longer than 10 years.”

Is it such a crazy bet that that index will return >1.1% CAGR?

Then I answer the OP’s question with - why not indeed!
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

RocketShipTech wrote: Sun Jul 19, 2020 11:25 am
A small correction, it’s the return of the S&P 500 plus the return of the “Barclays Long Government/Credit Index”

Which “measures the investment return of all medium and larger public issues of U.S. Treasury, agency, investment-grade corporate, and investment-grade international dollar-denominated bonds with maturities longer than 10 years.”
Good catch. Thank you!
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Ramjet
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Re: Why not 100% PSLDX?

Post by Ramjet »

RocketShipTech wrote: Sun Jul 19, 2020 11:25 am Is it such a crazy bet that that index will return >1.1% CAGR?
Exactly, it boils down to this and I'm willing to take that bet over the long term.
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Re: Why not 100% PSLDX?

Post by Robot Monster »

jibantik wrote: Fri Jul 17, 2020 5:11 pm
BullHouse_BearMarket wrote: Fri Jul 17, 2020 9:28 am Man, people really are adverse to PSLDX. My thread I started asking about things completely unrelated to it, has become an anti-PSLDX thread. Not what I was hoping for, but should have known better.

viewtopic.php?f=1&t=320333&p=5376305#p5376305
Don't be surprised if a fund with >1% ER, which eats away over 30% of your lifetime earnings, is not wholly supported by bogleheads.
Okay, yes, the ER is high, but my grandma always said you get what you pay for. It's what makes a Ferrari a Ferrari and a Volkswagen a Volkswagen. Now, of course, a Ferrari F8 Tributo Spider is gonna set you back a couple hundred grand or so, and sure it would be better to have instead invested all that money in an S&P fund and gone with the Volkswagen, but you can't take an S&P fund down the German autobahn at 211 mph, and yes, the Spider can reach that speed due to its superior engineering and aerodynamics. Hope that helped.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

RocketShipTech wrote: Sun Jul 19, 2020 11:25 am
A small correction, it’s the return of the S&P 500 plus the return of the “Barclays Long Government/Credit Index”

Which “measures the investment return of all medium and larger public issues of U.S. Treasury, agency, investment-grade corporate, and investment-grade international dollar-denominated bonds with maturities longer than 10 years.”

Is it such a crazy bet that that index will return >1.1% CAGR?

Then I answer the OP’s question with - why not indeed!
RocketShipTech just did the best succinct summary of the fund I've heard yet. Decide if that expectation is reasonable and you're halfway to deciding if you want to hold PSLDX. It is recommended almost everywhere to hold onto both stock and bonds... This fund does that very neatly for you and is an excellent tax-advantaged holding. NTSX does much the same and is tax-efficient for use as a taxable holding.

NTSX + PSLDX sound like excellent core holdings for a super simple 1-fund-ish accumulation portfolio that gives you broad diversification to both stock and bond markets.
get_g0ing
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Re: Why not 100% PSLDX?

Post by get_g0ing »

kevinf wrote: Sun Jul 19, 2020 1:30 pm
RocketShipTech wrote: Sun Jul 19, 2020 11:25 am
A small correction, it’s the return of the S&P 500 plus the return of the “Barclays Long Government/Credit Index”

Which “measures the investment return of all medium and larger public issues of U.S. Treasury, agency, investment-grade corporate, and investment-grade international dollar-denominated bonds with maturities longer than 10 years.”

Is it such a crazy bet that that index will return >1.1% CAGR?

Then I answer the OP’s question with - why not indeed!
RocketShipTech just did the best succinct summary of the fund I've heard yet. Decide if that expectation is reasonable and you're halfway to deciding if you want to hold PSLDX. It is recommended almost everywhere to hold onto both stock and bonds... This fund does that very neatly for you and is an excellent tax-advantaged holding. NTSX does much the same and is tax-efficient for use as a taxable holding.

NTSX + PSLDX sound like excellent core holdings for a super simple 1-fund-ish accumulation portfolio that gives you broad diversification to both stock and bond markets.
Very useful thread and discussion.
Are NTSX and PSLDX expected to have similar returns?
ChrisBenn
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Re: Why not 100% PSLDX?

Post by ChrisBenn »

get_g0ing wrote: Sun Jul 19, 2020 2:19 pm
kevinf wrote: Sun Jul 19, 2020 1:30 pm
RocketShipTech wrote: Sun Jul 19, 2020 11:25 am
A small correction, it’s the return of the S&P 500 plus the return of the “Barclays Long Government/Credit Index”

Which “measures the investment return of all medium and larger public issues of U.S. Treasury, agency, investment-grade corporate, and investment-grade international dollar-denominated bonds with maturities longer than 10 years.”

Is it such a crazy bet that that index will return >1.1% CAGR?

Then I answer the OP’s question with - why not indeed!
RocketShipTech just did the best succinct summary of the fund I've heard yet. Decide if that expectation is reasonable and you're halfway to deciding if you want to hold PSLDX. It is recommended almost everywhere to hold onto both stock and bonds... This fund does that very neatly for you and is an excellent tax-advantaged holding. NTSX does much the same and is tax-efficient for use as a taxable holding.

NTSX + PSLDX sound like excellent core holdings for a super simple 1-fund-ish accumulation portfolio that gives you broad diversification to both stock and bond markets.
Very useful thread and discussion.
Are NTSX and PSLDX expected to have similar returns?
I wouldn't expect them to:

90% equities + 60 % average intermediate treasuries - 0.2% er. (NTSX)
vs
100% equities + ~100% effective long duration gov + commercial - 1.1% er (PSLDX)

It really depends how their bond portions do.
https://stockcharts.com/h-perf/ui?s=PSL ... 9249444383
Bonds did well last year.
get_g0ing
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Re: Why not 100% PSLDX?

Post by get_g0ing »

ChrisBenn wrote: Sun Jul 19, 2020 2:42 pm
get_g0ing wrote: Sun Jul 19, 2020 2:19 pm
kevinf wrote: Sun Jul 19, 2020 1:30 pm
RocketShipTech wrote: Sun Jul 19, 2020 11:25 am
A small correction, it’s the return of the S&P 500 plus the return of the “Barclays Long Government/Credit Index”

Which “measures the investment return of all medium and larger public issues of U.S. Treasury, agency, investment-grade corporate, and investment-grade international dollar-denominated bonds with maturities longer than 10 years.”

Is it such a crazy bet that that index will return >1.1% CAGR?

Then I answer the OP’s question with - why not indeed!
RocketShipTech just did the best succinct summary of the fund I've heard yet. Decide if that expectation is reasonable and you're halfway to deciding if you want to hold PSLDX. It is recommended almost everywhere to hold onto both stock and bonds... This fund does that very neatly for you and is an excellent tax-advantaged holding. NTSX does much the same and is tax-efficient for use as a taxable holding.

NTSX + PSLDX sound like excellent core holdings for a super simple 1-fund-ish accumulation portfolio that gives you broad diversification to both stock and bond markets.
Very useful thread and discussion.
Are NTSX and PSLDX expected to have similar returns?
I wouldn't expect them to:

90% equities + 60 % average intermediate treasuries - 0.2% er. (NTSX)
vs
100% equities + ~100% effective long duration gov + commercial - 1.1% er (PSLDX)

It really depends how their bond portions do.
https://stockcharts.com/h-perf/ui?s=PSL ... 9249444383
Bonds did well last year.
Makes sense. Thanks for the comment on this.
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Steve Reading
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Re: Why not 100% PSLDX?

Post by Steve Reading »

jibantik wrote: Sat Jul 18, 2020 5:18 pm
randyharris wrote: Sat Jul 18, 2020 1:59 pm What is important is the net result, not the fees.
Agreed. Of course only one of those is predictable...

I am not too willing to guarantee a loss of 30% of my lifetime returns to a > 1% ER.
The 1.11% ER is a number that includes borrowing costs so it's not the comparable number to regular funds that don't leverage. The correct number to use is the 0.59%. Which is still on the high side but might be reasonable to some.
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GaryA505
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Re: Why not 100% PSLDX?

Post by GaryA505 »

I have a small Roth that I will be using for the kids college expenses in about 6-10 years. Today I was toying with the idea of using 50/50 mix of PSLDX/CASH in this account. Crazy?
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Re: Why not 100% PSLDX?

Post by firebirdparts »

GaryA505 wrote: Sun Jul 19, 2020 9:51 pm I have a small Roth that I will be using for the kids college expenses in about 6-10 years. Today I was toying with the idea of using 50/50 mix of PSLDX/CASH in this account. Crazy?
Not crazy. You don’t really need the cash but you be the judge. 10 years is usually considered a “long” time.
A fool and your money are soon partners
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Steve Reading
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Re: Why not 100% PSLDX?

Post by Steve Reading »

GaryA505 wrote: Sun Jul 19, 2020 9:51 pm I have a small Roth that I will be using for the kids college expenses in about 6-10 years. Today I was toying with the idea of using 50/50 mix of PSLDX/CASH in this account. Crazy?
Why not just hold 50% S&P 500 and 50% of some investment-grade index bond fund? It should have basically the same risk and return but you get to save on the 0.59% management fee of PSLDX
"... so high a present discounted value of wealth, it is only prudent for him to put more into common stocks compared to his present tangible wealth, borrowing if necessary" - Paul Samuelson
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

Steve Reading wrote: Sun Jul 19, 2020 10:04 pm
GaryA505 wrote: Sun Jul 19, 2020 9:51 pm I have a small Roth that I will be using for the kids college expenses in about 6-10 years. Today I was toying with the idea of using 50/50 mix of PSLDX/CASH in this account. Crazy?
Why not just hold 50% S&P 500 and 50% of some investment-grade index bond fund? It should have basically the same risk and return but you get to save on the 0.59% management fee of PSLDX
Plus, doing it yourself would also allow you to construct a better diversified portfolio. E.g 50% VT and 50% ILTB
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
GaryA505
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Re: Why not 100% PSLDX?

Post by GaryA505 »

vineviz wrote: Sun Jul 19, 2020 10:29 pm
Steve Reading wrote: Sun Jul 19, 2020 10:04 pm
GaryA505 wrote: Sun Jul 19, 2020 9:51 pm I have a small Roth that I will be using for the kids college expenses in about 6-10 years. Today I was toying with the idea of using 50/50 mix of PSLDX/CASH in this account. Crazy?
Why not just hold 50% S&P 500 and 50% of some investment-grade index bond fund? It should have basically the same risk and return but you get to save on the 0.59% management fee of PSLDX
Plus, doing it yourself would also allow you to construct a better diversified portfolio. E.g 50% VT and 50% ILTB
Maybe, but considering using 50% PSLDX and 50% SHV, and short-term treasuries don't have the interest rate of 10 year bonds.
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

GaryA505 wrote: Mon Jul 20, 2020 12:41 am
vineviz wrote: Sun Jul 19, 2020 10:29 pm
Steve Reading wrote: Sun Jul 19, 2020 10:04 pm
GaryA505 wrote: Sun Jul 19, 2020 9:51 pm I have a small Roth that I will be using for the kids college expenses in about 6-10 years. Today I was toying with the idea of using 50/50 mix of PSLDX/CASH in this account. Crazy?
Why not just hold 50% S&P 500 and 50% of some investment-grade index bond fund? It should have basically the same risk and return but you get to save on the 0.59% management fee of PSLDX
Plus, doing it yourself would also allow you to construct a better diversified portfolio. E.g 50% VT and 50% ILTB
Maybe, but considering using 50% PSLDX and 50% SHV, and short-term treasuries don't have the interest rate of 10 year bonds.
If your anticipated expense is in 10 years, SHV creates more
interest rate risk for you than ILTB does because of the greater mismatch between the time horizon and the bond duration.

So SHV would earning a lower yield while crating more risk. I’m not sure that’s prudent. But another alternative would be iShares® iBonds® Dec 2029 Term Corporate ETF (IBDU).
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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