Still using total bond market?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
User avatar
grobertj
Posts: 100
Joined: Fri May 15, 2020 1:02 pm
Location: Greensboro, NC

Re: Still using total bond market?

Post by grobertj »

For all the reasons stated earlier in this post, I continue to believe I am best served by remaining in 100% Wellesley Admiral Share (VWIAX). It's allocation is roughly 40% stocks and 60% bonds. But it's actively managed by people who understand bonds and stocks a heckuva lot better than me. I've back tested VWIAX against the 3 and 4 fund portfolio, and it returns more than either one. I'm considering lowering my bond allocation and would like opinions on the best way to do that. My current preference is to add some Wellington fund (VWENX). Another option is a Growth fund like VUG, which is weighted heavily towards the stocks that are hot right now. Thoughts?
The only constant is CHANGE!!
Blue456
Posts: 1371
Joined: Tue Jun 04, 2019 5:46 am

Re: Still using total bond market?

Post by Blue456 »

grobertj wrote: Fri Jul 31, 2020 11:03 am [T]he stocks that are hot right now. Thoughts?
That sounds like recency bias. Be careful not to buy high and sell low.
milktoast
Posts: 385
Joined: Wed Jul 10, 2019 8:17 pm

Re: Still using total bond market?

Post by milktoast »

USAFperio wrote: Fri May 15, 2020 6:34 pm When people on this thread are saying they’re still using Total Bond Market or whatnot during these low-yielding times, are they/you meaning you’re sticking with what you already own (thus simply not selling), or that you’re actually putting more money into TBM? That seems like a big but unaddressed difference.
I'm currently putting 2/3 of my monthly contributions into TBM. After rebalancing into stocks in March, I'm overweight on stocks but not enough to trigger a rebalance.

And it doesn't feel right.

I'm doing it because that's what my IPS says. But honestly, I feel like it's buying a turd every two weeks. SEC yield 1.17%. Ugh. Below inflation.

Being 5-10 years from retirement, if rates go up I'm going to take a bath on this thing. But I see no decent alternatives right now, especially in my 401k/NQDC where I'm keeping all my bonds.
sycamore
Posts: 2244
Joined: Tue May 08, 2018 12:06 pm

Re: Still using total bond market?

Post by sycamore »

grobertj wrote: Fri Jul 31, 2020 11:03 am For all the reasons stated earlier in this post, I continue to believe I am best served by remaining in 100% Wellesley Admiral Share (VWIAX). It's allocation is roughly 40% stocks and 60% bonds. But it's actively managed by people who understand bonds and stocks a heckuva lot better than me. I've back tested VWIAX against the 3 and 4 fund portfolio, and it returns more than either one. I'm considering lowering my bond allocation and would like opinions on the best way to do that. My current preference is to add some Wellington fund (VWENX). Another option is a Growth fund like VUG, which is weighted heavily towards the stocks that are hot right now. Thoughts?
My thought is that you deserve a new thread to discuss your specific situation. See viewtopic.php?f=1&t=6212 for the format to use. Getting a reasonable answer for your question depends on knowing more details about you. Otherwise you'll just get generic answers like "VUG is the wrong thing to use, it's too risky" or "VUG is better than any bond right now" or "follow your IPS and AA".
40 Years' Gatherin's
Posts: 53
Joined: Sun Jul 26, 2020 7:39 am

Re: Still using total bond market?

Post by 40 Years' Gatherin's »

Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
User avatar
kellyfj
Posts: 283
Joined: Tue Mar 27, 2007 12:41 pm

Re: Still using total bond market?

Post by kellyfj »

If it was the only Bond fund I had access to then it's fine.

For me at 48 I realized I am 75:25 so I need my bonds to perform best when stocks tank so I switched to intermediate treasury.
If I was close to a distribution phase then I'd probably have a mix of intermediate treasury (to offset equity risk) and intermediate-bond index (for a bit more income) - but if all I had was Bond Market Index it probably wouldn't hugely trouble me.

-Frank
User avatar
ruralavalon
Posts: 21371
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Still using total bond market?

Post by ruralavalon »

kellyfj wrote: Sun Aug 16, 2020 10:37 am If it was the only Bond fund I had access to then it's fine.

For me at 48 I realized I am 75:25 so I need my bonds to perform best when stocks tank so I switched to intermediate treasury.
If I was close to a distribution phase then I'd probably have a mix of intermediate treasury (to offset equity risk) and intermediate-bond index (for a bit more income) - but if all I had was Bond Market Index it probably wouldn't hugely trouble me.

-Frank
In my opinion Intermediate-term Treasury bond funds are a reasonable choice for diversification. Morningstar (7/8/2020), "What's the Best Diversifier for Stocks?" .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
sycamore
Posts: 2244
Joined: Tue May 08, 2018 12:06 pm

Re: Still using total bond market?

Post by sycamore »

40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Welcome to the forum, 40 Years' Gatherin's!

VBILX is a reasonable holding for fixed income.

So the presence of some short-term bonds in Total Bond Market is primarily what made you move? It's understandable that one might have no use for them. What about long term bonds?
User avatar
ruralavalon
Posts: 21371
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Still using total bond market?

Post by ruralavalon »

Welcome to the forum :) .

40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Our only bond fund is Vanguard Intermediate-term Bond Index Fund (VBILX).
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
User avatar
grobertj
Posts: 100
Joined: Fri May 15, 2020 1:02 pm
Location: Greensboro, NC

Re: Still using total bond market?

Post by grobertj »

ruralavalon wrote: Sun Aug 16, 2020 11:53 am Welcome to the forum :) .

40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Our only bond fund is Vanguard Intermediate-term Bond Index Fund (VBILX).
I'm doing exactly the same thing. From what I've read, John Bogle agreed. I'm still struggling whether to stay in the Total Stock Fund (VTI). From all my analysis, Growth Funds have outperformed the total market for the last 20 years.
The only constant is CHANGE!!
RocketShipTech
Posts: 679
Joined: Sat Jun 13, 2020 10:08 pm

Re: Still using total bond market?

Post by RocketShipTech »

grobertj wrote: Sun Aug 16, 2020 12:14 pm
ruralavalon wrote: Sun Aug 16, 2020 11:53 am Welcome to the forum :) .

40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Our only bond fund is Vanguard Intermediate-term Bond Index Fund (VBILX).
I'm doing exactly the same thing. From what I've read, John Bogle agreed. I'm still struggling whether to stay in the Total Stock Fund (VTI). From all my analysis, Growth Funds have outperformed the total market for the last 20 years.
Your analysis is incorrect. Growth has only been outperforming Total Stock since 2007. Someone who bought growth in 2000 would only now be catching up to Total Market.

https://www.portfoliovisualizer.com/fun ... mark=VTSMX

Image
40 Years' Gatherin's
Posts: 53
Joined: Sun Jul 26, 2020 7:39 am

Re: Still using total bond market?

Post by 40 Years' Gatherin's »

sycamore wrote: Sun Aug 16, 2020 11:49 am
40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Welcome to the forum, 40 Years' Gatherin's!

VBILX is a reasonable holding for fixed income.

So the presence of some short-term bonds in Total Bond Market is primarily what made you move? It's understandable that one might have no use for them. What about long term bonds?
Long term bonds are ok, but can be a bit volatile at times. I'd rather reserve that kind of volatility for my equity funds. The way I look at it, the Intermediate Term Bond Fund hits the sweet spot on the yield curve. For the record, the Total Bond Market fund is just fine for long term investing. I just feel the Intermediate Term Bond fund is a tad finer 8-)
nix4me
Posts: 914
Joined: Sat Oct 13, 2018 9:32 am

Re: Still using total bond market?

Post by nix4me »

40 Years' Gatherin's wrote: Sun Aug 16, 2020 5:34 pm
sycamore wrote: Sun Aug 16, 2020 11:49 am
40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Welcome to the forum, 40 Years' Gatherin's!

VBILX is a reasonable holding for fixed income.

So the presence of some short-term bonds in Total Bond Market is primarily what made you move? It's understandable that one might have no use for them. What about long term bonds?
Long term bonds are ok, but can be a bit volatile at times. I'd rather reserve that kind of volatility for my equity funds. The way I look at it, the Intermediate Term Bond Fund hits the sweet spot on the yield curve. For the record, the Total Bond Market fund is just fine for long term investing. I just feel the Intermediate Term Bond fund is a tad finer 8-)
well the yield curve is kinda "completely flat" right now. lol. 0.25
User avatar
jason2459
Posts: 988
Joined: Wed May 06, 2020 7:59 pm

Re: Still using total bond market?

Post by jason2459 »

Yield curve is quite steep which is exactly how the fed wants it right now.

https://www.gurufocus.com/yield_curve.php
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
RomeoMustDie
Posts: 280
Joined: Sat Mar 14, 2020 6:07 pm

Re: Still using total bond market?

Post by RomeoMustDie »

I like BNDX. More diversified.
User avatar
grobertj
Posts: 100
Joined: Fri May 15, 2020 1:02 pm
Location: Greensboro, NC

Re: Still using total bond market?

Post by grobertj »

RocketShipTech wrote: Sun Aug 16, 2020 12:22 pm
grobertj wrote: Sun Aug 16, 2020 12:14 pm
ruralavalon wrote: Sun Aug 16, 2020 11:53 am Welcome to the forum :) .

40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Our only bond fund is Vanguard Intermediate-term Bond Index Fund (VBILX).
I'm doing exactly the same thing. From what I've read, John Bogle agreed. I'm still struggling whether to stay in the Total Stock Fund (VTI). From all my analysis, Growth Funds have outperformed the total market for the last 20 years.
Your analysis is incorrect. Growth has only been outperforming Total Stock since 2007. Someone who bought growth in 2000 would only now be catching up to Total Market.

https://www.portfoliovisualizer.com/fun ... mark=VTSMX

Image
I don't understand. When I look at your visualizer analysis, it tells me that Growth has outperformed TSM by a large margin since 1992.
The only constant is CHANGE!!
User avatar
jason2459
Posts: 988
Joined: Wed May 06, 2020 7:59 pm

Re: Still using total bond market?

Post by jason2459 »

RomeoMustDie wrote: Sun Aug 16, 2020 5:53 pm I like BNDX. More diversified.
Why not BNDW then?
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
RocketShipTech
Posts: 679
Joined: Sat Jun 13, 2020 10:08 pm

Re: Still using total bond market?

Post by RocketShipTech »

grobertj wrote: Sun Aug 16, 2020 6:31 pm
RocketShipTech wrote: Sun Aug 16, 2020 12:22 pm
grobertj wrote: Sun Aug 16, 2020 12:14 pm
ruralavalon wrote: Sun Aug 16, 2020 11:53 am Welcome to the forum :) .

40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Our only bond fund is Vanguard Intermediate-term Bond Index Fund (VBILX).
I'm doing exactly the same thing. From what I've read, John Bogle agreed. I'm still struggling whether to stay in the Total Stock Fund (VTI). From all my analysis, Growth Funds have outperformed the total market for the last 20 years.
Your analysis is incorrect. Growth has only been outperforming Total Stock since 2007. Someone who bought growth in 2000 would only now be catching up to Total Market.

https://www.portfoliovisualizer.com/fun ... mark=VTSMX

Image
I don't understand. When I look at your visualizer analysis, it tells me that Growth has outperformed TSM by a large margin since 1992.
Cumulative active return chart is the only chart worth looking at when comparing relative performance between two funds.

When the slope is up that means the fund is beating the benchmark. When the slope is down, the opposite.
RomeoMustDie
Posts: 280
Joined: Sat Mar 14, 2020 6:07 pm

Re: Still using total bond market?

Post by RomeoMustDie »

jason2459 wrote: Sun Aug 16, 2020 7:25 pm
RomeoMustDie wrote: Sun Aug 16, 2020 5:53 pm I like BNDX. More diversified.
Why not BNDW then?
Yeah I like that one too.
HenryG
Posts: 73
Joined: Wed Aug 12, 2020 12:50 pm

Re: Still using total bond market?

Post by HenryG »

milktoast wrote: Fri Jul 31, 2020 11:26 am
USAFperio wrote: Fri May 15, 2020 6:34 pm When people on this thread are saying they’re still using Total Bond Market or whatnot during these low-yielding times, are they/you meaning you’re sticking with what you already own (thus simply not selling), or that you’re actually putting more money into TBM? That seems like a big but unaddressed difference.
I'm currently putting 2/3 of my monthly contributions into TBM. After rebalancing into stocks in March, I'm overweight on stocks but not enough to trigger a rebalance.

And it doesn't feel right.

I'm doing it because that's what my IPS says. But honestly, I feel like it's buying a turd every two weeks. SEC yield 1.17%. Ugh. Below inflation.

Being 5-10 years from retirement, if rates go up I'm going to take a bath on this thing. But I see no decent alternatives right now, especially in my 401k/NQDC where I'm keeping all my bonds.
This is similar to my situation, overweight in stocks and staying the course with IPS/TBM. You described the feeling very eloquently ha.
bck63
Posts: 1545
Joined: Fri Sep 28, 2018 4:59 pm

Re: Still using total bond market?

Post by bck63 »

I am still using total bond funds, although a lot of new money is also going into short-term treasuries because I want to have a few years of shorter term reserves when I get to retirement in 4-5 years.
STVCT
Posts: 47
Joined: Mon Sep 28, 2020 4:59 pm

Re: Still using total bond market?

Post by STVCT »

USAFperio wrote: Fri May 15, 2020 6:34 pm Just one clarifying question....

When people on this thread are saying they’re still using Total Bond Market or whatnot during these low-yielding times, are they/you meaning you’re sticking with what you already own (thus simply not selling), or that you’re actually putting more money into TBM? That seems like a big but unaddressed difference. It’s one thing to not sell the TBM you own, but another to keep buying it, and it’s a question I’ve been asking myself lately as well.

(For the record, I’ve been buying munis in taxable over the past few months, but only because my AA calls for more dollars going into bonds and I’m trying to be tax-smart. I’m hoping it’s a safe investment which will ultimately keep up with inflation.)

This is what I want to know more about. Still using bonds and still buying bonds are different questions. While there have been a lot of posts about the great performance of bonds, that's because prices have gone up as yields have gone down. BND is pretty much at a 15 year high, maybe longer. This is GREAT for all of the BND holders, but for some of us, this feels like buying at an inflated price.

Questions:

Has the price increase decreased the "value" - you're getting less yield but paying more? Bonds were attractive as stabilizers, but as someone with an aggressive AA who holds no bonds and is considering buying in now, it's not as attractive as some alternatives (in my case a stable value fund).

Has the increase in the value of BND changed anyone's AA where they need to direct new contributions to other places anyway? I've run some numbers on hypothetical portfolios for myself and I think it wouldn't have triggered a rebalance, but would be above my desired AA for fixed income, meaning new contributions would go to equities anyway.
Outer Marker
Posts: 1718
Joined: Sun Mar 08, 2009 8:01 am

Re: Still using total bond market?

Post by Outer Marker »

BND is paying about 1% 30 day SEC yield with significant interest rate risk; Stable Value in my 401K is paying about 2% 30 day SEC yield with no interest rate risk. Therefore, I shifted all the BND holdings I could into stable value, and will remain there until BND is regularly paying at least 3% - i.e. 50% more than I can make in stable value.
Northern Flicker
Posts: 7733
Joined: Fri Apr 10, 2015 12:29 am

Re: Still using total bond market?

Post by Northern Flicker »

40 Years' Gatherin's wrote: Sun Aug 16, 2020 5:34 pm
sycamore wrote: Sun Aug 16, 2020 11:49 am
40 Years' Gatherin's wrote: Sun Aug 16, 2020 10:17 am Earlier this year I sold my Total Bond Market Fund (VBTLX) and put the money into the Intermediate Term Bond Fund (VBILX). For me, this is a long term holding. At this time in my life, I have no use for short term bonds.
Welcome to the forum, 40 Years' Gatherin's!

VBILX is a reasonable holding for fixed income.

So the presence of some short-term bonds in Total Bond Market is primarily what made you move? It's understandable that one might have no use for them. What about long term bonds?
Long term bonds are ok, but can be a bit volatile at times. I'd rather reserve that kind of volatility for my equity funds. The way I look at it, the Intermediate Term Bond Fund hits the sweet spot on the yield curve. For the record, the Total Bond Market fund is just fine for long term investing. I just feel the Intermediate Term Bond fund is a tad finer 8-)
Both VBTLX and VBILX have an average duration of 6.6 years. The investment horizon suitable for either fund is exactly the same.

VBTLX has short, intermediate, and long-term bonds, but they combine to behave as an intermediate-duration bond fund just like VBILX. VBTLX includes mortgage-backed securities. VBILX does not. VBILX has been the more volatile and more risky of the two, but for a long time, it had a longer duration, so differences in historical return and historical volatility are not representative of future performance. VBILX should still be considered the more risky of the two due to a higher allocation to corporate credit.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
Post Reply