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Managed Fixed Income Funds
Old 03-21-2017, 07:55 PM   #1
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Managed Fixed Income Funds

Hi All,

I did one of the Fidelity sponsored webinars today addressing the spot just above MMF with slightly higher yields and risk.

Featured a PIMCO rep discussing the topic in a generally reasonable manner.

First, do many of you find this form of "education" useful?

And, second, what do you use as a higher yield alternative to MMFs when you don't expect to need the funds for a year or so?

I am figuring out ways to keep busy following my last day of work ... :-)
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Old 03-21-2017, 08:08 PM   #2
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My fixed income funds are my buffer in case of a severe market correction so I don't take a huge risk with them. In my taxable accounts, I keep enough to cover about 1-1.5 year's worth of expenses in Vanguard's VMLUX (Limited Term, Tax Exempt). I then add enough to cover another 2-3 yrs in Vanguards VWIUX (Intermediate Term, Tax Exempt), also in taxable account. In the event of a severe market correction, we will use these funds to avoid selling equities at the dip.

Should also mention that I have other funds in my tax deferred/exempt accounts that I set aside for "fixed income". These funds I don't expect to use for years. Sometimes those are in bond funds of some sort. At other times, I sink those funds into dividend aristocrats that have taken a price hit that I believe is only temporary. When they come back up in value, I typically would sell them off and move back to bonds.
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Old 03-21-2017, 08:16 PM   #3
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For non-immediate need money that I want to keep safe, I play the hot money CD game. Be patient and keep your eyes open and you will routinely run across a foolish credit union or bank a couple of times a year that is willing to offer rates way, way over market and often with a small early surrender penalty. Generally these opportunities allow you to lock in 3 to 7 year money that is FDIC insured and with a modest surrender penalty (6 to 12 months of interest).
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Old 03-21-2017, 09:15 PM   #4
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You are splitting hairs when talking about investments like this. At the end of the day the interest is equal to a Big Mac.
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Old 03-21-2017, 09:20 PM   #5
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You are splitting hairs when talking about investments like this. At the end of the day the interest is equal to a Big Mac.
Not sure about that. I am 5 years into a 10 year CD at 5% interest and I can bail any time I like for a 1 year interest penalty.
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Old 03-21-2017, 09:31 PM   #6
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Not sure about that. I am 5 years into a 10 year CD at 5% interest and I can bail any time I like for a 1 year interest penalty.
Yes, you are the anointed one. Do you really expect something like that is going to be available to the masses?
I also personally think your post is BS.
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Old 03-21-2017, 09:37 PM   #7
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Yes, you are the anointed one. Do you really expect something like that is going to be available to the masses?
Something quite that good? Not likely. Well above market and safe as houses? Absolutely. At least once a year I see smoking hot deals in the CD world. Keep some cash handy and keep your eyes open. In the next 6 to 12 months something very attractive will pop up.
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Old 03-21-2017, 09:39 PM   #8
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Something quite that good? Not likely. Well above market and safe as houses? Absolutely. At least once a year I see smoking hot deals in the CD world. Keep some cash handy and keep your eyes open. In the next 6 to 12 months something very attractive will pop up.
That is at the same level as EM debt.
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Old 03-21-2017, 09:44 PM   #9
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That is at the same level as EM debt.
Did you just compare US Gubmint insured CDs with EM debt? Perhaps I am missing something.

Right now Navy Federal is offering 2% CDs for 17 months.
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Old 03-21-2017, 09:50 PM   #10
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Did you just compare US Gubmint insured CDs with EM debt? Perhaps I am missing something.

Right now Navy Federal is offering 2% CDs for 17 months.
You misunderstand, you stated 5%, that EM debt level. 2% is pedestrian and a money loser with inflation at its current tick.
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Old 03-21-2017, 10:18 PM   #11
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You misunderstand, you stated 5%, that EM debt level. 2% is pedestrian and a money loser with inflation at its current tick.
I said above market, that is it. The alternative to such options is a money market at well under 1% a year.
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Old 03-21-2017, 10:24 PM   #12
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Not sure about that. I am 5 years into a 10 year CD at 5% interest and I can bail any time I like for a 1 year interest penalty.


Actually you guys are talking about two different things. The funds discussed are basically juiced up ultra short (2 yrs or less) bond funds. The extra yield is marginal maybe enough for the whole Big Mac meal.

I'm holding some of those CDs also and they look much much better than the funds being discussed but I can't find anything today as sweet as what I bought 5-7 yrs ago. I will likely stick with the CDs since I am somewhat committed to a ladder that averages out to ~3%.
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Old 03-21-2017, 10:33 PM   #13
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Hi All,



I did one of the Fidelity sponsored webinars today addressing the spot just above MMF with slightly higher yields and risk.



Featured a PIMCO rep discussing the topic in a generally reasonable manner.



First, do many of you find this form of "education" useful?



And, second, what do you use as a higher yield alternative to MMFs when you don't expect to need the funds for a year or so?



I am figuring out ways to keep busy following my last day of work ... :-)


Glad you asked! I attended the webinar also and actually considered posting a notice here to foster discussion. I do enjoy the Fido webinars as a starting point for further research. My overall takeaway is to stick with CDs as much as possible. 2nd choice would be the funds discussed(pending additional research followed by online savings account (~1%). Basically I see no use whatsoever for MM funds but they were the baseline for the discussion today. My personal baseline is an online savings account.
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Old 03-21-2017, 10:44 PM   #14
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Actually you guys are talking about two different things. The funds discussed are basically juiced up ultra short (2 yrs or less) bond funds. The extra yield is marginal maybe enough for the whole Big Mac meal.

I'm holding some of those CDs also and they look much much better than the funds being discussed but I can't find anything today as sweet as what I bought 5-7 yrs ago. I will likely stick with the CDs since I am somewhat committed to a ladder that averages out to ~3%.
My point was more that the risk-reward for hot money CDs is far better than short term corporates.
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Old 03-21-2017, 11:14 PM   #15
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Yes, you are the anointed one. Do you really expect something like that is going to be available to the masses?
I also personally think your post is BS.
I'm not sure why you think that. Brewer has been collecting hot CDs for years.

3% with 180 days interest penalty was recently available to "the masses". You just have to keep an eye out.

FDIC insured high yield savings and CDs have been beating short-term and intermediate term bond funds recently without the credit risk exposure. You have to compare.

Much more difference than a "Big Mac".
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Old 03-21-2017, 11:20 PM   #16
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My point was more that the risk-reward for hot money CDs is far better than short term corporates.


I got your point and I agree but the deals today are not as good. I have a 4pct CD maturing next month and the best replacement I can find is 3pct for 84 mos w/ 6mo EWP. I'll also get some of the NFCU 17 mo CDs. I'm hoping rates will tick up on April Fools Day.
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Old 03-21-2017, 11:52 PM   #17
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Just for clarification, the Pimco funds mentioned (in order of duration, I believe) are PAIUX MINT PSHDX LDUR and PLDDX.
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Old 03-22-2017, 08:09 AM   #18
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I'm not sure why you think that. Brewer has been collecting hot CDs for years.

3% with 180 days interest penalty was recently available to "the masses". You just have to keep an eye out.

FDIC insured high yield savings and CDs have been beating short-term and intermediate term bond funds recently without the credit risk exposure. You have to compare.

Much more difference than a "Big Mac".
Yeah I have some of those 5% cd's and I'm just your average Joe. But I admit, I don't care to open up ton's of online accts to do so. Penfed has had good deals but not much recently.
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Old 03-22-2017, 03:52 PM   #19
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Thanks to everyone for their thoughts and experience ... I've got a couple of the small NFCU CDs and it feels pretty good, but the numbers are small :-)

What's the story with cheesehead ... this is a serious and friendly discussion ... why so negative?
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Old 03-22-2017, 03:58 PM   #20
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Thanks to everyone for their thoughts and experience ... I've got a couple of the small NFCU CDs and it feels pretty good, but the numbers are small :-)

What's the story with cheesehead ... this is a serious and friendly discussion ... why so negative?
Sorry for the negativity.
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