Total Bond Mkt Index vs PIMCO Total Return Inst/Stable Value
I could use some help deciding what to do about the bond allocation in my 401(k), which will be 10% of total (other 90% in stock funds). I have the following choices:
Stable Value Fund
1) Fixed Income Fund, ER 0.24%
The Fixed Income Fund has the following underlying securities:
US Treasury, Agency, Suprannational 25-65%
AAA Corporate Bonds (including AAA rated asset backed securities) 10-25%
AA Corporate Bonds 5-25%
A Corporate Bonds 5-25%
BBB Corporate Bonds 0-25%
Mortgage Backed Securities 10-30%
High Yield/Emerging Market Bonds 0-5%
1) Barclays Global Investors (BGI) US Debt Index Fund F, ER 0.10%
(Seeks to match Lehman Brothers Aggregate Bond Index, similar to Vanguard VBTLX Admiral Shares)
2) PIMCO Total Return Fund Institutional Class, PTTRX, ER 0.43%, 257% Turnover Rate
3) Evergreen International Bond Fund Institutional Class, ESICX, ER 0.74%, 196% Turnover Rate
Paul Merriman gives advice for my company's 401k plan at fundadvice.com, he says put 50% in PIMCO Total Return and 50% in Fixed Income Fund. He gives no rationale. Why do you think he would chose these two funds?
Vanguard's TR funds hold Total Bond Market Index, which would be my BGI index fund with the super low 0.10% ER.
I'm in the accumulation stage with 30 years to go until "normal" retirement age, with a 90% stock/10% bond allocation.
Not sure what to do about my bonds. What should my considerations be? Which fund(s) would you use? Any advice appreciated.