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Total Bond Mkt Index vs PIMCO Total Return Inst/Stable Value
04-01-2008, 06:49 PM
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#1
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Recycles dryer sheets
Join Date: Jan 2006
Posts: 189
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Total Bond Mkt Index vs PIMCO Total Return Inst/Stable Value
Hi all,
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%
Bond Funds
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.
Thanks,
Dude 8)
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04-02-2008, 01:46 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
Posts: 5,072
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DW has PTTRX in her 401k for the bond allocation. However, it is the only bond choice.
If there was an index bond fund available, she would put her fixed allocation in the lower cost index fund.
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04-02-2008, 08:26 AM
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#3
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Recycles dryer sheets
Join Date: Jan 2006
Posts: 189
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Thanks for sharing your thoughts. It's hard to pass on the 0.10% ER index fund. I just wish I understood why Merriman would not chose the index fund, but instead go with PIMCO Total Return/Fixed Income combo. Maybe performance chasing. I think I'll e-mail him and ask. Thanks.
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04-02-2008, 01:23 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
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Quote:
Originally Posted by Dude
Thanks for sharing your thoughts. It's hard to pass on the 0.10% ER index fund. I just wish I understood why Merriman would not chose the index fund, but instead go with PIMCO Total Return/Fixed Income combo. Maybe performance chasing. I think I'll e-mail him and ask. Thanks.
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Perhaps it might have something to do that it has one of the most successful fixed income managers in the history of finance, but I might be guessing
PIMCO total return is one of the few active funds that I see a lot of indexers use. He may be a nutball, but Bill Gross knows his bonds.
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04-02-2008, 02:01 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by saluki9
PIMCO total return is one of the few active funds that I see a lot of indexers use. He may be a nutball, but Bill Gross knows his bonds.
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Nutball like a fox...
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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04-02-2008, 08:05 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Jul 2003
Location: Pasadena CA
Posts: 3,346
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Quote:
Originally Posted by brewer12345
Nutball like a fox...
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Yep, the guy says some really strange things and then doesn't do anything he says but whatever he actually does seems to work pretty well.
__________________
T.S. Eliot:
Old men ought to be explorers
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04-02-2008, 09:09 PM
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#7
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Recycles dryer sheets
Join Date: Jan 2006
Posts: 189
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Thanks. Considering going 50/50 between the PIMCO and BGI index funds.
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04-03-2008, 12:11 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
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I moved 25% of my DW's 403b funds into PTTRX many years ago due to its performance.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
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