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Old 11-08-2015, 03:13 PM   #21
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Ticker symbols would be helpful - they have a lot of different tax exempt funds.

You could even make a list of them, and put those "[ LIST ]" tags to use!

-ERD50

ERD50, are you deliberately following all my post ? LOL. Ok, I'm putting you on the LIST


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Old 11-08-2015, 03:45 PM   #22
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ERD50, are you deliberately following all my post ? LOL. Ok, I'm putting you on the LIST


I follow, and comment on LOTS of posts (my post count should make that painfully clear!).

The only thing 'special' about you, is the [-LIST-] tags in all your recent posts. Yes, I'm the curious sort - what the heck is up with that?

And I'm also curious about munis paying 6-8% - what are these, Detroit, PR, etc?

Again, tickers would help. You said you wanted opinions, so yes, tickers would help.

-ERD50
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Old 11-08-2015, 03:59 PM   #23
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I use four muni bond funds varying from high yield to short term for the fixed allocation within my taxable portfolio.
Would that be short, intermediate, long, hiyield?
Do you use equal portions or some other strategy?
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Old 11-08-2015, 04:14 PM   #24
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I have a pretty large muni position (high six figures) but it pays closer to 3%. I too am curious about the funds you invest in for those returns.
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Old 11-08-2015, 04:33 PM   #25
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To your question about DCAing into the position - there are probably lots of threads on that topic. I'm a lump sum type guy myself, but I understand why some people don't like to do that.

But it is relevant to ask - where's the money now that you'd be investing?
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Old 11-08-2015, 11:21 PM   #26
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We hold considerably more than that in an intermediate muni fund.(VWITX). It is yielding around 3%. No leverage.
If you have more than $50k you should be in the admiral version of this fund VWIUX
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Old 11-08-2015, 11:35 PM   #27
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We hold considerably more than that in an intermediate muni fund.(VWITX). It is yielding around 3%. No leverage.
The SEC yield on that fund is 1.59%.

The distribution yield is 2.75%.
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Old 11-09-2015, 06:02 AM   #28
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If you have more than $50k you should be in the admiral version of this fund VWIUX
Is the admiral version open to all and am I correct in that the only dif between the two funds is a lower expense ratio?
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Old 11-09-2015, 06:16 AM   #29
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The SEC yield on that fund is 1.59%. The distribution yield is 2.75%.
I was under the impression that the SEC yield represents a 30 day yield so varies from month to month as not all holdings pay dividends equally spread amongst the 12 months of the year. YTD yield is 2.91%. YTD performance is 1.87% including market losses/gains.
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Old 11-09-2015, 06:31 AM   #30
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If you have more than $50k you should be in the admiral version of this fund VWIUX
It looks to me like one has to have a Vanguard account in order to invest in Admiral shares. Am I mistaken? At any rate the expense ratio difference seems to be .16 vs .20. Thanks anyway for the suggestion.
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Old 11-09-2015, 07:59 AM   #31
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I was under the impression that the SEC yield represents a 30 day yield so varies from month to month as not all holdings pay dividends equally spread amongst the 12 months of the year. YTD yield is 2.91%. YTD performance is 1.87% including market losses/gains.
The SEC yield is the income yield that an investor should expect over the long term if they buy the fund today. As interest rates decline the fund yield will converge towards the SEC yield.

http://bonds.about.com/od/bondfunds/...-Sec-Yield.htm
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Old 11-09-2015, 08:07 AM   #32
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The SEC yield is the income yield that an investor should expect over the long term if they buy the fund today. As interest rates decline the fund yield will converge towards the SEC yield.

Distribution Yield vs. SEC Yield: Which Should You Use?
Right - although I track distribution yield (most recent payout) as well.

If you watch distribution yields, you'll see they have been dropping over time. Vanguard under the "distributions" tab shows you the monthly distribution yield history.

Most of my bond funds distribution yield are closer to the SEC yield, but I notice my muni bond funds are paying out quite a bit higher. Honestly, that is why I still hold them.

I assume the SEC yield for the long-term return on any bond fund I buy.
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Old 11-09-2015, 09:06 AM   #33
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The SEC yield is the income yield that an investor should expect over the long term if they buy the fund today. As interest rates decline the fund yield will converge towards the SEC yield.

Distribution Yield vs. SEC Yield: Which Should You Use?
Please understand that I am not questioning the truth of what you say. I've read the same definitions, but if the SEC yield is the income yield that an investor should expect over the long term, why wouldn't that yield increase during that same time horizon as interest rates increase. By that I mean if the duration of the fund is 5-6 years and a fund is held for that time during a rising interest rate environment, wouldn't the SEC yield increase as well and if so then the expected long term yield was something different(higher)? Sorry I struggle with this concept.
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Old 11-09-2015, 09:17 AM   #34
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I've always looked at yield to maturity to project and compare future returns.
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Old 11-09-2015, 09:19 AM   #35
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Please understand that I am not questioning the truth of what you say. I've read the same definitions, but if the SEC yield is the income yield that an investor should expect over the long term, why wouldn't that yield increase during that same time horizon as interest rates increase. By that I mean if the duration of the fund is 5-6 years and a fund is held for that time during a rising interest rate environment, wouldn't the SEC yield increase as well and if so then the expected long term yield was something different(higher)? Sorry I struggle with this concept.
No - SEC yield is NOT the yield to expect over the long term - it's the return to expect over the long term.

Yes - the SEC yield will rise with rising interest rates, but you will also take a NAV reduction in the bond fund because of the rise in interest rates.
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Old 11-09-2015, 09:31 AM   #36
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No - SEC yield is NOT the yield to expect over the long term - it's the return to expect over the long term.

Yes - the SEC yield will rise with rising interest rates, but you will also take a NAV reduction in the bond fund because of the rise in interest rates.
Sorry Audrey if I seem too uninformed, but if one holds a fund for the number of years that is quoted as the duration, isn't it a break even situation. So if I own $100 now of a fund with a 5year duration that is currently yielding 3% and interest rates increase, my nav declines but the fund's yield increases to the point that at the end of 5 years it made no difference that the NAV declined. If I am correct, then is current yield not as meaningful to me as SEC yield? Again, as I said I struggle process this in light of making investment decisions for my fixed income portfolio.
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Old 11-09-2015, 10:13 AM   #37
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It looks to me like one has to have a Vanguard account in order to invest in Admiral shares. Am I mistaken? At any rate the expense ratio difference seems to be .16 vs .20. Thanks anyway for the suggestion.
It is a .08 (.12 vs .20) difference and yes you need to have the funds with Vanguard. There is also no trading fees with a Vanguard account/Vanguard funds
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Old 11-09-2015, 02:19 PM   #38
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Sorry Audrey if I seem too uninformed, but if one holds a fund for the number of years that is quoted as the duration, isn't it a break even situation. So if I own $100 now of a fund with a 5year duration that is currently yielding 3% and interest rates increase, my nav declines but the fund's yield increases to the point that at the end of 5 years it made no difference that the NAV declined. If I am correct, then is current yield not as meaningful to me as SEC yield? Again, as I said I struggle process this in light of making investment decisions for my fixed income portfolio.
Yes, it's considered that if you hold a fund with 5 year duration that in the event of an interest rate rise, you should break even after 5 years. But you have to reinvest the dividends to break even.
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Old 11-09-2015, 02:40 PM   #39
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Yes, it's considered that if you hold a fund with 5 year duration that in the event of an interest rate rise, you should break even after 5 years. But you have to reinvest the dividends to break even.
I agree with Audrey. And I'll add that "break even" means the NAV of the fund will equal what you invested originally at (in this example) five years. You could sell and get your money back. But you may have done better with another investment category or method. Having your money tied up for five years and "breaking even" in nominal dollars isn't a success.
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Old 11-09-2015, 03:12 PM   #40
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Yes, it's considered that if you hold a fund with 5 year duration that in the event of an interest rate rise, you should break even after 5 years. But you have to reinvest the dividends to break even.
Yes - that is the way we have this set up. I have never been a fan of bond funds, due to the affect on NAV of rising interest rates, but if the money is long term I have convinced myself that as long as my time horizon is as long as the duration, then I have limited my downside. That and individually held bonds of high quality are what we have settled on for the bulk of the FI portion of our portfolio.
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