Fixed Income Investing II

[Closet_Gamer]

Not necessarily recommending, but one option that is in-between would be to make a ladder of target maturity bond funds. iBonds has corporate, treasury, high yield, TIP and muni flavors available.

I did this recently. Seems like a good approach. Still some complexity but a lot less than individual bonds for sure.

Unfortunately they decided to put their ladder building tool behind a wall for commercial finance people. So you can’t just plug in the number anymore to see the yields and portfolio yield. Irritating.

 

[audreyh1]

FZDXX has also been steadily creeping down. Month ago it was 5.21% now 5.16%.

 

[mathjak107]

i own 3 bond funds but keep duration on all under 4 years . i use fzdxx too for cash we hold

returns have been very good as things rebound .

i use a short term bond fund , an intermediate term one that has a duration of about 3.6 years and a floating rate high income fund which is very short term high yield loans . based on my buy price it’s paying an annualized 10% interest .

 

[HF63]

i own 3 bond funds but keep duration on all under 4 years . i use fzdxx too for cash we hold

returns have been very good as things rebound .

i use a short term bond fund , an intermediate term one that has a duration of about 3.6 years and a floating rate high income fund which is very short term high yield loans . based on my buy price it’s paying an annualized 10% interest .

Can you share the ticker symbol for floating rate fund??

 

[mrfeh]

Can you share the ticker symbol for floating rate fund??

If you haven't already, I suggest doing some reading on such funds before buying.

https://www.bogleheads.org/forum/viewtopic.php?t=421259

 

[mathjak107]

Can you share the ticker symbol for floating rate fund??

ffrhx , fidelity floating rate high income

 

[aja8888]

Anyone have thoughts on JAAA as it looks better than junk bonds for credit quality.

https://www.janushenderson.com/en-us/advisor/product/jaaa-aaa-clo-etf/#maturity_breakdown

An ETF investing in high-quality CLOs which seeks to deliver investors risk-managed access to an asset class that may provide consistent risk-adjusted returns and low correlation to traditional fixed income asset classes while exhibiting low volatility with low downgrade risk.

 

[monte1022]

i use a short term bond fund , an intermediate term one that has a duration of about 3.6 years ....

What are the other two?

 

[audreyh1]

Can you share the ticker symbol for floating rate fund??

If you haven't already, I suggest doing some reading on such funds before buying.

https://www.bogleheads.org/forum/viewtopic.php?t=421259

Yeah same here. I don’t touch floating rate funds with a 10 foot pole. They require market timing. They are junk debt and you can get burned badly if you don’t anticipate a recession in a timely manner.

 

[Golden Mean]

That chart doesn't include 2023. Total return of VBTLX was 5.7% last year.

I'm not selling shares for expenses, so the current NAV is not relevant, other than the fact that monthly re-investments are cheap.

Where did you get 5.7%? It looks to me like it paid out an average of about 3.2% and the NAV was flat for 2023. Of course that 3% return was if you bought it at 9.60ish. If you bought it at over $10.50 or more (its price for the last 10 years), then it sucks even more.

 

[Out-to-Lunch]

Where did you get 5.7%?

That is what both Portfolio Visualizer and Yahoo! Finance report:

https://finance.yahoo.com/quote/VBTLX/performance/

 

[mrfeh]

Where did you get 5.7%? It looks to me like it paid out an average of about 3.2% and the NAV was flat for 2023. Of course that 3% return was if you bought it at 9.60ish. If you bought it at over $10.50 or more (its price for the last 10 years), then it sucks even more.

From Morningstar:

 

[mathjak107]

i ran portfolio visualizer and from jan 2023 to dec 2023 i show 3.70% with dividends

fidelity total bond was 3.85%

 

[mathjak107]

Yeah same here. I don’t touch floating rate funds with a 10 foot pole. They require market timing. They are junk debt and you can get burned badly if you don’t anticipate a recession in a timely manner.

the fidelity one is very very short duration. not a problem at all . even 2022 was pretty flat .

last issue was 2008 but that was a outlier for most bond funds .

even my money market broke the buck and we got locked out and lost money .

fidelitys most conservative bond fund the ultra conservative bond fund got crushed .

but those issues with toxic derivatives have been rectified .

because it such short duration it has been pretty stable. most loans are just a couple of days or a few months.

want to know what’s scared ..most non govt bond funds are loaded with BBB.

that is the sweet spot and now 70% of all non govt bond money is in that segment .

that is the last stop for investment grade .

any credit down grades in a downturn can have every fund , insurer , pension fund , etc have to dump these in mass if they are restricted to investment grade .

moody’s calls it the elephant in the room today and the likely source of the next blow up

 

[mrfeh]

i ran portfolio visualizer and from jan 2023 to dec 2023 i show 3.70% with dividends

fidelity total bond was 3.85%

FXNAX is Fidelity's total bond fund, akin to VBTLX. Returned 5.5% in 2023.

 

[mathjak107]

FXNAX is Fidelity's total bond fund, akin to VBTLX. Returned 5.5% in 2023.

i used fidelity total bond .

i will run fxnax in portfolio visualizer now

 

[mrfeh]

i used fidelity total bond .

i will run fxnax in portfolio visualizer now

If you want annual returns, you can just use yahoo finance and look at the performance tab.

https://finance.yahoo.com/quote/FXNAX/performance

 

[mathjak107]

FXNAX is Fidelity's total bond fund, akin to VBTLX. Returned 5.5% in 2023.

crazy , i wish i took a screen shot last time as now i am showing
vbtlx at 5.70 and fxnax at 5.50% .


and now ftbfx fidelity total bond show 7.23


same date was run

 

[Out-to-Lunch]

i ran portfolio visualizer and from jan 2023 to dec 2023 i show 3.70% with dividends

fidelity total bond was 3.85%

Well, I just ran PV for Jan 2023 to Dec. 2023 and got 5.7% CAGR. This was with dividends reinvested. I get the same result if I choose year to year, and only include 2023.

 

[mathjak107]

Well, I just ran PV for Jan 2023 to Dec. 2023 and got 5.7% CAGR. This was with dividends reinvested. I get the same result if I choose year to year, and only include 2023.

see my post above

 

[audreyh1]

the fidelity one is very very short duration. not a problem at all . even 2022 was pretty flat .

last issue was 2008 but that was a outlier for most bond funds .

even my money market broke the buck and we got locked out and lost money .

fidelitys most conservative bond fund the ultra conservative bond fund got crushed .

but those issues with toxic derivatives have been rectified .

because it such short duration it has been pretty stable. most loans are just a couple of days or a few months.

want to know what’s scared ..most non govt bond funds are loaded with BBB.

that is the sweet spot and now 70% of all non govt bond money is in that segment .

that is the last stop for investment grade .

any credit down grades in a downturn can have every fund , insurer , pension fund , etc have to dump these in mass if they are restricted to investment grade .

moody’s calls it the elephant in the room today and the likely source of the next blow up

I got burned badly twice with FFRHX, enough for me. It was doing awesome until very suddenly it wasn’t. Requires way too much monitoring for me.

 

[pb4uski]

crazy , i wish i took a screen shot last time as now i am showing
vbtlx at 5.70 and fxnax at 5.50% .


and now ftbfx fidelity total bond show 7.23


same date was run

Yes, for Jan 2023 to Dec 2023.

Portfolio	Initial Balance	Final Balance	CAGR	Stdev	Max. Drawdown	Sharpe Ratio	Sortino Ratio	Market Correlation
Vanguard Total Bond Market Index Adm	$10,000	$10,570	5.70%	8.42%	-5.98%	0.10	0.16	0.83
Fidelity Total Bond Fund	$10,000	$10,723	7.23%	8.33%	-5.07%	0.27	0.48	0.87
Fidelity U.S. Bond Index	$10,000	$10,555	5.55%	8.47%	-6.13%	0.08	0.13	0.83

 

[mathjak107]

I got burned badly twice with FFRHX, enough for me. It was doing awesome until very suddenly it wasn’t. Requires way too much monitoring for me.

had to be 2008 , yes ?

 

[audreyh1]

I’m sure, but that wasn’t the only time.

 

[Golden Mean]

i ran portfolio visualizer and from jan 2023 to dec 2023 i show 3.70% with dividends

fidelity total bond was 3.85%

I think I see the confusion; mrfeh's graph shows the gain if you bought Jan 1. I'm not sure that's a useful number. If you bought at the low of the year, that graph would show something like 7% return. It indicates to me that bond funds are not like bonds as much as they are like dividend stocks.