How many bond funds are needed?

[redduck]

I am the proud investor in these bond funds:Vanguard Short-Term; Vanguard High Yield; Buffalo High Yield (in an IRA) and Dodge and Cox Income Fund (in an IRA). I also have the TIPs ETF. Too many bond funds? Does the Dodge and Cox Income Fund cover everything, so I don't actually need the other funds?

[ats5g]

Quote:

Originally Posted by redduck I am the proud investor in these bond funds:Vanguard Short-Term; Vanguard High Yield; Buffalo High Yield (in an IRA) and Dodge and Cox Income Fund (in an IRA). I also have the TIPs ETF. Too many bond funds? Does the Dodge and Cox Income Fund cover everything, so I don't actually need the other funds?

I don't know about TIPS, but DODIX can and does hold HY bonds, and can shift its duration around [for example, going from ST to IT, etc.], as well as shift sectors around [Treasuries, Corporates, Mortgages]. You could always call Dodge and Cox and ask about TIPS.

I view DODIX as a substitute for an IT total bond fund [like VBMFX].

Any reason you'd want to own 2 HY bond funds?

- Alec

[redduck]

[Any reason you'd want to own 2 HY bond funds?]

- Alec

Not really. Awhile back, I was able to buy the Buffalo HY Fund at Schwab (in my IRA) with no transaction fee. Thought it was a good idea at the time (so did Barron's Magazine--that's where I got the idea). My guess it's not a necessary part of my portfolio. I could sell it and put the proceeds into Dodge and Cox Income Fund. One less fund to monitor. Oh, D&C income fund does have TIPs in it.


And, one day, I'm going to figure out how to quote a reply the correct way on this website. (But, probably not today).

[Peaceful_Warrior]

I carry very few actual bonds in my portfolio. I am invested in some LLCs that return 9-10% annually with very low volatility and minimal risk, so I basically consider that my bond portion.

Also, I have a couple of Whole Life insurance policies (got duped, but now that I'm in... might as well) that I consider also the "bond" part of my portfolio.

Everything else is in equities... my 401k has a 0% bond allocation, and after tax I'm in the Vanguard Total Market as well as the aforementioned LLCs (which I also carry some shares in my Roth IRAs).

[audreyh1]

Quote:

Originally Posted by redduck I am the proud investor in these bond funds:Vanguard Short-Term; Vanguard High Yield; Buffalo High Yield (in an IRA) and Dodge and Cox Income Fund (in an IRA). I also have the TIPs ETF. Too many bond funds? Does the Dodge and Cox Income Fund cover everything, so I don't actually need the other funds?

Yes, IMO DODIX is good enough. One nice thing about DODIX is that they shorten or lengthen the duration based on where the best value is in the yield curve.

The only other thing is if you want a couple of years of money in shorter-term income - money that you expect to withdraw in 2-3 years time. Then a short term or ultra short term will take care of that. Might be a good enhancement.

Holding high yield funds usually increases total return, but it also increases your credit risk and volatility. Another problem with high yield is that it tanks when stocks tank (and vice versa) so it doesn't really give you the rebalancing benefit that other fixed income will.

Audrey

[ats5g]

Quote:

Originally Posted by redduck [Any reason you'd want to own 2 HY bond funds?] - Alec Not really. Awhile back, I was able to buy the Buffalo HY Fund at Schwab (in my IRA) with no transaction fee. Thought it was a good idea at the time (so did Barron's Magazine--that's where I got the idea). My guess it's not a necessary part of my portfolio. I could sell it and put the proceeds into Dodge and Cox Income Fund. One less fund to monitor. Oh, D&C income fund does have TIPs in it. And, one day, I'm going to figure out how to quote a reply the correct way on this website. (But, probably not today).

The whole quoting thingee is not all that hard. Simply pick the post that you want to quote and click "quote".

As long as your fine with DODIX's management moving the fund's holdings around as they see fit, you're good. Though, it is a little pricey for me for a bond fund.

- Alec

[Spanky]

Quote:

Originally Posted by redduck I am the proud investor in these bond funds:Vanguard Short-Term; Vanguard High Yield; Buffalo High Yield (in an IRA) and Dodge and Cox Income Fund (in an IRA). I also have the TIPs ETF. Too many bond funds? Does the Dodge and Cox Income Fund cover everything, so I don't actually need the other funds?

It depends if you want to do "sliced and diced" or fine tuning on bond allocation.

[mickeyd]

I have 3 bond funds in my portfolio.

1) TIPS Idx fund @ Vanguard (I have it in RO IRA as well as my Roth)

2) Intermediate-Term Bond Idx fund @ VG (Also RO and Roth)

(Note: The above funds include about 40% of my entire stash)

3) ST Bond index fund @ VG (It is the back-up for my taxable Prime MMF also @ VG) Currently returning less that PMMF, so it is not a current winner.

I tend to favor equities over fixed investments, so I generally retain that part of my stuff as a diversification play.