Question on Short Duration Bond Fund

[prof12]

Hi All--

I hope you can provide some advice. I have my traditional IRAs with Edward Jones and my FP has insisted I maintain a Hartford Short Duration Bond Fund (HSDAX) as part of my asset allocations. It is, I believe, a dog, and I'd really like to dump it for individual stocks that could potentially make more gains for my bottom line. The FP says it needs to be there for balance. I disgree, but would like other opinions. Thanks. prof12

[REWahoo]

What overall asset allocation are you targeting?
Will owning/not owning the bond fund in question materially impact your target AA?
Why are you paying a FA if you aren't happy with his recommendations?

[nun]

Quote:

Originally Posted by prof12 Hi All-- I hope you can provide some advice. I have my traditional IRAs with Edward Jones and my FP has insisted I maintain a Hartford Short Duration Bond Fund (HSDAX) as part of my asset allocations. It is, I believe, a dog, and I'd really like to dump it for individual stocks that could potentially make more gains for my bottom line. The FP says it needs to be there for balance. I disgree, but would like other opinions. Thanks. prof12

It's difficult to answer your question without knowing your circumstances and AA goal. However, I know for sure that you shouldn't be buying a bond fund with an up front load and an expense ratio of 0.85% HSDAX. Given your questioning of your FA and that recommendation why are you paying him/her? However, your desire to buy individual stocks rather than HSDAX does not inspire me with confidence assuming your FA was implementing a sensible AA strategy.

[ERhoosier]

Quote:

Originally Posted by nun It's difficult to answer your question without knowing your circumstances and AA goal. However, I know for sure that you shouldn't be buying a bond fund with an up front load and an expense ratio of 0.85% HSDAX. Given your questioning of your FA and that recommendation why are you paying him/her? ...

+1

I won't get into arguing any specific AA, but if you need a short-term bond fund for "balance" I would not pick a fund with (according to Morningstar) a 2% sales charge, above ave expense ratio, and over 20% of its holdings in >10yr maturity instruments.
Hartford Short Duration A Report (HSDAX) | Asset Allocation Summary

[prof12]

Thanks, ERhoosier. You have crystalized what my "gut" told me. I suspected I was strongly encouraged to go with this because of the Edward Jones FP needing some extra money rather than having my interest as his primary focus. I own a boatload of shares and have seen less than $100. for my trouble.

Now that I'm retired, Vanguard is looking better and better. Thanks. prof12

[nun]

Quote:

Originally Posted by prof12 Thanks, ERhoosier. You have crystalized what my "gut" told me. I suspected I was strongly encouraged to go with this because of the Edward Jones FP needing some extra money rather than having my interest as his primary focus. I own a boatload of shares and have seen less than $100. for my trouble. Now that I'm retired, Vanguard is looking better and better. Thanks. prof12

I suspect that your adviser was actually trying to implement some sort of AA plan, but was doing it with an expensive fund to make money for them self. Leaving Edward Jones for Vanguard would be a good move, just make sure you have a sensible plan. Owning a "boatload of shares" isn't a plan, you should have an AA that meets your risk/return requirements and that will probably include a short term bond fund.

[audreyh1]

High quality short duration bond fund - VBISX. It doesn't do much either, but it's cheap and it holds steady or even appreciates when equities or low quality bonds crash - that would be the "balance" part.

[ERhoosier]

Quote:

Originally Posted by audreyh1 High quality short duration bond fund - VBISX. It doesn't do much either, but it's cheap and it holds steady or even appreciates when equities or low quality bonds crash - that would be the "balance" part.

Or VFSTX for sl better yield with shorter effective duration -
https://personal.vanguard.com/us/fun...FundIntExt=INT
Or Admiral shares version (sl better yield/lower expenses) if acct is large enough-
https://personal.vanguard.com/us/fun...FundIntExt=INT

[RockyMtn]

Not going to find a whole lot of short term bond funds that do much which appreciation wise or yield wise. While frustrating now it will be quite satisfactory when interest rates ultimately rise. However, the 2% fee is basically going to insure that you lose money on a yearly basis. Find a cheaper alternative IMHO.

[brewer12345]

I think you would be better off with a CD than this crappy fund or a short term bond fund.

[prof12]

I looked at Vanguard's side by side comparison for each of my mutual funds and this bond fund. The difference in the potential bottom line is both shocking and staggering. I see from another poster that they too are switching from Edward Jones to Vanguard. I will be calling Vanguard this next week to discuss moving my portfolio in kind. Thank you everyone for your honest, forthright and worthwhile help. Prof12

[Brooks Saddle]

Quote:

Originally Posted by prof12 I looked at Vanguard's side by side comparison for each of my mutual funds and this bond fund. The difference in the potential bottom line is both shocking and staggering. I see from another poster that they too are switching from Edward Jones to Vanguard. I will be calling Vanguard this next week to discuss moving my portfolio in kind. Thank you everyone for your honest, forthright and worthwhile help. Prof12

That would be a very smart thing to do. Also, visit the Boglehead forum. There is a thread that started over a year ago on the 3 fund portfolio. That would be a good place to start.

[daylatedollarshort]

Quote:

Originally Posted by brewer12345 I think you would be better off with a CD than this crappy fund or a short term bond fund.

Brewer, I took your advice from earlier threads, and have been doing exactly that. The yields are the same or better, and the CDs are FDIC insured.

Thanks!

[Katsmeow]

Quote:

Originally Posted by ERhoosier Or VFSTX for sl better yield with shorter effective duration - https://personal.vanguard.com/us/fun...FundIntExt=INT Or Admiral shares version (sl better yield/lower expenses) if acct is large enough- https://personal.vanguard.com/us/fun...FundIntExt=INT

This is what I have (the Admiral version).