Bond Ballast Allocation - Is it time to to make some tweaks?

[DawgMan]

It took me a number of years, but I finally made peace with holding bond funds in my AA viewing them as a ballast as opposed to a "must get yield/total return" investment. My 60/40 AA holds a majority of intermediate bond funds/ETFs in the fixed allocation with maybe a 1/3rd in short term treasuries.

As we all know, rising interest rates has been a prediction now for many years and my intermediate bond funds over time have performed just as I had hoped during this time. Due to the market run up, along with some new money I will be investing, I had planned to do a little early rebalancing. YTD, my intermediate bond funds are down between 2.5% - 3% with my short term treasuries returning around 0%. This all got me thinking that perhaps I should be more like 50/50 short term bond funds & intermediate? For those ballasts folks, what type of bond mix do you keep and what triggers any tweaks, fine tuning, if at all?

[VanWinkle]

Quote:

Originally Posted by DawgMan It took me a number of years, but I finally made peace with holding bond funds in my AA viewing them as a ballast as opposed to a "must get yield/total return" investment. My 60/40 AA holds a majority of intermediate bond funds/ETFs in the fixed allocation with maybe a 1/3rd in short term treasuries. As we all know, rising interest rates has been a prediction now for many years and my intermediate bond funds over time have performed just as I had hoped during this time. Due to the market run up, along with some new money I will be investing, I had planned to do a little early rebalancing. YTD, my intermediate bond funds are down between 2.5% - 3% with my short term treasuries returning around 0%. This all got me thinking that perhaps I should be more like 50/50 short term bond funds & intermediate? For those ballasts folks, what type of bond mix do you keep and what triggers any tweaks, fine tuning, if at all?

The time lapse before I need the money has the most influence on my
bond duration. I have all of my bond money in 2 funds, both intermediate bond funds from Vanguard. They are also down 3-3.5% this year at this time. They did well last year so I don't expect the same return every year. "Don't do something, stand there" a quote from John Bogle makes sense to me in many situations. Portfolios are like a bar of soap, the more you rub them, the smaller they get. I just re-balanced equities to intermediate bonds to get back to my 50/50 allocation. I do keep about 1 year in cash, but the rest is invested in my 50/50 allocation.

Good luck to you,

VW

[Montecfo]

Quote:

Originally Posted by DawgMan It took me a number of years, but I finally made peace with holding bond funds in my AA viewing them as a ballast as opposed to a "must get yield/total return" investment. My 60/40 AA holds a majority of intermediate bond funds/ETFs in the fixed allocation with maybe a 1/3rd in short term treasuries. As we all know, rising interest rates has been a prediction now for many years and my intermediate bond funds over time have performed just as I had hoped during this time. Due to the market run up, along with some new money I will be investing, I had planned to do a little early rebalancing. YTD, my intermediate bond funds are down between 2.5% - 3% with my short term treasuries returning around 0%. This all got me thinking that perhaps I should be more like 50/50 short term bond funds & intermediate? For those ballasts folks, what type of bond mix do you keep and what triggers any tweaks, fine tuning, if at all?

I would be thinking about floating rate bonds and minimizing duration.

But if "ballast" is your only objective you want to the 100 pct long treasuries.

[Dash man]

I’m going the bond ladder route to be able to take advantage of increasing rates if they continue. I’m using Schwab’s Wasmer Schroeder Strategies 3-7 year taxable bonds ladder since I don’t trust bond funds and am not comfortable doing it myself. There is a .55%/yr fee, but it’s probably cheaper than the mistakes I’d make.