Third Avenue Focused Credit Fund takes rare step, seeking an orderly liquidation as j

[audreyh1]

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Originally Posted by bmcgonig If credit gets worse on Monday or Tuesday I think that they will not raise. Would be very strange indeed. Sent from my iPad using Early Retirement Forum

It does seem like that could stay their hand.

[audreyh1]

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Originally Posted by Lsbcal Still I'm a bit worried about my intermediate bond funds. I'll be reorganizing my deck chairs to increase credit quality. A few I have: DODIX credit quality = BBB (will decrease this in favor of VFIDX) VFIDX credit quality = A BOND credit quality = ?? (M* does not rate this one but management is quick on their feet ... I think. For more info see: PIMCO ETFs - PIMCO Total Return Active Exchange-Traded Fund)

Lsbcal - I'm curious why you choose VFIDX, a predominantly corporate bond fund (even though investment grade), instead of a fund with much higher credit quality (AA rated) like VBTLX.

During a period of credit crisis, or market turmoil, the highest credit quality bond funds tend to behave the best. Even investment grade corporate debt can get knocked hard during liquidity scares.

[Lsbcal]

Quote:

Originally Posted by audreyh1 Lsbcal - I'm curious why you choose VFIDX, a predominantly corporate bond fund (even though investment grade), instead of a fund with much higher credit quality (AA rated) like VBTLX. During a period of credit crisis, or market turmoil, the highest credit quality bond funds tend to behave the best. Even investment grade corporate debt can get knocked hard during liquidity scares.

Well the answer is a bit complicated. First, I have an indicator that is my own concoction to indicate when to reduce stock positions. It turns out that a combo of that and yield curve flattening is a good way to move from an investment grade intermediate bond fund to an intermediate Treasury fund.

I've looked at this with data from July 1987 to now and it seems a gentle way of sidestepping times when credit risk comes up. I always remind myself a 1930's crisis could happen (but probably will not). So that is my current plans and not suggesting anyone else should like this approach.

Also, VFIDX is an index fund (no active management risk) with low ER and a good track record even if one does not trade it. Compared to DODIX it comes out looking pretty good. It looks even better when I employ the switching method to Treasuries.

Here is a table comparing some of the bond funds I own or am considering:


FWIW, I'm probably going to sell my DODIX plus some BOND. I'm then going to be holding VFIDX (largest position), VBTLX, and BOND.

I would welcome any constructive criticism.

[mathjak107]

right now my own holdings are a mix of vanguard vbtlx and fidelity total bond fund , fidelity short term bond , fidelity corporate bond and fidelity limited term bond fund .