Are bond funds a good parking place for liquidity?

[FD1000]

I never bought a single bond in my life. I never bought a CD or treasury.
I like simplicity and why I've own MM when I can't find OEFs. I also like owning just 2-3 funds.
Out of thousands of funds I always found managers/funds that know how to make money in unique markets.
I also want my money to be liquid at all times for me to invest and trade in the best funds I find.
Even 2022 was a good year when I made over 9% after all expenses. It was the first time I was out for months from early 2022 to November. But, I made several trades for hours to 2-3 days when the price got stupid low or the VIX was really high, I love these hair on fire markets when I'm out in MM and waiting to hunt.

So KISS for me equals funds, after all it's my name
FD=fund daddy

 

[pb4uski]

I’m in the higher rated money market called FMPXX.

Only the problem for most of us, but apparently not for HappilyRetired, is the $1m minimum.

 

[COcheesehead]

Only the problem for most of us, but apparently not for HappilyRetired, is the $1m minimum.
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There’s a back door into those high minimum funds. You only need to hit the minimum on the initial purchase. I had a $1m+ of real estate funds pass through the account for a few weeks, so I bought this fund. Today I have less than $40,000 in it.

 

[FD1000]

There’s a back door into those high minimum funds. You only need to hit the minimum on the initial purchase. I had a $1m+ of real estate funds pass through the account for a few weeks, so I bought this fund. Today I have less than $40,000 in it.

That's what I have done at Schwab in my TIRA and then transferred one share to Roth and joint.
Of course, I hit it several times since I sell everything sometimes.

 

[pb4uski]

There’s a back door into those high minimum funds. You only need to hit the minimum on the initial purchase. I had a $1m+ of real estate funds pass through the account for a few weeks, so I bought this fund. Today I have less than $40,000 in it.

Yes, I'm aware of the back door... at the same time it is rare that many of us would have $1m in settled funds to make the minimum purchase. I could finagle it if the 25bps was really important to me, but its not.

I like FD's hack of transferring some shares in kind to other accounts.

 

[COcheesehead]

Yes, I'm aware of the back door... at the same time it is rare that many of us would have $1m in settled funds to make the minimum purchase. I could finagle it if the 25bps was really important to me, but its not.

I like FD's hack of transferring some shares in kind to other accounts.

I just did it as a “why not”

 

[Chuckanut]

There’s a back door into those high minimum funds. You only need to hit the minimum on the initial purchase. I had a $1m+ of real estate funds pass through the account for a few weeks, so I bought this fund. Today I have less than $40,000 in it.

I suppose 10 investors could each toss $100,000 into a pile, and pass the pile around from one to another every few weeks until all have satisfied the $1,000,000 initial investment hurdle. Then each person gets his/her $100,000 dollars back.

What could possibly go wrong?

 

[big-papa]

I've been using ultrashort bond funds for this sort of thing. Just know that even though they are ultrashort, they can lose money. Unlike a MMF, most don't keep a fixed NAV. Depending on the nature of the fund and its underlying investments, value can drop pretty quickly when there's a quick yield change. But they also tend to recovery quickly - though some faster than others.

I've been using ICSH for a while now to hold funds specifically for use for home improvement projects we've had lined up for the last few years. FLOT is another one that I know people have used. Note they're classified as "ultrashort bond funds", but bonds aren't necessarily the only thing they hold.

Until this year, I also used ICSH to buffer coupons and maturing TIPS for spending over the course of the year as I wanted to minimize loss of purchasing power throughout the year. This year I switched to the 2 new ultrashort TIPS funds: ICPI & RBIL While they (or, rather their indexes as a proxy) did lose to inflation starting in 2020, the loss was significantly lower than any MMF or other ultrashort funds I studied. They're also the only 2 that are back above water, in real returns, even today, having gotten back into positive real territory in late 2024.

 

[COcheesehead]

Purple line is HOSAX YTD. The other two are the indexes it’s measured against. That’s a pretty steady NAV for a bond fund in these times and with a 6%+ distribution.