What's Your Non-Equity Portfolio Look Like?

Thank you for this thread:

zero bonds
10% Vanguard Money Market
14% Check account

I have been waiting for the "right" house to buy for the last 6 months so $ are just sitting there. Hindsight is perfect - shoulda been in S&P500!

I fear I am going to do the same for the next six months :-(
 
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I was actually surprised by this chart, with regard to how much cash is currently in my equity mutual funds. I know some folks wouldn't consider that "non-equity" but in terms of risk and return it is.

Of course, if that ever gets reinvested, it changes the chart a bit.

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And some folks don't like to consider their cash emergency fund as part of their portfolio, and that changes the graph again.

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Non-equity allocation = 38%

As a percentage of my total allocation that is made up of

cash = 3%
Stable value = 12%
TIAA-Traditional = 5%
VFIDX = 7%
Bonds in Wellesley (VWIAX) = 11%
 
Bonds are about 34% of our portfolio. Approaching rebalancing time. Our bonds are in:
VG intermediate - 19%
VG Short Term - 5%
Pimco Total Return - 43%
TSP G Fnd - 34%

The Pimco is in DW's 401K. The rest are in VG IRA's and the Federal 401K like account.

These percentages don't include 8 months expenses sitting in a taxable MMF.
 
Im thinking about some MLP's as an alternative to bonds.
Interesting that that many advisers are uncomfortable with them cause of tax complications. Complexity is not an issue for me if the return/rationale is there.
This might mean they are undervalued.
My father in law became rich on them over the past two decades.
Pipeline MLP's seem very low risk. ( regulation risk is perhaps the biggest concern).

Anyone into these? Do you consider them to be like bonds?

OTOH reading the WSJ article this weekend on bond investing as rates rise- Im not sure I'm smart enough to out-fox the vanilla 60/40 AA.

Currently my non equities are 13% cash and 32% the bonds in the vanguard AA managed fund.
 
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Im thinking about some MLP's as an alternative to bonds.
Interesting that that many advisers are uncomfortable with them cause of tax complications. Complexity is not an issue for me if the return/rationale is there.
This might mean they are undervalued.
My father in law became rich on them over the past two decades.
Pipeline MLP's seem very low risk. ( regulation risk is perhaps the biggest concern).

Anyone into these? Do you consider them to be like bonds?

OTOH reading the WSJ article this weekend on bond investing as rates rise- Im not sure I'm smart enough to out-fox the vanilla 60/40 AA.

Currently my non equities are 13% cash and 32% the bonds in the vanguard AA managed fund.

Yes, I have had a large amount of Schwab IRA funds in EPD (bought low 30's) and MMP (bought low 40's). I also have positions in KMP and NSH in my taxable accounts.

Note: for all who comment on what a PIA it is to "do the tax reporting", Schwab does my tax forms and sends me the form to sign each year prior to 4/15.

Now, for all you who think it is a PIA to do the tax in the taxable, I just download the K1 from the MLP sites and upload it into Turbo Tax. I believe there are a few entries I have to make after that but it takes all of 5 minutes.

Pipeline MLPs are the safest and are not entirely subject to swings in energy prices. Be careful with MLPs that are tied to energy production as things can go south in a hurry.

I can't comment on whether they are currently undervalued as some have had nice runs in the last few years. Personally, I would look at companies that have pipeline operations in the Eagle Ford development in south Texas as the regulatory climate there is vary good.

I don't consider them to be like bonds.
 
SV = 5.7%
Wellington/Wellesley = 6.7%
Short-Int term IG = 10.7%
Diversified = 4.7%
Foreign = 4.7%
Floating Rate = 2.3%
Strategic/HY= 1.9%
Multi-sector= 1.8%
 
Yes, I have had a large amount of Schwab IRA funds in EPD (bought low 30's) and MMP (bought low 40's). I also have positions in KMP and NSH in my taxable accounts.

Note: for all who comment on what a PIA it is to "do the tax reporting", Schwab does my tax forms and sends me the form to sign each year prior to 4/15.

Now, for all you who think it is a PIA to do the tax in the taxable, I just download the K1 from the MLP sites and upload it into Turbo Tax. I believe there are a few entries I have to make after that but it takes all of 5 minutes.

Pipeline MLPs are the safest and are not entirely subject to swings in energy prices. Be careful with MLPs that are tied to energy production as things can go south in a hurry.

I can't comment on whether they are currently undervalued as some have had nice runs in the last few years. Personally, I would look at companies that have pipeline operations in the Eagle Ford development in south Texas as the regulatory climate there is vary good.

I don't consider them to be like bonds.

Thanks for that info.
Here's what I'm thinking:
Yields are higher than most bonds
Pipeline MLP's are largely insulated from the economy in a number of ways- including long term contracts for service. So, their correlation to stocks thru a bus. cycle seems like it could be low.
If so, then it serves as bond in a portfolio sense.

Is this thinking is flawed in some way?
 
Our fixed income choices:

Code:
20%  old high yield Ibonds
32%  Pimco Total Return ETF (BOND) - intermediate bonds with some foreign
37%  Dodge & Cox Income (DODIX) - intermediate bonds, corporate emphasis
8%   Vanguard Short Term Investment Grade
3%   cash  (1% of total portfolio)
 
Thanks for that info.
Here's what I'm thinking:
Yields are higher than most bonds
Pipeline MLP's are largely insulated from the economy in a number of ways- including long term contracts for service. So, their correlation to stocks thru a bus. cycle seems like it could be low.
If so, then it serves as bond in a portfolio sense.

Is this thinking is flawed in some way?

Well, a bond is an IOU with periodic interest payments and a maturity date. Bond NAV's can fluctuate with changes in interest rates, but you will get the face value upon maturity.

MLP's are shares of a General Partnership and have no underlying stated value. They pay distributions decided upon by the General Partner and also share costs and some income percentage of the operations they are representing. When you sell a MLP position, it has a new basis other than the original cost, thus it is taxed differently than bond interest. It's complicated.

You can buy an ETF that holds many MLPs. You can also buy certain General Partner shares (see KMI).

Kinder Morgan Inc (KMI): Another Compelling Reason To Buy And Hold Kinder Morgan For The Long Term - Seeking Alpha
 
Im thinking about some MLP's as an alternative to bonds.
Interesting that that many advisers are uncomfortable with them cause of tax complications. Complexity is not an issue for me if the return/rationale is there.
...
Anyone into these? Do you consider them to be like bonds?

Because of my attempts to seek out diversification, I have a total of 21 MLP pipeline companies, along with a few non-pipeline MLPs (refiners, an oil producer, sand/soda ash/fertilizer producers). Not every single one is showing a profit, but overall, I'm happy with their distributions and performance over the 6-7 years I've owned most of them.

The tax forms can appear very intimidating at first...but I set up a spreadsheet, with a row for every K-1 field, for an easy summation of all of my K-1s, so I can quickly and easily fill out each relevant IRS form. The additional marginal time it takes you to track 1 more K-1 isn't that bad once you do one...then two...then three...:)


Thanks for that info.
Here's what I'm thinking:
Yields are higher than most bonds
Pipeline MLP's are largely insulated from the economy in a number of ways- including long term contracts for service. So, their correlation to stocks thru a bus. cycle seems like it could be low.
If so, then it serves as bond in a portfolio sense.

Is this thinking is flawed in some way?

I view my "bond" category as something that's fairly predictable. While MLPs (especially pipelines) can have steady growth, like a utility, I view them more susceptible to the vagaries of not only the small, ever-present specter of possible tax law changes by Washington, but also somewhat susceptible to other risks (leaks in the pipeline from natural causes or vandalism/terrorism, favoritism to General Partners over Limited Partners, having to constantly grow the dividend over time to stay competitive with other MLPs or face a weak/declining stock price, etc.)...in addition to the ever-present interest rate risk of paying an adequate premium for all of the above factors over and above the current risk-free rate.

Because of that, I keep my 'bonds' separate from REITs and MLPs, and even my BDCs, even though many BDCs have fixed-rate investments/loans to many companies.
 
Cash: 44%
Bond: 56%

Bonds:
26%: PenFed CD's (some consider these cash, but I consider them bond-like for my purposes)
27%: PIMCO Tot Return
13%: Individual Munis
15%: Bond portion of mutuals
9%: Whole life
6%: Individual corporates
4%: I-bonds
 
I assume the various classes like Business Development Companies, Utilities, REITs, Pipeline MLPs and the like would be considered "equities" for the purposes of this exercise.

I would consider some of those alternative investments.
 
I had to look this up as it is a variable that I do not normally compute. These data are from December 31, 2013.

Equities (including international) comprise 43.5% of my portfolio. Of the remainder, the distribution is as follows:

Cash and cash equivalents:10.21%
Bonds: 46.21%
Real estate (assets minus liabilities; excludes residence): 26.34%
Alternative investments: 13.92%
Precious metals: 3.21%

Total does not quite add up to 100% due to rounding.
 
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Cash: 44%
Bond: 56%

Bonds:
26%: PenFed CD's (some consider these cash, but I consider them bond-like for my purposes)
27%: PIMCO Tot Return
13%: Individual Munis
15%: Bond portion of mutuals
9%: Whole life
6%: Individual corporates
4%: I-bonds
No Equity at all? CD is considered as fixed-income.
 
no TBM?

I'm surprised not many people are listing a Total Bond fund among their holdings in this thread. It may not be optimal, especially in today's interest rate environment, but as a long term holding on autopilot it seems fine. My non-equity portion is 50% TBM and 50% TIPs fund. Their purpose is for diversification/non-correlation with equities - it's ok if they have some losses. I've held them for years and plan to just rebalance as necessary. Anyone see issues with this?
 
I'm at about 39% TBM and 13% Money Market.
 
No Equity at all? CD is considered as fixed-income.

Sorry, I was assuming the OP was just interested in the FI portion. Overall I'm 62/38. I'm not the most aggressive one out there, but not quite that conservative... :)
 
Im thinking about some MLP's as an alternative to bonds.
Interesting that that many advisers are uncomfortable with them cause of tax complications. Complexity is not an issue for me if the return/rationale is there.
This might mean they are undervalued.
My father in law became rich on them over the past two decades.
Pipeline MLP's seem very low risk. ( regulation risk is perhaps the biggest concern).

Anyone into these? Do you consider them to be like bonds?

OTOH reading the WSJ article this weekend on bond investing as rates rise- Im not sure I'm smart enough to out-fox the vanilla 60/40 AA.

Currently my non equities are 13% cash and 32% the bonds in the vanguard AA managed fund.



I had a basket of separate MLP's, but sold them all and went with just one http://www.alerianmlp.com/amlp/amlp-index.php
 
Fixed income is 30% of our portfolio.

TBM: 69%
bank loan fund: 16
CDs: 7
IBonds: 5
short term muni fund: 3
 
My non-equity portion is 50% TBM and 50% TIPs fund.

Is the TIPs fund short-term? I heard that short-term is more appropriate if the prospect for higher inflation is likely. Futher, short-term is lower risk despite possible lower return than the longer-term TIPS in the long run.
 
55% in various short term bond funds
19% cash
14% TIPS mainly actual bonds
12% Misc including some individual corp and muni bonds, a little bit of high yield, a CA Muni Bond MF

Am not including a piece of a Mort on a commercial building that DW inherited.
 
I'm surprised not many people are listing a Total Bond fund among their holdings in this thread. It may not be optimal, especially in today's interest rate environment, but as a long term holding on autopilot it seems fine. My non-equity portion is 50% TBM and 50% TIPs fund. Their purpose is for diversification/non-correlation with equities - it's ok if they have some losses. I've held them for years and plan to just rebalance as necessary. Anyone see issues with this?


To me one of the problem of TBM is that it is composition has really changed since 2008 when the Fed went on it is buying spree. It is only 23% corporate and the rest is government (90% US) or agency debt. Fully 30% of the assets are in long bonds 20-30+ year issues. Anyway given the low current interest rates and the prospect of rising interest none of these seem like great assets to own.

The BND current yield is 2.5% and the average duration is 5.5 years so even a 50 basis point rise in interest rates will result in small loss. I think PenFed CD, stable value funds etc. all seem like better investments.
 
I think PenFed CD, stable value funds etc. all seem like better investments.
The stable value fund in our 401K returns only 1.68% for the past 3 years. I heard that other SV funds are doing a lot better (e.g., 3+%). Is that true?
 
The stable value fund in our 401K returns only 1.68% for the past 3 years. I heard that other SV funds are doing a lot better (e.g., 3+%). Is that true?
The SV fund in our 401K has returned 2.03% for 1YR and 2.67% for 5YR but i do not use it.
 
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