Hmmm.
Yep, and with a duration of 5.7 years, BND is squarely in the "intermediate" category. Back when I held bonds as a risk asset instead of as an income source, my personal taste tended towards treasuries and FUAMX was my go-to fund at the time - also intermediate.
And why buying bonds after 2022, the worst rate hike in history, was an excellent to buy and lock in those yields.
I would be surprised that a FA would put someone into BND... that is too simple... not earning their 'fee'...
Maybe initially, but once set, I find myself replacing a few bonds a year. I find the process of bond buying actually enjoyable, but I am a bond geek.
I suppose it is a bit of a balancing act for a FA. My FA apparently took his duty as a fiduciary very seriously and leaned toward covering his you-know-what with investments straight out of the basic investing books as opposed to trying to squeeze out more fees for himself. I can relate to that from my career in law, where our belief was no fee was high enough to risk being sued or hauled into arbitration by a disgruntled client. So my suspicion is my FA would rather I let him go (which I eventually did) than see me lose a lot of money in the market.
Right now, I only enjoy closing the gap years where there are currently no bonds maturing. I find that interesting for some reason. But I only get to do that 3 more times and am then done with that.
So you just let bonds mature and don’t replace with a longer maturity?
That's right. I spend them when they mature (along with all coupons). We each built our 2 longer ladders to take us until we're in our mid 90's. I have another ladder, an SS bridge, that terminates in 5 years when I start SS. When/if we make it to our 80's we'll then figure out what we want to do if it looks like at least one of us is going to be in it for the longer haul. We'll have I-bonds that start to mature in our mid 80's, over a 10 year period. We can spend that directly, extend our TIPS ladders then or maybe purchase a SPIA or maybe Ladder SPIAs. Cross that road when we get there.
So much is influenced by time period selected imo. In any event I tend to favor visual graphs a bit, long term, for instance can see how little volatility in EGRIX which then increases Sharpe ratio calculation. Those who like both might go 50:50 for a trendline in between I guess. SCHD,EGRIX Stock Chart (Dividends Reinvested, Inflation Adjusted) | Total Real Returns
Yup and then people were asking why own equities perhaps. But generally speaking I like individual bonds to avoid interest rate risk for can hold till maturity or called. Then only risk is default. BTW does this thread refer only to open ended bond funds, or does it included closed ended bond funds too?
What, you don't think Sandisk going up 10% every single day is long term sustainable?
Do you think the enormous popularity of these passive bond funds is due to logic that concludes, without much scholarly analysis, what was proven to work for stock investing ought to work for bond investing? Low-cost index funds held long term, right? I'm relatively new at DIY investing, and I am coming to believe that the logic is flawed. You and others reached that conclusion long ago.
Yup. Let the client carry the fund’s er on top of the FAs AUM fee. If things go south it’s the funds fault.
It’s the nature of bonds. It’s debt. The owner gets paid back plus interest. Your return is the result of which debt you choose and the interest associated with that debt. The primary purpose of a bond is income. Any growth or trading opportunity is secondary. A bond short of default will return to par. That’s it.
Yes I do think it is flawed for bonds, speaking very generally. And that I think is why you have a lot of people indexing their bonds: worked for stocks. Many of us have been taught to believe low expenses are the holy grail, when in fact value is king.
Especially when you hold to maturity and can ignore changes in value caused by changes in interest rates because those value changes unwind when held to maturity.
