Based on the description, I'm guessing the trust tracks the "Bloomberg U.S. Universal Index". It includes the same things in the index used by VBTLX except that it also includes high-yield bonds. Slightly more risk, slightly more expected return....
-A bond trust specifically designed for “My-Company-Name-Here," run by BNY investments. In the description, it states: Invests in high-grade and medium-grade fixed income securities, such as US Treasuries, agencies, corporate bonds, mortgage-backed, asset-backed, and high yield. Seeks to outperform Barclays Aggregate Bond Index. On the description, it doesn’t disclose expense ratio, but does state the return over the years (net of fees), and the return outperforms the Barclays Index.
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On the bond trust, what are your thoughts on this type of investment? I see it as an actively managed, high fee, higher-risk bond fund (compared to a bond index fund). However, it does state the return is higher than Barclay Bond index even net of fees. Would you invest in this? My concern is the part about investing medium-grade fixed income securities, in corporate bonds, mortgage-backed, asset-backed, and high yield. Doesn't seem safe enough when stuff hits the fan.
I have no concerns about the AUM in the SWAGX or SWRSX funds. Schwab is very good at running their bond funds. Maybe Vanguard is slightly better but not so much that I'd pay $75 per purchase. I'd have no problem using those funds as my choices.VBTLX would be ideal, but I don’t want to pay $75 every time I buy another tranche.
SWAGX or SWRSX – this fits the bill for a passive index low-cost bond fund. However, the total asset is small at $5B, when compared to VBTLX. Would this lead to some kind of liquidity risk or large bid-ask spread?
Hard to answer that question because we don't know why you want to own bonds. What purpose do you see a bond fund serving in your portfolio?Lastly, this a different question. What is the optimal bond investment choice? I didn’t give it too much thought before and would generally choose US total bond index, which generally have a duration of around 7-8 years. I’ve seen some who prefers a TIPS index fund. Some split half and half TIPS index and US Total Bond Index...
Typical answers are:
- to reduce portfolio volatility (stocks are much more volatile than bonds) -- some people are unnerved by large market swings, and using bonds to keep the overall volatility down may help such people stay the course.
- to generate an income stream, e.g., because you're retired and need to get money from your portfolio to pay for expenses. (Nowadays we encourage people to know that you can also generate an income stream simply by selling shares as needed.)
- someone told me I should own bonds because XYZ
Or a combination of the above.
Anyway, "optimal" or "best" bond choice depends on the goal and time horizon and how you view the various bond risks. Let us know about them, and then we can suggest some reasonable choices.
Statistics: Posted by sycamore — Sat Dec 21, 2024 12:27 pm