Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.
For regular SAA and TAA portfolios, the next re-balance will be on Monday, March 13, 2017. You can also find the re-balance calendar for 2017 on ‘Dashboard‘ page once you log in.
As a reminder to expert users: advanced portfolios are still re-balanced based on their original re-balance schedules and they are not the same as those used in Strategic and Tactical Asset Allocation (SAA and TAA) portfolios of a plan.
Please note that we now list the next re-balance date on every portfolio page.
Fidelity Total Bond Fund Review
Fidelity Total Bond Fund (FTBFX (Fidelity Total Bond)) just won the Morningstar’s Fixed Income Manager of the Year award for 2016 (see this). As our stated policy, we are adding the fund to the candidate fund list for our total return bond fund portfolios listed on Brokerage Investors (What We Do -> Brokerage Investors). In this newsletter, we take a closer look at the fund.
|Ticker/Portfolio Name||1Yr AR||3Yr AR||5Yr AR||10Yr AR||10Yr Sharpe||Since 10/24/2002 AR|
|FTBFX (Fidelity Total Bond)||6.6%||3.4%||3.2%||5.6%||1.22||5.4%|
|DODIX (Dodge & Cox Income)||6.6%||3.1%||3.4%||5.0%||1.46||5.1%|
|MWTRX (Metropolitan West Total Return Bond M)||1.2%||2.3%||3.6%||5.6%||1.31||6.3%|
|PTTRX (PIMCO Total Return Instl)||3.8%||2.6%||3.0%||5.7%||1.26||5.4%|
|LSBRX (Loomis Sayles Bond Retail)||15.2%||2.1%||4.5%||5.6%||0.95||8.4%|
|VBMFX (Vanguard Total Bond Market Index Inv)||1.1%||2.5%||2.1%||4.2%||0.92||4.3%|
Detailed year by year comparison >>
The fund’s performance is comparable with other funds in our total return bond list. Like other funds, it did much better in the past 10 years, outperforming VBMFX by a big margin. Since its inception in 2002, it matched PTTRX and lagged behind LSBRX and MWTRX. Its performance is more compatible with DODIX.
The fund did poorly in 2008, losing over -5%, compared with the positive return of VBMFX in that year.
Fidelity total bond was introduced in 2002. Based on Fidelity, it had the following allocation as of 12/31/2016:
From the above, it has a much higher exposure in corporate bonds than Barclay Total Bond Index (43.8% vs. 27.7%). The following shows its holdings’ credit risk:
It has about 15% in high yield bonds and 5% in emerging market bonds. These investments have helped its recent performance.
The following is the synopsis of the fund’s investment philosophy:
- The fund carries an intermediate term duration which is in the sweet spot of bond investments. In general, its interest rate risk is similar to total bond market index such as VBMFX.
- The fund can invest in investment grade and high yield corporate bonds, emerging market bonds, Treasury bonds and mortgage-backed securities.
- However, it generally maintains around 80% in high quality bonds including investment grade corporate bonds, Treasuries and mortgage-backed bonds. The other 20% can be in riskier bonds such as high yield bonds and emerging market debts. This is similar to many total return bond funds in our candidate list. Specifically, we would say it’s more like DODIX (Dodge & Cox Income) and MWTRX (Metropolitan West Total Return Bond M). It takes less risk than LSBDX (Loomis Sayles Bond Instl).
- Morningstar attributed its recent relatively good performance to the oversized investments in emerging market bonds and high yield bonds. On the other hand, it was hit harder than other total return bond funds in 2008 because of its relative higher risk exposure at that time.
Fidelity traditionally has a good fixed income investment team. Their bond funds have been reasonable and we are not surprised that finally, one of their bond funds won the Morningstar’s award. The lead manager of the fund is Ford O’Neil who has been with Fidelity for the past 27 years. Furthermore, the fund has a deep bench investment team. We believe it’s good to include it in our candidate total return bond fund list.
In general, we view this bond fund as a good substitute/candidate for DODIX, MWTRX and WAPIX. Its addition certainly can help when it outperforms other similar funds.
Interestingly, we included this bond fund in our Fidelity Total Return Bond portfolio since last year. It’s naturally available as a no load no transaction fee fund (NTF) in Fidelity. It’s also available as NTF in TD Ameritrade. We have added the fund to the TD Ameritrade portfolio.
Unfortunately, other brokerages all charge transaction fee, making it limited to the two portfolios only.
We would like to remind our users that DODIX (Dodge & Cox Income) is practically excluded in all of our total return bond portfolios as it’s not available as a NTF fund in all the brokerages we support.
Last week, US stocks continued to advance though international stocks and commodities had started to retreat. The US stock market has been very overbought since the election in last November. From Factset, With the earnings report for Q4 2016 being near the end, S&P 500 companies (92% have reported earnings) exceeded the expectation: the blended earnings growth is 4.9%, better than the expected 3.1% on December 31, 2016. Regardlessly, stocks are very over valued. For example, the Buffet ratio of Total Stock Market Capitalization to GNP is over 136%, much higher than a normal 100% ratio. We have no idea when a correction will come and the best way is to stick to the well defined properly risk managed investment strategies and react accordingly when market and economic conditions change.
For more detailed asset trend scores, please refer to 360° Market Overview.
Now that the Trump administration is officially sworn in, the new president is facing the reality to deliver his many promises to make substantial changes. As the nation is posed to invest, the most important factor to watch is how productive the investments will be. Simply put, productive investments will result in better return on investment (ROI), tangibly or intangibly. They should also increase productivity that in turns will improve our standard of living. Capital misallocation can result in a higher growth but might not improve the real standard of living, which is the ultimate goal of economic activities. Whether the new president can truly achieve this goal is still yet to be seen. One thing is certain: we will see more market volatilities.
In terms of investments, U.S. stock valuation is at a historically high level. It is thus not a good time to take excessive risk. However, we remain optimistic on U.S. economy in the long term and believe much better investment opportunities will arise in the future.
We again would like to stress for any new investor and new money, the best way to step into this kind of markets is through dollar cost average (DCA), i.e. invest and/or follow a model portfolio in several phases (such as 2 or 3 months) instead of the whole sum at one shot.
- February 20, 2017: Long Term Stock Timing Based Portfolios And Their Roles
- February 13, 2017: Alternative Investment Portfolios Review
- February 6, 2017: Tax Free Municipal Bond Investments Review
- January 30, 2017: Brokerage Specific Conservative Portfolios
- January 23, 2017: Fixed Income Portfolio Review
- January 16, 2017: Long Term Trend Following Portfolio Review
- January 9, 2017: Tactical Asset Allocation Review
- January 3, 2017: Strategic Asset Allocation Review
- December 12, 2016: Enhanced Index Funds
- December 5, 2016: Review Of Broad Base Core Mutual Funds For Brokerages
- November 28, 2016: Core Index ETFs Review
- November 21, 2016: International Exposure Of U.S. Large Companies
- November 14, 2016: Asset Trends After The Election
- November 7, 2016: Rising Rate And Current Bond Trend
- October 31, 2016: Economy Power And Long Term Stock Returns
- October 24, 2016: Current Commodity Trend And Managed Futures
- October 17, 2016: Investment Mistakes And Good Or Bad Investment Strategies
- October 10, 2016: Momentum Investing Review
- October 3, 2016: Survey & Feedback
- September 26, 2016: Fixed Income Investing: Actively Managed Funds vs. Index Funds
- September 19, 2016: Stock Investing: Actively Managed Funds vs. Index Funds
- September 12, 2016: Newsletter Update
- September 5, 2016: Overvalued Markets And Long Term Timing Strategies
- August 29, 2016: Your 401K Finally Draws Attention
- August 22, 2016: Inflation Protected Securities TIPS For Current Overvalued Markets
- August 15, 2016: Risk On: Emerging Market Stocks And Small Cap Stocks
- August 8, 2016: Portfolio Construction Using Stock ETFs And Bond Mutual Funds
- August 1, 2016: Adding Value To Your Own Investments
- July 25, 2016: Tactical Asset Allocation Funds Review
- July 18, 2016: Strategic Asset Allocation & Lazy Portfolio Review
- July 11, 2016: Asset Trend Review
- June 27, 2016: Secular Cycles For Tactical And Strategic Investment Strategies
- June 20, 2016: A World of Debt
- June 13, 2016: Managed Futures For Portfolio Building
- June 6, 2016: Newsletter Summary
- May 30, 2016: Swensen Portfolio And Permanent Portfolios
- May 23, 2016: AAII Article And Some Web Changes
- May 16, 2016: The PIMCO (Dis)Advantages
- May 9, 2016: Boost Your Dull Summer Investments
- May 2, 2016: Low Cost Index Fund Investing
- April 25, 2016: Tax Free Municipal Bond Funds & Portfolios
- April 18, 2016: Asset Class Trend Review
- April 11, 2016: Construction of Sound And Conservative Portfolios
- March 28, 2016: Total Return Bond ETFs Review
- March 21, 2016: Small And Large Company Stock Performance In Different Economic Expansion Cycles
- March 14, 2016: Are Tactical And Timing Strategies Losing Steam?
- March 7, 2016: Defined Maturity Bond Fund Analysis
- February 29, 2016: Smart Strategic Asset Allocation Rebalance When Market Trend Changes
- February 22, 2016: Be Cash Smart
- February 15, 2016: Bond ETF Portfolios
- February 8, 2016: Newsletter Collection Update
- February 1, 2016: Total Return Bond Fund Portfolios In A Volatile Period
- January 25, 2016: Alternative Portfolios Review
- January 18, 2016: Strategic Asset Allocation: A Cautious Outlook
- January 11, 2016: Review Of Trend Following Tactical Asset Allocation
- January 4, 2016: What Worked And Didn’t In 2015
- December 21, 2015: Distressed Assets
- December 14, 2015: High Yield Bonds And Their Correlation With Stocks
- December 7, 2015: Diversification And Global Allocation
- November 30, 2015: Investors and Speculators Combined
- November 23, 2015: Active Stock Fund Performance Consistency
- November 16, 2015: Permanent, Risk Parity And Alternative Portfolios Review
- November 9, 2015: Broad Base Core Mutual Fund Review
- November 2, 2015: Broad Base Index Core ETFs Review
- October 26, 2015: Total Return Bond Fund Review
- October 19, 2015: Advanced Portfolio Review
- October 12, 2015: What About Commodities?
- October 5, 2015: Core Satellite Portfolios In A 401k Account
- September 28, 2015: Risk Managed Strategic Asset Allocation Portfolios Revisited
- September 21, 2015: Quest For The Best Investment Strategy
- September 14, 2015: Core Satellite Portfolios In Market Turmoil
- September 7, 2015: Market Rout Creates An Opportunity to Reposition Your Portfolios
- August 31, 2015: Review of Asset Allocation Funds and Portfolios
- August 24, 2015: Market Rout And Your Portfolios
- August 17, 2015: ETF or Mutual Fund Based Portfolios
- August 10, 2015: Updated Newsletter Collection
- August 3, 2015: Slippery Asset Trends
- July 27, 2015: Performance Dispersion Among Momentum Based Portfolios
- July 20, 2015: Global Balanced Portfolio Benchmarks
- July 13, 2015: Pain in Tactical Portfolios
- July 6, 2015: Fixed Income Total Return Bond Funds In Strategic Asset Allocation Portfolios
- June 29, 2015: Core ETF Commission Free Portfolios
- June 22, 2015: Secular Asset Trends
- June 15, 2015: Giving Up Bonds?
- June 1, 2015: Summer Blues?
- May 26, 2015: Cash, Bonds and Stocks In A Rising Rate Environment
- May 18, 2015: Portfolio Update
- May 11, 2015: Pain in Fixed Income?
- May 4, 2015: The Balanced Stock and Long Term Treasury Bond Portfolios
- April 27, 2015: Long Term Treasury Bond Behavior
- April 20, 2015: 529 College Savings Plan Rebalance Policy Change
- April 13, 2015: Total Return Bond Funds As Smart Cash
- April 6, 2015: The Low Return Environment
- March 30, 2015: Brokerage Specific Core Mutual Fund Portfolios 2
- March 23, 2015: Investment Arithmetic for Long Term Investments
- March 16, 2015: Brokerage Specific Core Mutual Fund Portfolios
- March 9, 2015: Newsletter Collection Update
- March 2, 2015: Total Return Bond ETFs
- February 23, 2015: Why Is Global Tactical Asset Allocation Not Popular?
- February 16, 2015: Where Are Permanent Portfolios Going?
- February 9, 2015: How Have Asset Allocation Funds Done?
- February 2, 2015: Risk Management Everywhere
- January 26, 2015: Composite Portfolios Review
- January 19, 2015: Fixed Income Investing Review
- January 12, 2015: How Does Trend Following Tactical Asset Allocation Strategy Deliver Returns
- January 5, 2015: When Forecast Fails
- December 22, 2014: Long Term Asset Returns: How Long Is Long?
- December 15, 2014: Beaten Down Assets
- December 8, 2014: Implementing Core Asset Portfolios In a Brokerage
- December 1, 2014: Two Key Issues of Investment Strategies
- November 24, 2014: Holiday Readings
- November 17, 2014: Retirement Spending Portfolios Update
- November 10, 2014: Fixed Income Or Cash
- November 3, 2014: Asset Trend Review
- October 27, 2014: Investment Loss, Mistakes And Market Cycles
- October 20, 2014: Strategic Portfolios With Managed Volatility
- October 13, 2014: Embrace Volatility
- October 6, 2014: Tips For 401k Open Enrollment
- September 29, 2014: What Can We Learn From Bill Gross’ Departure From PIMCO?
- September 22, 2014: Why Total Return Bond Funds?
- September 15, 2014: Equity And Total Return Bond Fund Composite Portfolios
- September 8, 2014: Momentum Based Portfolios Review
- September 1, 2014: Risk & Diversification: Mint.com Interview
- August 25, 2014: Remember Risk
- August 18, 2014: Consistency, The Most Important Edge In Investing: Tactical Case
- August 11, 2014: What To Do In Overvalued Stock Markets
- August 4, 2014: Is This The Peak Or Correction?
- July 28, 2014: Stock Musings
- July 21, 2014: Permanent Portfolios & Four Pillar Foundation Based Framework
- July 14, 2014: Composite Portfolios Review
- July 7, 2014: Portfolio Behavior During Market Corrections
- June 30, 2014: Half Year Brokerage ETF and Mutual Fund Portfolios Review
- June 23, 2014: Newsletter Collection Update
- June 16, 2014: There Are Always Lottery Winners
- June 9, 2014: The Arithmetic of Investment Mistakes
- June 2, 2014: Tips On Portfolio Rebalance
- May 26, 2014: In Praise Of Low Cost Core Asset Class Based Portfolios
- May 19, 2014: Consistency, The Most Important Edge In Investing: Strategic Case
- May 12, 2014: How To Handle An Elevated Overvalued Market
- May 5, 2014: Asset Allocation Funds Review
- April 28, 2014: Now The Economy Backs To The ‘Old Normal’, Should Our Investments Too?
- April 21, 2014: Total Return Bond Investing In The Current Market Environment
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