Bond Fund Portfolio

Dec 8, 2009 11:20 pm

I am looking for 4 or 5 funds to use as a package for investors who do not want any equity exposure.  I have been using JPMorgan Core Plus Bond, Templeton Global, Franklin Insured Tax Free and Pimco Low Duration. Thoughts ? Other funds ? Thanks.

Dec 8, 2009 11:39 pm

Load or no load

Dec 9, 2009 12:11 am


Dec 9, 2009 12:18 am

Franklin’s got some great bond funds.  I like their US Government Securities fund, Global Bond (of course), and their Low Duration Bond.  Pioneer Strategic Income is a great one as well.

Most of the people I pitch bond funds to have $10-25k they’re looking to give me for a strategy like this, not a ton of money, so we keep it within 1 family usually Frank/Temp or Pioneer to keep it simple.  If they have more than that we’re usually working a fixed annuity into the equation or we’re going into a conservative wrap type strategy if they’ve got $50+

Dec 9, 2009 12:24 am

Yeah these aren’t huge tickets, usually in the 25k to 50k range. I would like to be able to cover as many bond areas as possible with as few funds as possible.

Dec 9, 2009 12:28 am

What's anyone using for ETFs? I like a mix of BND, BSV, TIP and SHM (nq).

Dec 9, 2009 12:33 am

[quote=Ron 14]

I am looking for 4 or 5 funds to use as a package for investors who do not want any equity exposure.  I have been using JPMorgan Core Plus Bond, Templeton Global, Franklin Insured Tax Free and Pimco Low Duration. Thoughts ? Other funds ? Thanks.

[/quote]   I like Templeton Global.. Prefer Harbor Bond over low duration, because of expenses(but harbor is no load)... and Permanent portfolio, I know you said bond, but it fits...
Dec 9, 2009 12:43 am

PIMCO Low Duration is very good.  Try PIMCO Investment Grade Corporate Bond too.  I like MFS funds as well and their Municipal Income and Emerging Markets Debt are nice.  Get on the Emerging Markets bond bandwagon for the next 6-12 months, you’ll be nicely rewarded.  I mean your clients will be nicely rewarded.

Dec 9, 2009 2:10 am

I would use Franklin Total Return in that situation, for the whole ticket.
I tried and failed once to put together a diversified bond fund portfolio, using X percent of international, high yield, corporate, governnment, etc., but I couldn’t figure out what percentages to use  and most of them have overlap anway. If I COULD figure out the percentages, I would be a bond manager.
Templeton Global scares me – it’s been too good for too long.
I like the way Lord Abbett presents their bond funds. You could maybe mix Bond Debenture with Short Duration.

Pity we don’t have 3 year, 5 pct fixed annuties these days.

Dec 9, 2009 2:51 am

What do you guys think are the main segments to cover ?

Gov / International / Corporate / Muni / High Yield / TIPS / Short Duration. Are all of these needed?
Dec 9, 2009 2:51 am

Ahhhhhhhhhh, Delaware Diversified Income.  Great fund!  Putting a 350k ticket in on Thursday for that.

Dec 9, 2009 2:55 am

Wow. Awesome for you. Congrats. Is it an all encompassing bond fund ?

Dec 9, 2009 3:08 am

Not necessarily, but it does have a few different types of bonds.  The one I’m using is actually the Delaware Limited Term Diversified Income.  It uses corporate, govt., some international and emerging markets. 

Dec 9, 2009 7:16 am

Vanguard claims the risk/reward of international bonds is not worth owning them. 

Dec 9, 2009 7:19 am

Does anyone remember how badly the strategic bond funds sucked starting about one year ago? Sure, they came roaring back this year. I think I’ll take a pass on them going forward.
( Franklin, Fidelity, Oppenheimer, Columbia strategic, etc.). So much for active management for protecting from a meltdown.

Dec 9, 2009 11:46 am

Lord Abbett Short Duration for the ultra conservative

Pimco Total Return for most other people. I don’t do much more than that on the taxable side.

Dec 9, 2009 2:06 pm

Vanguard claims the risk/reward of international bonds is not worth owning them. 

  Probably right if they are referring to indexing them.  However, this is a place where you MUST you active management that knows the international landscape.
Dec 9, 2009 3:14 pm

try dryden short term corp.  pbsmx  nice yield good long term results.

Dec 9, 2009 3:25 pm

Vanguard claims the risk/reward of international bonds is not worth owning them. 

  That's because Vanguard doesn't think tactically.  Even buy/hold investing would see international bonds play a good role in a portfolio.  Check the last 10 years on MEDAX.  Only real down year since the '90's was last year, and they have already more than made last years losses back so far this year.  I don't understand how a company could claim something like that based off the research and data that is available to them.
Dec 9, 2009 3:50 pm

IMHO international bonds are a great way to add value to a portfolio.

Dec 9, 2009 6:13 pm

Yeah, I see your point. Moraen, what do you mean by value?

  I think Vanguard is looking at blended portfolio behavior and returns. For myself, I was very unhappy with the volatility of even fifty or sixty percent bond portfolios in the last year.   Granted, there was a meltdown, and nobody was buying anything. During the next meltdown, it would be nice to  have higher quality fixed income to help hold up the the bottom line number on the statement.   Vanguard is saying, for the extra yield, and especially the currency risks, international fixed is not worth it.   Not saying my way or the highway. For that matter, I was inspired to fire most active managers and just wrap the indexes ( at a higher fee for small accounts to boot).   How many of us here are trying to beat the indexes. Clients who want advice "get" indexes plus fees, and wealthier clients who want asset management (service) just want you.   I'm just making a small point, that the idea that international bonds add "value" is probably like the idea that active management adds value. ( In some cases it obviously does.)   If the markets are tougher and absolute returns are historically lower going forward, a lot of stories will be going by the wayside ( active management, 12b1, tactical, managed futures, hedge funds and all of the fancy products the wirehouses hope to manufacture to outperform the mean).   Anyway, the point is for the advisor to get paid and do the real work, and stay in business. It seems like the less fluff, the more focus there will be on b/d's to provide efficient admin fees on wraps, and that will be good for the clients, reps and th industry.   There's a reason international bond fund ETFs have been slow to ramp up. The next time a wholesaler calls you telling stories about international bonds and diversification, ask her to prove it.
Dec 12, 2009 6:56 pm

Templeton Global Bond
Pimco Total Return
JP Morgan High Yield
Pimco Real Return
-all in equal amount

-5% in 2008 / + 21% in 2009.

You can also add Thornburg Limited Term US Government as an alternative to a money market fund. 

Great management, well diversified holdings.  Your clients will not get hurt with these funds.

Recent performance of Templeton Global Bond is a reason for caution, but they have proven that they can manage FI in any market conditions and do a better job than most of their peers.

PIMCO has the ear of government and the Democratic Policy think tanks.  PIMCO has a hand in actually shaping the economic policies of the country and certainly knows how to profit from those same decisions, probably moreso than any other bond manager at this time.

JPM High Yield has had consistent MOR performance.  This sector is so volatile that it is very difficult to pick a leading manager year after year.  Better to go with consistency instead of chasing the abosolute best return here.

Thornburg Limited Duration US Govt is run as essentially a 10y Govt Bond ladder.  ALL US Govt debt, premium coupons and relative short duration.  Great current yield for what can be used as  a money market surrogate.  When I use this fund, I tell clients this is for money they will need in 12-18mos.

Good Luck

Dec 12, 2009 11:25 pm

That is exactly what I was looking for. Thank you sir.