Fidelity intermediate treasury index vs. Fidelity U.S. bond index

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mesaverde
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Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by mesaverde »

I'm fortunate to have two excellent intermediate term bond funds in my 457b and 403b accounts with my employer. I'm currently maxing both plans out and am approx. 6-8 years from retirement, so will be allocating more contributions towards bonds in the coming years.

The two intermediate term bond index funds in both accounts are:
-Fidelity Intermediate Treasury Bond Index fund (FUAMX). ER .03%, current yield .50%, average maturity 6.8 years, average duration 6.5 years.
(tracks the Bloomberg Barclays 5-10 Year U.S. Treasury Bond Index).
-Fidelity U.S. Bond Index Fund (FXNAX). ER .025%, current yield 1.63%, average maturity 7.6 years, average duration 5.51 years.
(tracks Bloomberg Barclays U.S. Aggregate Bond Index).

I know there isn't a huge difference between these two funds, but going forward, is there a preference to which I should allocate new contributions towards? I don't particularly like the slightly added risk of the corporates in the U.S. Bond Index fund, but perhaps that isn't such a big deal.
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Stinky
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by Stinky »

mesaverde wrote: Sun May 03, 2020 10:19 am I'm fortunate to have two excellent intermediate term bond funds in my 457b and 403b accounts with my employer. I'm currently maxing both plans out and am approx. 6-8 years from retirement, so will be allocating more contributions towards bonds in the coming years.

The two intermediate term bond index funds in both accounts are:
-Fidelity Intermediate Treasury Bond Index fund (FUAMX). ER .03%, current yield .50%, average maturity 6.8 years, average duration 6.5 years.
(tracks the Bloomberg Barclays 5-10 Year U.S. Treasury Bond Index).
-Fidelity U.S. Bond Index Fund (FXNAX). ER .025%, current yield 1.63%, average maturity 7.6 years, average duration 5.51 years.
(tracks Bloomberg Barclays U.S. Aggregate Bond Index).

I know there isn't a huge difference between these two funds, but going forward, is there a preference to which I should allocate new contributions towards? I don't particularly like the slightly added risk of the corporates in the U.S. Bond Index fund, but perhaps that isn't such a big deal.
It's a matter of personal preference.

I think that you laid the facts out well - duration a little shorter on the US Bond Index Fund, and yield 1.13% higher.

If it were me, I would take the higher yield. I would take the corporate credit risk exposure for over 1% more yield. But that's just me. Others may differ.
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ruralavalon
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by ruralavalon »

You are fortunate to have two good choices for bond funds in the 401ks.

It's a matter of personal choice, my choice would be for the slightly higher return of the total bond market bond index fund. I don't mind the higher risk of corporate bonds.
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Ferdinand2014
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by Ferdinand2014 »

I would never consider corporate bonds. I only invest in 100% pure Treasurys. I sleep well at night.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
dcabler
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by dcabler »

Ferdinand2014 wrote: Sun May 03, 2020 12:19 pm I would never consider corporate bonds. I only invest in 100% pure Treasurys. I sleep well at night.
+1. And it's FUAMX for me as well
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Leif
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by Leif »

A bit higher yield vs. a bit better counterweight to the equity market.
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anon_investor
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by anon_investor »

Ferdinand2014 wrote: Sun May 03, 2020 12:19 pm I would never consider corporate bonds. I only invest in 100% pure Treasurys. I sleep well at night.
Do you have a larger equity allocation than you otherwise would total bond? I have moved to all treasuries and have a higher equity AA than I did with total bond.
Ferdinand2014
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by Ferdinand2014 »

anon_investor wrote: Sun May 03, 2020 12:41 pm
Ferdinand2014 wrote: Sun May 03, 2020 12:19 pm I would never consider corporate bonds. I only invest in 100% pure Treasurys. I sleep well at night.
Do you have a larger equity allocation than you otherwise would total bond? I have moved to all treasuries and have a higher equity AA than I did with total bond.
I don’t have an AA. I have about 3 years of expenses in short term treasurys and everything else is in the S&P 500. It really makes no difference to me if that 3 years represents 5% or 50% of my portfolio. In general though, I would say I feel much more comfortable pushing my equities upwards and lowering my expense number knowing it’s all Treasurys. Barbell approach AKA Buffett if you will. Short Treasurys on one end, equities on the other. I view my money horizon as a series of needs over 1-3 years that keeps repeating itself of highly predictable cash needs and everything else as a distant ever fuzzy horizon which represents my equities.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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anon_investor
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by anon_investor »

Ferdinand2014 wrote: Sun May 03, 2020 2:27 pm
anon_investor wrote: Sun May 03, 2020 12:41 pm
Ferdinand2014 wrote: Sun May 03, 2020 12:19 pm I would never consider corporate bonds. I only invest in 100% pure Treasurys. I sleep well at night.
Do you have a larger equity allocation than you otherwise would total bond? I have moved to all treasuries and have a higher equity AA than I did with total bond.
I don’t have an AA. I have about 3 years of expenses in short term treasurys and everything else is in the S&P 500. It really makes no difference to me if that 3 years represents 5% or 50% of my portfolio. In general though, I would say I feel much more comfortable pushing my equities upwards and lowering my expense number knowing it’s all Treasurys. Barbell approach AKA Buffett if you will. Short Treasurys on one end, equities on the other. I view my money horizon as a series of needs over 1-3 years that keeps repeating itself of highly predictable cash needs and everything else as a distant ever fuzzy horizon which represents my equities.
That is a pretty good strategy for larger portfolios. My portfolio would be way too conservative if I had 3 years expenses in short term treasuries. What made you decide on 3 years expenses as oppose to another number?
Ferdinand2014
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by Ferdinand2014 »

anon_investor wrote: Sun May 03, 2020 2:50 pm
Ferdinand2014 wrote: Sun May 03, 2020 2:27 pm
anon_investor wrote: Sun May 03, 2020 12:41 pm
Ferdinand2014 wrote: Sun May 03, 2020 12:19 pm I would never consider corporate bonds. I only invest in 100% pure Treasurys. I sleep well at night.
Do you have a larger equity allocation than you otherwise would total bond? I have moved to all treasuries and have a higher equity AA than I did with total bond.
I don’t have an AA. I have about 3 years of expenses in short term treasurys and everything else is in the S&P 500. It really makes no difference to me if that 3 years represents 5% or 50% of my portfolio. In general though, I would say I feel much more comfortable pushing my equities upwards and lowering my expense number knowing it’s all Treasurys. Barbell approach AKA Buffett if you will. Short Treasurys on one end, equities on the other. I view my money horizon as a series of needs over 1-3 years that keeps repeating itself of highly predictable cash needs and everything else as a distant ever fuzzy horizon which represents my equities.
That is a pretty good strategy for larger portfolios. My portfolio would be way too conservative if I had 3 years expenses in short term treasuries. What made you decide on 3 years expenses as oppose to another number?
No exact science. Self employed. Keeps me solvent through most scenarios in my situation. Sleep well at night.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
retiredjg
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by retiredjg »

I'd use the US Bond Index or a combination of the two. The US Bond index, in addition to a higher yield, has a shorter duration. When interest rates go up, it will lose less in value. However, the difference is not all that great...just a little.

Either is a good choice.
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anon_investor
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by anon_investor »

Ferdinand2014 wrote: Sun May 03, 2020 3:47 pm
anon_investor wrote: Sun May 03, 2020 2:50 pm
Ferdinand2014 wrote: Sun May 03, 2020 2:27 pm
anon_investor wrote: Sun May 03, 2020 12:41 pm
Ferdinand2014 wrote: Sun May 03, 2020 12:19 pm I would never consider corporate bonds. I only invest in 100% pure Treasurys. I sleep well at night.
Do you have a larger equity allocation than you otherwise would total bond? I have moved to all treasuries and have a higher equity AA than I did with total bond.
I don’t have an AA. I have about 3 years of expenses in short term treasurys and everything else is in the S&P 500. It really makes no difference to me if that 3 years represents 5% or 50% of my portfolio. In general though, I would say I feel much more comfortable pushing my equities upwards and lowering my expense number knowing it’s all Treasurys. Barbell approach AKA Buffett if you will. Short Treasurys on one end, equities on the other. I view my money horizon as a series of needs over 1-3 years that keeps repeating itself of highly predictable cash needs and everything else as a distant ever fuzzy horizon which represents my equities.
That is a pretty good strategy for larger portfolios. My portfolio would be way too conservative if I had 3 years expenses in short term treasuries. What made you decide on 3 years expenses as oppose to another number?
No exact science. Self employed. Keeps me solvent through most scenarios in my situation. Sleep well at night.
It sounds like you never have to worry about rebalancing. Do you TLH? If so how do you stay in S&P500 without a wash sale.

Any consideration shifting your short term treasuries to HYS or CDs with current low treasury yields?

I was 100% equities with a static cash emergency fund for many years, but I always counted my emergency fund as part of my fixed income. I only started adding bonds in the last couple of years, but my total fixed income allocation is still nowhere near 3 years expenses. Then again I am likely still 20 to 30 years from retirement.
Ferdinand2014
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by Ferdinand2014 »

anon_investor wrote: Sun May 03, 2020 4:01 pm
Ferdinand2014 wrote: Sun May 03, 2020 3:47 pm
anon_investor wrote: Sun May 03, 2020 2:50 pm
Ferdinand2014 wrote: Sun May 03, 2020 2:27 pm
anon_investor wrote: Sun May 03, 2020 12:41 pm

Do you have a larger equity allocation than you otherwise would total bond? I have moved to all treasuries and have a higher equity AA than I did with total bond.
I don’t have an AA. I have about 3 years of expenses in short term treasurys and everything else is in the S&P 500. It really makes no difference to me if that 3 years represents 5% or 50% of my portfolio. In general though, I would say I feel much more comfortable pushing my equities upwards and lowering my expense number knowing it’s all Treasurys. Barbell approach AKA Buffett if you will. Short Treasurys on one end, equities on the other. I view my money horizon as a series of needs over 1-3 years that keeps repeating itself of highly predictable cash needs and everything else as a distant ever fuzzy horizon which represents my equities.
That is a pretty good strategy for larger portfolios. My portfolio would be way too conservative if I had 3 years expenses in short term treasuries. What made you decide on 3 years expenses as oppose to another number?
No exact science. Self employed. Keeps me solvent through most scenarios in my situation. Sleep well at night.
It sounds like you never have to worry about rebalancing. Do you TLH? If so how do you stay in S&P500 without a wash sale.

Any consideration shifting your short term treasuries to HYS or CDs with current low treasury yields?

I was 100% equities with a static cash emergency fund for many years, but I always counted my emergency fund as part of my fixed income. I only started adding bonds in the last couple of years, but my total fixed income allocation is still nowhere near 3 years expenses. Then again I am likely still 20 to 30 years from retirement.
I do not rebalance. My cash sits in treasury bills and every week I add to my S&P 500 in taxable, SEP and DW 403b. I had some international that I TLH some time ago. No TLH since. 10 years ago I had maybe 3 months in cash and the rest in equities. As my expenses decreased and my savings rate increased, the 3 years of expenses came about over the last 5 years. I no longer add to it. No thoughts of HYS or CD’s. Not worth the effort. I value simplicity and very low maintenance. I am 10-15 years for retirement.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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anon_investor
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by anon_investor »

Ferdinand2014 wrote: Sun May 03, 2020 5:37 pm
anon_investor wrote: Sun May 03, 2020 4:01 pm
Ferdinand2014 wrote: Sun May 03, 2020 3:47 pm
anon_investor wrote: Sun May 03, 2020 2:50 pm
Ferdinand2014 wrote: Sun May 03, 2020 2:27 pm

I don’t have an AA. I have about 3 years of expenses in short term treasurys and everything else is in the S&P 500. It really makes no difference to me if that 3 years represents 5% or 50% of my portfolio. In general though, I would say I feel much more comfortable pushing my equities upwards and lowering my expense number knowing it’s all Treasurys. Barbell approach AKA Buffett if you will. Short Treasurys on one end, equities on the other. I view my money horizon as a series of needs over 1-3 years that keeps repeating itself of highly predictable cash needs and everything else as a distant ever fuzzy horizon which represents my equities.
That is a pretty good strategy for larger portfolios. My portfolio would be way too conservative if I had 3 years expenses in short term treasuries. What made you decide on 3 years expenses as oppose to another number?
No exact science. Self employed. Keeps me solvent through most scenarios in my situation. Sleep well at night.
It sounds like you never have to worry about rebalancing. Do you TLH? If so how do you stay in S&P500 without a wash sale.

Any consideration shifting your short term treasuries to HYS or CDs with current low treasury yields?

I was 100% equities with a static cash emergency fund for many years, but I always counted my emergency fund as part of my fixed income. I only started adding bonds in the last couple of years, but my total fixed income allocation is still nowhere near 3 years expenses. Then again I am likely still 20 to 30 years from retirement.
I do not rebalance. My cash sits in treasury bills and every week I add to my S&P 500 in taxable, SEP and DW 403b. I had some international that I TLH some time ago. No TLH since. No thoughts of HYS or CD’s. Not worth the effort. I value simplicity and very low maintenance. I am 10-15 years for retirement.
That simplicity is awesome. I am jealous.
Ferdinand2014
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by Ferdinand2014 »

anon_investor wrote: Sun May 03, 2020 5:43 pm
Ferdinand2014 wrote: Sun May 03, 2020 5:37 pm
anon_investor wrote: Sun May 03, 2020 4:01 pm
Ferdinand2014 wrote: Sun May 03, 2020 3:47 pm
anon_investor wrote: Sun May 03, 2020 2:50 pm

That is a pretty good strategy for larger portfolios. My portfolio would be way too conservative if I had 3 years expenses in short term treasuries. What made you decide on 3 years expenses as oppose to another number?
No exact science. Self employed. Keeps me solvent through most scenarios in my situation. Sleep well at night.
It sounds like you never have to worry about rebalancing. Do you TLH? If so how do you stay in S&P500 without a wash sale.

Any consideration shifting your short term treasuries to HYS or CDs with current low treasury yields?

I was 100% equities with a static cash emergency fund for many years, but I always counted my emergency fund as part of my fixed income. I only started adding bonds in the last couple of years, but my total fixed income allocation is still nowhere near 3 years expenses. Then again I am likely still 20 to 30 years from retirement.
I do not rebalance. My cash sits in treasury bills and every week I add to my S&P 500 in taxable, SEP and DW 403b. I had some international that I TLH some time ago. No TLH since. No thoughts of HYS or CD’s. Not worth the effort. I value simplicity and very low maintenance. I am 10-15 years for retirement.
That simplicity is awesome. I am jealous.
25 years of investing mistakes has taught me that I need to keep my investing to the simplest decision free level possible or I will inevitably become my own worst enemy. As they say, money is like soap. The more you handle it, the smaller it gets.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
Dominic
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by Dominic »

I prefer Treasuries to total bond funds, because you avoid mortage-backed securities (which have call risk) and corporate bonds (which have relatively high correlation to equities). Treasuries generally benefit from a flight to quality when the stock market takes a tumble, and longer duration effectively levers that up.

That said, if you're near retirement, you probably have a large enough bond allocation that a nominal ~0.5% yield is going to drag your portfolio down. I'd say split the difference, and go 50/50 Treasuries and total bond.
dru808
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by dru808 »

What’s your aa? I’m on the treasury only bandwagon if it isn’t a large amount <30% of portfolio.
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Topic Author
mesaverde
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by mesaverde »

dru808 wrote: Sun May 03, 2020 8:16 pm What’s your aa? I’m on the treasury only bandwagon if it isn’t a large amount <30% of portfolio.
Currently the AA is 65% stock (mainly Total U.S. index & Total international index) and 35% bond (U.S. bond index).
Over the next few years I'll almost exclusively be making contributions towards bonds so that it's 40/60 stock/bond as I begin retirement.
Judging by the responses above I'm still tied between the U.S. bond index and intermediate treasury index.
It seems like treasuries complement stocks more than the U.S. bond fund. That is quite apparent in recessions.
"Learn from the past, live in the present, plan for the future"
dru808
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Re: Fidelity intermediate treasury index vs. Fidelity U.S. bond index

Post by dru808 »

mesaverde wrote: Mon May 04, 2020 7:12 pm
dru808 wrote: Sun May 03, 2020 8:16 pm What’s your aa? I’m on the treasury only bandwagon if it isn’t a large amount <30% of portfolio.
Currently the AA is 65% stock (mainly Total U.S. index & Total international index) and 35% bond (U.S. bond index).
Over the next few years I'll almost exclusively be making contributions towards bonds so that it's 40/60 stock/bond as I begin retirement.
Judging by the responses above I'm still tied between the U.S. bond index and intermediate treasury index.
It seems like treasuries complement stocks more than the U.S. bond fund. That is quite apparent in recessions.
I believe either way you go you’ll be fine, if I had 35-50% bonds I’d probably hold total bond or something equivalent that held more than just treasuries. When the time comes to up my bond holding I’ll add tips and corporates.
Sptm 60 | Vigi 20 | Blv 10 | Btc/Eth 10
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