Thoughts on bond component for Avantis or DFA three fund portfolio

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nedsaid
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

vineviz wrote: Wed Nov 30, 2022 8:44 pm
nedsaid wrote: Wed Nov 30, 2022 7:30 pm I tried my mightiest to defend the honor of the Vanguard Total Bond Market Index. I thought all hope was lost, and Taylor Larimore, just like the Calvary, comes riding over the hill to the rescue. Just like the movies. Taylor has saved the day, or at least this thread.
I love Taylor: he's right about about many things, but he's dead wrong about the utility and universal appropriateness of total bond market funds.

It's a bit like holding up Kraft Singles American Cheese Slices as the ultimate expression of cheese.
Another possible drawback of the Total Market Index funds are their exposure to Government Agency Bonds, most of which are Mortgage Backed Securities. I have owned Fidelity GNMA fund for many years, I cut way back on this fund due to concerns that Larry Swedroe and others had raised.

Fidelity and Vanguard had cut the duration of their funds down to something like three years and these funds had larger losses than one would expect with short durations, one reason being is extension risk. People will refinance their mortgages as rates fall but won't refinance as rates rise. A thirty year mortgage, has a duration of about 12 years because you are receiving principal back with each payment, whereas with a thirty year bond, you get the principal back all at once when the bond matures. Going from memory here from what Rick Ferri posted. So the average maturity of the mortgages within a GNMA fund would be more than its duration. I suppose the effective duration of a GNMA fund would probably be more like, lets say 5 rather than the stated 3. Something like that. So GNMA funds lost less than the Bond Index but more than what you would think with a duration of 3 years. When I last checked about a month ago, Fidelity GNMA was down 13% when US Bond Index was down 15%. Fidelity Short Term Bond Index was down about 7%. So Mortgage Backed Securities get hammered harder than Treasuries of the same duration when interest rates are going up.

I read somewhere that Americans move about every seven years, I don't know what the number is now. We know that because of this and because of refinancing, not many mortgages actually last 30 years. My guess is that the average mortgage lasts 8-10 years. During a time of stable or even declining interest rates, GNMAs do well, though during times of declining rates you don't get the full effect of bonds appreciating with falling interest rates because of the refinancing. US Treasury Debt is not called by the US Government as rates fall, yet another advantage for Treasuries. GNMAs, don't do well during times of rising rates, the Fed's rate hikes this time around have been relatively swift and sharp.

I just checked, effective duration for Fidelity GNMA fund is now 4.83 and 2.57 for Short Term Index Fund. Going from memory, I do recall duration for both Vanguard GNMA and Fidelity GNMA being more like three before this inflation hit. I suppose the managers are lengthening durations now because they figure the damage has been done. Point is, GNMA funds fell more than I would have expected as it looked to me that the managers suspected something like this was coming and shortened durations.

I did like GNMAs because you got a higher yield than Treasuries and the interest and principal were guaranteed by the US Government. The disadvantage you see in years like 2022 when rates rose dramatically.

So that is another piece of the puzzle.
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nedsaid
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

I dunno Vince, I suppose a lot of the discussion between us boils down to differences in approach. You are very familiar with the academic research and got to study under Gene Fama. The depth of your knowledge on these issues exceeds mine, I learned a lot from you and Larry Swedroe regarding the academic research, yours comes more directly from academia where Larry's seemed to come from people with academic credentials who worked directly or indirectly in the financial industry. Larry seemed to use sources from such things as credentialed people writing in industry journals. Your experience in the industry vastly exceeds mine.

But quite honestly, I have discussions with knowledgeable people here and compare what they say with my real life investment experience, I just don't see everything that you and others see. I get their point and I take prudent steps to reduce my risks but it seems that their warnings sometimes were overblown.

It is sort of like me admitting to being a snake handler if I admit to owning individual stocks. It is like OMG Ned, you don't know the risks you are taking, etc. etc. etc. I have ridiculed this as similar to the reefer madness warnings about marijuana. Not saying that drug use isn't risky but just saying that certain risks seem to be overstated. By the way, I am not a weed user but just making a point. Shoot, the Dow Industrial Average, an Index of just 30 stocks, has turned out to be a decent index, not the way I would construct one but has turned out to be not so horrible. The point is, you don't need 3,300 stocks to diversify away from single stock risk. It seems you can diversify a lot of it away with 20-25 stocks, even more with 50, and even more at 100. After a while, you get diminishing diversification benefit from adding more and more stocks.

I actually have told people to NOT invest in individual stocks but at the same time have told people how to do this in a way to minimize their risks. A portfolio of 25 stocks is riskier and more volatile than let's say the S&P 500. If you do some research, buy quality stocks at reasonable prices, diversify across industry sectors, and have reasonably long holding periods; you have a reasonable chance for success. Not saying you will beat the market but have acceptable results. What I will say is you have a more concentrated portfolio and some additional risk, it is a relatively inefficient way of investing money compared to just buying a well constructed index fund. Really, much of what I was doing was sampling the Large and Mid Cap Value universe. So I was taking risk but not like the reefer madness warnings that Bill Bernstein makes. It is sort of like that Nedsaid fellow telling people how to reduce their risk handling poisonous snakes! In practice, I have about matched the Vanguard Value Index.

Or in other discussions, it's like OMG Ned, don't you understand that GNMAs are like the most dangerous thing on the planet? I am exaggerating a bit to illustrate a point. But I got warnings from Swedroe and Valuethinker and others that seemed overdone. I listened and thought it prudent to reduce my position in my GNMA fund that I owned for many years. Now it is all the hysteria here over Bond Index funds and Core Bond funds. I mean like Bond Index Funds were like the very worse thing evah.

I want to call attention to what I call the Nisiprius effect. Larry Swedroe or whoever would make an assertion on the forum and Nisiprius will use real life funds that real investors could have invested in to test the assertion. He then puts together his amazing graphs and when I look at the results the actual data didn't seem to quite match the assertions. He would use both Morningstar and Portfolio Visualizer to create his graphs. It is sort of like, "Larry. Dude. Is that all there is to it?" When you looked at the graphs, all this effect Larry was talking about, whether diversification benefits or risk or whatever were barely discernable on a graph. Nisiprius did this over and over and to great effect.

On the other hand, I remember posting what Broker #4, someone I have worked with for over 25 years had to say about risks in the Bond market. He said that he thought that there was much more risk in the Bond Market than what most investors perceived and that Bonds could see a hit of as much as 20% if certain things happened. He discussed such things as Dodd-Frank, the decreasing role of banks as a market maker in the bond market, lack of liquidity in many parts of the bond market. I remember the ridicule that I got that my broker was scare mongering and that I was exaggerating. I stood by my comments, but he and I were wrong, the Bond Index was down only 18% and not 20%, I kidded him about that the other day.

All that being said, I do listen to what you and Larry and Valuethinker and other experts say. I have over time Indexed more and more of my portfolio to reduce such things as costs, individual security risk, sector risk and so forth. I have incorporated factor investing into my portfolio as I believe in diversification across factors. I have reformed my evil ways and have a more disciplined approach to rebalancing my portfolio. I have over time cut my commitment to individual stocks.

So I hear what you are saying, I respect your opinion, I take prudent steps to take into account what I have learned. But my gosh, I think the discussion over the risks has gotten a bit over the top. I mean, like dude, we are arguing over wiggles and squiggles on graphs. If my portfolio wiggles a bit more on the way up if I used Bond Index funds rather than Vineviz approved fixed income products, it seems like we are in violent disagreement over not much. Sound and fury, raging like a storm, in the end not signifying a whole heck of a lot.

Again, not here arguing for inefficient portfolios. We should all seek to learn more and improve ourselves as investors. But my gosh, I have done a lot of stuff that I probably shouldn't have done and things turned out okay. Would I have done better if I had known all of this stuff 40 years ago? Certainly. But I did what I could with what I knew at the time. So I appreciate your participation in the forum, I have learned a lot from folks like you and Larry, and I like to think I am a better investor because of it.

End of rant. Feel. better. now.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Wed Nov 30, 2022 3:01 pm There isn't much hope for me, I am doomed to Heck for certain now. I can add to my list of minor offenses putting the vast bulk of my fixed income investments into Intermediate Term and Investment Grade Bonds. I know economists can't grasp why I did this, what I was attempting to do was to get most of the yield that I would get from Long Term Bonds but with much less volatility. Silly me.
I think the authors of that paper would point out that if you did this during the relevant age range:

(1) You were taking on unnecessary long-term inflation risk (assuming you are not talking about IP bonds);
(2) You were taking on unnecessary long-term interest rate risk;
(3) Short-term "volatility" of NAV wasn't actually a meaningful risk for you.

I know you are suggesting these observations are so minor as to count as nitpicking, but I do think a lot of that attitude is motivated by the fact that it has happened to be a good period for personal investors who followed your strategy. Meaning if the long-term risks you have been taking had been realized in a more significant way during your investment period, I suspect trying to pass this off as a nothingburger would be less plausible.

And I guess that is just where this conversation always ends up. Do people find it convincing that a few decades of these risks not seriously materializing means they don't actually exist (not in any serious way, at least) going forward? And I gather quite a few people are convinced that is sound logic.

And my sincere hope is they never experience otherwise (at least not in a sustained way).

But I'd still advise anyone in a relevant position not to unnecessarily take those risks. Because I, at least, think they could materialize in a serious way.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Wed Nov 30, 2022 3:22 pm It is puzzling to me why the Core Bond Funds at DFA or Avantis would be such poor choices for investors. Presumably the managers are applying the same factors research to Bonds that has been applied to Stocks. This is the very academic research that Vineviz believes in.
Again, you can look at DFA's own Target Date funds, and see they don't use such funds.

I don't find it puzzling they market such funds anyway. Every company does that--Vanguard, for example, markets all sorts of funds it doesn't use in its Target funds, including many funds that are not typically recommended here. Presumably that is because no matter what they may believe is the best approach for personal investors, there is a market for those funds anyway.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Wed Nov 30, 2022 5:01 pm If I were offering advice to a complete novice who knew nothing about investing, I would likely recommend the Taylor Larimore 3 fund portfolio.
Assuming they had access to one in their relevant accounts, I'd recommend a Target Date fund.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Wed Nov 30, 2022 7:30 pmTaylor has saved the day, or at least this thread.
Unfortunately, Taylor's chart starts after the worst recent prolonged period for the relevant bonds (their worse period would have been starting in the mid-60s), and for that matter stops short of the worst recent not-(yet)-prolonged period (2022).

So that's a good example of the sort of argument I was mentioning--that if this particular period has worked out well for the relevant investors, the risks these academics are discussing must also be negligible going forward.

Now of course Taylor also includes the disclaimer:

"Past performance does not forecast future performance."

But it appears for some people, that disclaimer doesn't undermine the argument that if this strategy had reasonably good past performance over this specific period, then in fact we can safely treat those risks as negligible going forward.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

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First, I'd like to say that I am honored that my thread has attracted such vigorous and useful discussion among such knowledgeable contributors.

My contemplated Avantis or DFA portfolio would consist of 50% US stocks, 20% International stocks and 30% taxable bonds. My tax bracket is not high enough to warrant the use of tax-free bonds. I would prefer to use ETFs to keep the tax drag low and keep it relatively simple with no more than 2 or 3 bond ETFs. I would purchase a DFA Target Date fund, but Fidelity (where I'd like to keep my account) does not offer these.

Thanks again for all of your contributions!
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

NiceUnparticularMan wrote: Thu Dec 01, 2022 5:18 am
nedsaid wrote: Wed Nov 30, 2022 3:01 pm There isn't much hope for me, I am doomed to Heck for certain now. I can add to my list of minor offenses putting the vast bulk of my fixed income investments into Intermediate Term and Investment Grade Bonds. I know economists can't grasp why I did this, what I was attempting to do was to get most of the yield that I would get from Long Term Bonds but with much less volatility. Silly me.
I think the authors of that paper would point out that if you did this during the relevant age range:

(1) You were taking on unnecessary long-term inflation risk (assuming you are not talking about IP bonds);
(2) You were taking on unnecessary long-term interest rate risk;
(3) Short-term "volatility" of NAV wasn't actually a meaningful risk for you.

I know you are suggesting these observations are so minor as to count as nitpicking, but I do think a lot of that attitude is motivated by the fact that it has happened to be a good period for personal investors who followed your strategy. Meaning if the long-term risks you have been taking had been realized in a more significant way during your investment period, I suspect trying to pass this off as a nothingburger would be less plausible.

And I guess that is just where this conversation always ends up. Do people find it convincing that a few decades of these risks not seriously materializing means they don't actually exist (not in any serious way, at least) going forward? And I gather quite a few people are convinced that is sound logic.

And my sincere hope is they never experience otherwise (at least not in a sustained way).

But I'd still advise anyone in a relevant position not to unnecessarily take those risks. Because I, at least, think they could materialize in a serious way.
There is such a thing as volatility drag, there is a wonderful thread on the topic somewhere in the forum. The idea is pretty simple, smaller losses are easier to overcome than big losses. A 10% loss needs an 11.1% gain to break even, a 20% loss needs a 25% gain to break even, a 25% loss needs a 33.3% gain to break even, a 50% loss needs a 100% gain to break even. If you can keep returns about the same but reduce volatility, over long periods of time this can make a sizeable positive difference.

The effect of what Vince is recommending is that US Treasuries are an excellent diversifier to stocks most all of the time. So for example, during the 2008-2009 financial crisis, US Treasuries were up when most everything else was down. You repeat that over many bull markets over a lifetime and this seesaw effect of Treasuries being up while Stocks are down makes a difference.

Reducing the effect of volatility drag is easy to conceptualize but harder to successful implement in practice. I tried this with volatile but non-correlating asset classes, worked great during the 2000-2002 bear market and not so great during 2000-2008, the difference was that most everything but US Treasuries and certain US Government Agency Bonds crashed in 2008-2009. What used to non-correlate, correlated when things went really bad during 2000-2008. But if you can successfully reduce the volatility drag effect, it can have a big effect over time.

Vince and others would say that you are taking a certain amount of equity risk with Corporate Bonds and we saw this in
2008-2009. I assumed that TIPS would act about the same as nominal Treasuries during the financial crisis and they did not. Turns out that there was equity-like risk with TIPS as well.

So I get what Vince and others are saying. Four points. Bond Index funds and Core Bond funds are not the worst thing ever. They have their flaws but for the most part, 2022 as a big exception, did their job. Second, asset classes in a crisis don't always act as expected. 2008-2009 blew up a lot of beautifully designed portfolios as there were a lot of negative surprises. Third, ALL asset classes have their unique risks, it often takes a bear market to expose them. Not sure all of the unique risks of US Treasuries are fully known. Fourth, each bear market is different, the causes are different and the ways to hedge them are different each time.

I also get that 1982 through 2019 were a great period for Bonds. Disinflation and an almost 40 year trend of declining interest rates. This made a lot of Bond types look really good and masked some weaknesses.
Last edited by nedsaid on Thu Dec 01, 2022 10:46 am, edited 1 time in total.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

NiceUnparticularMan wrote: Thu Dec 01, 2022 5:23 am
nedsaid wrote: Wed Nov 30, 2022 3:22 pm It is puzzling to me why the Core Bond Funds at DFA or Avantis would be such poor choices for investors. Presumably the managers are applying the same factors research to Bonds that has been applied to Stocks. This is the very academic research that Vineviz believes in.
Again, you can look at DFA's own Target Date funds, and see they don't use such funds.

I don't find it puzzling they market such funds anyway. Every company does that--Vanguard, for example, markets all sorts of funds it doesn't use in its Target funds, including many funds that are not typically recommended here. Presumably that is because no matter what they may believe is the best approach for personal investors, there is a market for those funds anyway.
Good point about DFA Target Date funds. They make heavy use of TIPS, particularly as you get closer to retirement. The other Bond category are Global Bonds.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

NiceUnparticularMan wrote: Thu Dec 01, 2022 5:37 am
nedsaid wrote: Wed Nov 30, 2022 7:30 pmTaylor has saved the day, or at least this thread.
Unfortunately, Taylor's chart starts after the worst recent prolonged period for the relevant bonds (their worse period would have been starting in the mid-60s), and for that matter stops short of the worst recent not-(yet)-prolonged period (2022).

So that's a good example of the sort of argument I was mentioning--that if this particular period has worked out well for the relevant investors, the risks these academics are discussing must also be negligible going forward.

Now of course Taylor also includes the disclaimer:

"Past performance does not forecast future performance."

But it appears for some people, that disclaimer doesn't undermine the argument that if this strategy had reasonably good past performance over this specific period, then in fact we can safely treat those risks as negligible going forward.
Taylor went back as far as the Index funds existed. Total Bond Market Index didn't exist during the mid-1960's or the period right after World War II. But I get your point.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

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Bitzer wrote: Thu Dec 01, 2022 10:15 am First, I'd like to say that I am honored that my thread has attracted such vigorous and useful discussion among such knowledgeable contributors.

My contemplated Avantis or DFA portfolio would consist of 50% US stocks, 20% International stocks and 30% taxable bonds. My tax bracket is not high enough to warrant the use of tax-free bonds. I would prefer to use ETFs to keep the tax drag low and keep it relatively simple with no more than 2 or 3 bond ETFs. I would purchase a DFA Target Date fund, but Fidelity (where I'd like to keep my account) does not offer these.

Thanks again for all of your contributions!
Don't use a Target Date Fund for a taxable account as they are designed for tax deferred accounts, Target Date funds will rebalance the portfolio without regard to tax efficiency.

You could use an Intermediate Term US Treasury fund for your Bonds, if you wanted to follow Vineviz's recommendations. The interest on US Treasuries are exempt from State income taxes which is a good tax benefit, particularly for States with higher income tax rates.

So hopefully, you were able to wade through all of the comments.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

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Bitzer wrote: Thu Dec 01, 2022 10:15 am First, I'd like to say that I am honored that my thread has attracted such vigorous and useful discussion among such knowledgeable contributors.

My contemplated Avantis or DFA portfolio would consist of 50% US stocks, 20% International stocks and 30% taxable bonds. My tax bracket is not high enough to warrant the use of tax-free bonds. I would prefer to use ETFs to keep the tax drag low and keep it relatively simple with no more than 2 or 3 bond ETFs. I would purchase a DFA Target Date fund, but Fidelity (where I'd like to keep my account) does not offer these.
With a 70% equity allocation, my advice would be to put 20% in a long-term nominal Treasury fund (e.g. VGLT, SPTL, SCHQ) and the remaining 10% in a broad TIPS fund (e.g. SCHP or DFIP).

Just my $0.02.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

Bitzer wrote: Sat Nov 26, 2022 10:33 pm I am considering a three fund ETF portfolio of either Avantis or DFA funds. However, I am less "sold" on their bond offerings. Does anyone have any thoughts about the merits of either AVIG (Avantis Core Fixed Income ETF) or DFCF (DFA Core Fixed Income ETF)? Any thoughts on the merits of sticking with BND rather than experimenting with either AVIG or DFCF? Thanks!
This should answer your question. I went to Portfolio Visualizer and compared Vanguard Total Bond Market Index Investor shares with Vanguard Intermediate Term Treasury Fund Investor Shares. The data goes back from January 1992 through November 2022. Almost 30 years of data. Edit: I added the Vanguard Long Term Treasury fund Investor Shares.

. . . . . . . . . . . . . . . . . Total Bond Index. . . . .Intermediate Treasury. . . .Long Term Treasury
Initial Balance. . . . . . . .$10,000. . . . . . . . . . .$10,000. . . . . . . . . . . . .$10,000
Final Balance. . . . . . . . $38,961 , , , , , , , , , , ,$41,092. . . . . . . . . . . . .$56,246
CAGR. . . . . . . . . . . . . 4.50%. . . . . . . . . . . . 4.68%. . . . . . . . . . . . . . 5.75%
Standard Deviation. . . . .3.89%. . . . . . . . . . . . 4.75%. . . . . . . . . . . . . .10.54
Best Year. . . . . . . . . . . .18.18%. . . . . . . . . . .20.44%. . . . . . . . . . . . . .30.09%
Worst Year. . . . . . . . . . .(12.72%). . . . . . . . . .(9.73%). . . . . . . . . . . . . .(28.01%)
Maximum Drawdown. . . .(17.57%). . . . . . . . . . (14.24%). . . . . . . . . . . . .(40.02%)
Sharpe Ratio. . . . . . . . . 0.57 . . . . . . . . . . . . 0.51. . . . . . . . . . . . . . . .0.37
Sortino Ration. . . . . . . . 0.86 . . . . . . . . . . . . 0.81. . . . . . . . . . . . . . . .0.58
Market Correlation. . . . 0.09 . . . . . . . . . . . .(0.12). . . . . . . . . . . . . . .(0.14)

Note that Total Bond has fared worse in 2022 than Intermediate Treasury. As of 12/31/2021 Total Bond had Growth of $10,000 of $44,638 and Intermediate Treasuries was $45,523.

The two funds closely tracked each other through May 2002 and then Intermediate Treasury started to show an advantage. In July 2007 Intermediate Treasury started to pull away. The two funds almost converged again January 31, 2020 but after that Intermediate Treasury started showing its advantage again.

Intermediate Treasury was the clear winner. Total Bond Index was not far off but it is clear what the better investment is. Note that Intermediate Treasuries has a slightly negative correlation to the Stock Market which is exactly what you want.

Also, Intermediate Treasury would be the more tax efficient investment. 100% of the interest is not taxed in the States. Total Bond has Corporates and US Agency Bonds in it so only the interest that comes from US Treasuries is State tax exempt.

Edit: Just for fun, I added a comparison for Vanguard Long Term Treasury Investor shares. Vineviz was correct here as well, but I did not want this kind of volatility on the fixed income side of my portfolio. Hence, my choice to stick with Intermediate Term Investment Grade bonds. But you can see why he recommends them.
Sharpe Ratio is a measure of risk-adjusted performance of the portfolio, and it is calculated by dividing the mean monthly excess return of the portfolio over the risk-free rate by the standard deviation of excess return, and the displayed value is annualized.

Sortino Ratio is a measure of risk-adjusted return which is a modification of the Sharpe Ratio. While the latter is the ratio of average returns in excess of a risk-free rate divided by the standard deviation of those excess returns, the Sortino Ratio has the same denominator divided by the standard deviation of returns below the risk-free rate.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Thu Dec 01, 2022 10:26 am If you can keep returns about the same but reduce volatility, over long periods of time this can make a sizeable positive difference.
Then you haven't actually kept the assumed returns about the same.

The mathematical models you are talking about basically do that--implicitly assume higher returns for the less volatile asset mix, then "reveal" this assumption as they do the math involved.
The effect of what Vince is recommending is that US Treasuries are an excellent diversifier to stocks most all of the time. So for example, during the 2008-2009 financial crisis, US Treasuries were up when most everything else was down. You repeat that over many bull markets over a lifetime and this seesaw effect of Treasuries being up while Stocks are down makes a difference.
I would personally suggest that long-term nominal Treasuries are not a reliable diversifier for stocks.

And actually, depending on what you mean by "diversifier", there may not be a strong case for anything being a predictably useful diversifier when you already have a globally-diversified stock portfolio. DFA seems to think maybe short-term global bonds could count, and I can understand why they might think that. But I would see it as a weak case.

Personally, I think the case for starting to phase in long-term inflation-protected bonds a good length of time before expected retirement is not that they are reliable stock diversifiers, it is rather that they are an appropriate "risk-free" asset for such investors. Although not really fully risk-free, so call it more "minimized-risk". And there are reasons to believe some "de-risking" as retirement starts to approach can be helpful.

I note there is a liability matching version of this argument too. To me, it really mostly amounts to the same thing.
What used to non-correlate, correlated when things went really bad during 2000-2008.
Right, in the real world, correlations tend to vary a lot, and therefore you can easily encounter scenarios where the correlations you were hoping for don't materialize, or indeed reverse.
But if you can successfully reduce the volatility drag effect, it can have a big effect over time.
Again, this is mathematically equivalent to saying if you could predict the magic asset allocation formula that will beat the long-term returns on globally-diversified stocks over your investment period, that would be a good formula for you to use.

Which is true given that premise. But to my knowledge, there is really no such magic formula that will predictably have that effect. Many alchemists, here and elsewhere, have tried to identify one, through backtesting and such. But they don't appear to actually do any better out of sample than random luck would suggest. Which is what one would expect because their backtesting protocol is basically a form of what is also known as overfitting, and also because relevant financial markets, financial systems, legal systems, macroeconomies, and so on are constantly evolving. So, there is no consistent underlying mechanism that can be reliably investigated through a procedure like backtesting.

Oh well.
Bond Index funds and Core Bond funds are not the worst thing ever. They have their flaws but for the most part, 2022 as a big exception, did their job.
I'm just repeating myself, but this is basically just insisting that because there hasn't been a sustained bad scenario for nominal USD bonds in the last few decades, we can now safely disregard the risk that such a scenario will happen in the next few decades.

If that reasoning is compelling to you, I am sure nothing I can say will persuade you otherwise.

But to me, it is obviously an invalid way to reason.
Second, asset classes in a crisis don't always act as expected. . . . Fourth, each bear market is different, the causes are different and the ways to hedge them are different each time.
So the way I would put it is there are many, many different sorts of potential crises that can affect financial markets. In any given crisis, given the exact nature of the crisis, usually the behavior of the financial markets involved makes some sort of sense. But the problem is predicting in advance which sort of crises you are going to experience, and really no one can do that. In that sense, I very much agree with your fourth point, and think it really subsumes your second point.

And unfortunately, it tends not to be possible to hedge against all possible crises. Meaning if you try, you end up either cancelling out your hedges, and/or increasing some different kind of risk.

However, what we can still do is hedge against some of the worse possible crises, given the total context of our financial planning. We can't hedge against the worst possible crises, because those are "all bets are off" sorts of situations anyway. But we know some of the really bad but not total societal collapse scenarios that can happen, and we can specifically hedge against those.

Although for long-term retirement savers still deep in accumulation, a globally-diversified stock portfolio is already a really good start on such a strategy. Maybe a sufficient one, at least until retirement gets within a reasonably-moderate investment horizon.
Third, ALL asset classes have their unique risks, it often takes a bear market to expose them. Not sure all of the unique risks of US Treasuries are fully known.
Not sure what you have in mind with Treasuries--like, we know they have default risk, it is just assumed that risk is rather low--but I agree (as I did above) that there is no such thing as a truly risk-free asset. Moreover, risks are contextual, meaning the risks that logically matter most to you as a specific personal investor can be different from a different personal investor, and very much different from other types of investors like governments, corporations, universities, and so on.

Of course that is a large part of why Total Bond makes very little sense as a default investment. The bonds in question are not being bought just by personal investors like you. They are not in fact just being bought by personal investors collectively. They are being bought by all sorts of different entities, with their own idiosyncratic risk management strategies. And meanwhile, bond investors, including perhaps personal investors actually like you, are also buying fixed-income not included in Total Bond.

OK, so if you are buying bonds in an effort to manage the risks that you, as a specific personal investor, are logically most worried about, it makes no particular sense to assume Total Bond is the right choice for you. It could entirely exclude, in fact, the most helpful sorts of fixed income assets for a person in your particular situation.
I also get that 1982 through 2019 were a great period for Bonds. Disinflation and an almost 40 year trend of declining interest rates. This made a lot of Bond types look really good and masked some weaknesses.
I'd say the period in question starts before that once you add in the term of intermediate or longer bonds, but right, this was a generally favorable period for nominal USD bonds.

But still, they didn't actually do anything all that helpful for long-term investors deep in accumulation. Meaning you would have done better still just with stocks.

And then if you don't believe the next few decades must be equally favorable for nominal US bonds, if you instead think they face the same sorts of risks that materialized right before the beginning of that period, and have materialized in many other times and places . . . people relying on that observation about the recent past of nominal USD bonds will strike you as clearly violating the principle that you shouldn't assume recent good performance predicts future performance.

But others seem to think it makes perfect sense to rely on that observation for future planning purposes. So, there we are.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Thu Dec 01, 2022 10:31 am Taylor went back as far as the Index funds existed. Total Bond Market Index didn't exist during the mid-1960's or the period right after World War II. But I get your point.
And just to be clear, I wasn't suggesting Taylor was being deliberately misleading.

But it happens that we simply do not have that sort of data outside of what really is a very narrow window, one we know does not remotely contain "stress tests" for all sorts of scenarios personal investors should rationally be concerned about. Indeed, TIPS are an even more recent introduction, so trying to compare nominal USD bonds to TIPS through actual fund data requires restricting yourself to an even narrower window.

The pointy-headed academics might then do things like create synthetic (aka hypothetical) returns series, which might then show dire things happening outside those narrow windows.

But if you are the sort of person who credits backtests over very narrow windows (which those same academics will tell you are clearly unreliable), you might also be the sort of person who does not credit that sort of analysis.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Thu Dec 01, 2022 10:45 am Don't use a Target Date Fund for a taxable account as they are designed for tax deferred accounts, Target Date funds will rebalance the portfolio without regard to tax efficiency.
My two cents is any tax efficiencies you get from managing your own taxable asset mix could easily be outweighed by the behavioral risks you are taking.

That said, a simple alternative solution for taxable accounts is to look at what your Target fund would hold around the median point of your remaining investing horizon, buy that in taxable (possibly in tax-managed form, munis, and such if you really want), and then simply never rebalance.

Or just buy a single diversified stock fund in taxable, and never rebalance. That is typically quite tax efficient!

The idea of never rebalancing an account strikes some people as deeply heretical. However, in many scenarios, particularly if you are only not rebalancing with a portion of your savings (more on this below), it is not necessarily all that consequential in any predictable way.

Same with not conforming your taxable account to some overarching asset allocation plan. Some people think that is obviously heretical. But personally, I would suggest that if you have already been saving a long time, already filled up your tax-deferred space to the maximum, and still have accumulated a large taxable account too--by any reasonable standards, you have likely already "won the game".

Indeed, to me the most pressing question at that point is typically not how should you allocate those taxable funds, it is what do you actually want to use them to achieve?

A more luxurious retirement than most of your peers (peers in terms of career path)?

An earlier retirement than most of your peers?

Some of both?

Giving more to others more than most of your peers?

Some of all three?

Those to me are the BIG questions at that point. And your answers to those questions will logically inform what makes the most sense in terms of an asset allocation with those taxable funds.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

NiceUnparticularMan wrote: Thu Dec 01, 2022 12:58 pm
nedsaid wrote: Thu Dec 01, 2022 10:26 am If you can keep returns about the same but reduce volatility, over long periods of time this can make a sizeable positive difference.
Then you haven't actually kept the assumed returns about the same.

The mathematical models you are talking about basically do that--implicitly assume higher returns for the less volatile asset mix, then "reveal" this assumption as they do the math involved.

Nedsaid: The concept of reducing volatility drag sounds great but very hard to put into practice.
The effect of what Vince is recommending is that US Treasuries are an excellent diversifier to stocks most all of the time. So for example, during the 2008-2009 financial crisis, US Treasuries were up when most everything else was down. You repeat that over many bull markets over a lifetime and this seesaw effect of Treasuries being up while Stocks are down makes a difference.
I would personally suggest that long-term nominal Treasuries are not a reliable diversifier for stocks.

Nedsaid: Interesting, I thought about Long Term TIPS for this purpose but TIPS seem to have equity-like risk. We saw this in 2008-2009.

And actually, depending on what you mean by "diversifier", there may not be a strong case for anything being a predictably useful diversifier when you already have a globally-diversified stock portfolio. DFA seems to think maybe short-term global bonds could count, and I can understand why they might think that. But I would see it as a weak case.

Nedsaid: I did notice that the iShares International Aggregate Bond Index ETF had lost less than the US Bond Index so far in 2022. This fund IS currency hedged just like the Vanguard Total International Bond Index fund. So Vanguard might be right that there is a diversification benefit here. I agree the effect is probably weak but I own International Bonds anyways. Hard to ignore the largest asset class in the world.

Personally, I think the case for starting to phase in long-term inflation-protected bonds a good length of time before expected retirement is not that they are reliable stock diversifiers, it is rather that they are an appropriate "risk-free" asset for such investors. Although not really fully risk-free, so call it more "minimized-risk". And there are reasons to believe some "de-risking" as retirement starts to approach can be helpful.

I note there is a liability matching version of this argument too. To me, it really mostly amounts to the same thing.
What used to non-correlate, correlated when things went really bad during 2000-2008.
Right, in the real world, correlations tend to vary a lot, and therefore you can easily encounter scenarios where the correlations you were hoping for don't materialize, or indeed reverse.
But if you can successfully reduce the volatility drag effect, it can have a big effect over time.
Again, this is mathematically equivalent to saying if you could predict the magic asset allocation formula that will beat the long-term returns on globally-diversified stocks over your investment period, that would be a good formula for you to use.

Which is true given that premise. But to my knowledge, there is really no such magic formula that will predictably have that effect. Many alchemists, here and elsewhere, have tried to identify one, through backtesting and such. But they don't appear to actually do any better out of sample than random luck would suggest. Which is what one would expect because their backtesting protocol is basically a form of what is also known as overfitting, and also because relevant financial markets, financial systems, legal systems, macroeconomies, and so on are constantly evolving. So, there is no consistent underlying mechanism that can be reliably investigated through a procedure like backtesting.

Oh well.
Bond Index funds and Core Bond funds are not the worst thing ever. They have their flaws but for the most part, 2022 as a big exception, did their job.
I'm just repeating myself, but this is basically just insisting that because there hasn't been a sustained bad scenario for nominal USD bonds in the last few decades, we can now safely disregard the risk that such a scenario will happen in the next few decades.

If that reasoning is compelling to you, I am sure nothing I can say will persuade you otherwise.

Nedsaid: Not at all saying that there couldn't be a sustained bad scenario for bonds. We had a bear market in bonds from the end of World War II through 1981. Bill Bernstein said Bonds lost about half of their purchasing power during that time. I have heard a couple of stories that War Bonds purchased during WWII ultimately lost about 1/2 of their purchasing power but that is how we paid for the war. My father told me this story and James Stowers, founder of American Century Investments, mentioned this in his book. I have posted on these topics many times, guess you missed them.

What I was reacting to was overdone rhetoric in this thread regarding Bond Index Funds and Core Bond Funds. As I showed above, Intermediate Term Treasury Bonds were a better investment than Total Bond Market Index but not by a lot. One would have thought that Bond Index Funds and Core Bond Funds were a total disaster and they were not. A sustained bad scenario would be bad for ALL Bonds with the exception of TIPS.


But to me, it is obviously an invalid way to reason.
Second, asset classes in a crisis don't always act as expected. . . . Fourth, each bear market is different, the causes are different and the ways to hedge them are different each time.
So the way I would put it is there are many, many different sorts of potential crises that can affect financial markets. In any given crisis, given the exact nature of the crisis, usually the behavior of the financial markets involved makes some sort of sense. But the problem is predicting in advance which sort of crises you are going to experience, and really no one can do that. In that sense, I very much agree with your fourth point, and think it really subsumes your second point.

And unfortunately, it tends not to be possible to hedge against all possible crises. Meaning if you try, you end up either cancelling out your hedges, and/or increasing some different kind of risk.

Nedsaid: Hence my observation that it seems better to ride out the volatility rather than try to avoid it. I have tried to create an "all-weather" portfolio but much easier said than done.

However, what we can still do is hedge against some of the worse possible crises, given the total context of our financial planning. We can't hedge against the worst possible crises, because those are "all bets are off" sorts of situations anyway. But we know some of the really bad but not total societal collapse scenarios that can happen, and we can specifically hedge against those.

Although for long-term retirement savers still deep in accumulation, a globally-diversified stock portfolio is already a really good start on such a strategy. Maybe a sufficient one, at least until retirement gets within a reasonably-moderate investment horizon.
Third, ALL asset classes have their unique risks, it often takes a bear market to expose them. Not sure all of the unique risks of US Treasuries are fully known.
Not sure what you have in mind with Treasuries--like, we know they have default risk, it is just assumed that risk is rather low--but I agree (as I did above) that there is no such thing as a truly risk-free asset. Moreover, risks are contextual, meaning the risks that logically matter most to you as a specific personal investor can be different from a different personal investor, and very much different from other types of investors like governments, corporations, universities, and so on.

Nedsaid: Hard to say what might happen. Three things I could think of are temporary default, currency crisis, sustained higher rates of inflation. What I will say is that I never foresaw anything like the Covid-19 crisis. Just saying that the unknown unknowns are what get us.

Of course that is a large part of why Total Bond makes very little sense as a default investment. The bonds in question are not being bought just by personal investors like you. They are not in fact just being bought by personal investors collectively. They are being bought by all sorts of different entities, with their own idiosyncratic risk management strategies. And meanwhile, bond investors, including perhaps personal investors actually like you, are also buying fixed-income not included in Total Bond.

Nedsaid: I believe that Total Bond Index is a good default investment in its simplicity, low cost, and exposure to high quality bonds. There are, however better alternatives like Intermediate Term US Treasuries, for example. I went to Portfolio Visualizer and did a comparison back to 1992 and Intermediate Term US Treasuries was the clear winner but not by a whole lot. 2022 was a particularly bad year for Total Bond Index.

There is just no way that I would do a 100% Stock portfolio or even a portfolio consisting of just Stocks and Long Term Treasuries. That is a lot of volatility for a fixed income investment and as we know Stocks are volatile enough. This is why I used Intermediate Bonds to cushion Stock volatility. The standard advice was to use Intermediate Term Investment Grade Bonds to capture most of the yield of Long Term Treasuries but with a lot less volatility.

I would, however, consider a slice of my Bonds being in Long Term Treasuries. Vineviz thread on this topic was quite informative. But all my Bonds in Long Term Treasuries? No, I am not doing that.


OK, so if you are buying bonds in an effort to manage the risks that you, as a specific personal investor, are logically most worried about, it makes no particular sense to assume Total Bond is the right choice for you. It could entirely exclude, in fact, the most helpful sorts of fixed income assets for a person in your particular situation.
I also get that 1982 through 2019 were a great period for Bonds. Disinflation and an almost 40 year trend of declining interest rates. This made a lot of Bond types look really good and masked some weaknesses.
I'd say the period in question starts before that once you add in the term of intermediate or longer bonds, but right, this was a generally favorable period for nominal USD bonds.

But still, they didn't actually do anything all that helpful for long-term investors deep in accumulation. Meaning you would have done better still just with stocks.

Nedsaid: I remember seeing an article in 2012 or so that said Bonds, particularly Long Treasuries had been outperforming Stocks and that there was no reason for investors to have been in Stocks at all. Of course, the timing of the article was just perfect as Bonds had been in a bull market for 30 years and Stocks were still a bit underwater from the 2000-2002 bear market. It took Stocks until about mid-2013 to get back to all time highs.

There is also the thing of stock volatility. Most investors cannot stomach the volatility of 100% stock portfolios.


And then if you don't believe the next few decades must be equally favorable for nominal US bonds, if you instead think they face the same sorts of risks that materialized right before the beginning of that period, and have materialized in many other times and places . . . people relying on that observation about the recent past of nominal USD bonds will strike you as clearly violating the principle that you shouldn't assume recent good performance predicts future performance.

But others seem to think it makes perfect sense to rely on that observation for future planning purposes. So, there we are.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by Taylor Larimore »

Bogleheads:

This topic has received several posts criticizing Total Bond Market Index Fund in The Three-Fund Portfolio.

It is helpful to know that Morningstar believes Total Bond Market ETF is "among the best." Read link below:

https://www.morningstar.com/articles/11 ... g-the-best

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holding in a Standard & Poor's 500 Index fund (or a total stock market index fund) and holding their bonds in a total bond market index fund."
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

Taylor, I never thought I would be the guy mounting a spirited defense of Total Bond Market Index.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Thu Dec 01, 2022 1:22 pm Nedsaid: Interesting, I thought about Long Term TIPS for this purpose but TIPS seem to have equity-like risk. We saw this in 2008-2009.
Yeah, again I personally don't really have a strong recommendation for a "stock diversifier", and particularly would not single out LT TIPS for this purpose.

Again, DFA seems to like short-term global bonds, but obviously that is quite different. Although I have never been tempted myself, I wouldn't argue against someone who thought a small allocation to global bonds made sense for a US investor deep in accumulation.
Nedsaid: Not at all saying that there couldn't be a sustained bad scenario for bonds. We had a bear market in bonds from the end of World War II through 1981. Bill Bernstein said Bonds lost about half of their purchasing power during that time. I have heard a couple of stories that War Bonds purchased during WWII ultimately lost about 1/2 of their purchasing power but that is how we paid for the war. My father told me this story and James Stowers, founder of American Century Investments, mentioned this in his book. I have posted on these topics many times, guess you missed them.

What I was reacting to was overdone rhetoric in this thread regarding Bond Index Funds and Core Bond Funds. As I showed above, Intermediate Term Treasury Bonds were a better investment than Total Bond Market Index but not by a lot.
I honestly see that as an internal contradiction.

You know there is a period that was really bad for nominal USD bonds. You know that period is outside your comparison period. And for that matter, your comparison didn't include anything BUT nominal USD bonds.

So why would you think your comparison actually "showed" anything meaningful? Like if you had showed LT TIPS investors wouldn't have done any better than Total Bond investors during any significant part of that prior long period, OK, that would be interesting. But you didn't do that, and so your "showing" doesn't seem to me to be actually more than an endorsement of recency bias.
One would have thought that Bond Index Funds and Core Bond Funds were a total disaster and they were not. A sustained bad scenario would be bad for ALL Bonds with the exception of TIPS.
Other than that, Mrs. Lincoln, how was the play?

Anyway, I think this actually depends on the scenario, because there are scenarios that could be bad for USD bonds but not for non-USD bonds.

So, there could be scenarios which would be very bad for nominal USD bond funds like the ones you mentioned, and not for TIPS and/or non-USD bonds.

And as it happens, as a US investor, those are the types of scenarios that most concern me.
I have tried to create an "all-weather" portfolio but much easier said than done.
My two cents is that is so hard because it is inherently contradictory.

Like, can you really set up a portfolio that would predictably do relatively well in a disinflationary stock crisis, and also an inflationary stock crisis, and also in a persistent low-returns/high-inflation scenario?

My considered answer is no. Maybe two out of three, and even that is a challenge. All three? No, as far as I know that is not possible.
Nedsaid: I believe that Total Bond Index is a good default investment in its simplicity, low cost, and exposure to high quality bonds.
I saw some nice-looking baby clothes on sale in Target the other day. Strangely, I did not buy any. Why not? I don't have a baby. And I can't show up on a work Zoom wearing baby clothes and expect that to turn out well.

If the type of bonds in Total Bond are not a good choice for a particular personal investor, then the fact they bought a high-quality version of those bonds at a low cost does not change the fact that they bought the wrong type of bonds.
There is just no way that I would do a 100% Stock portfolio or even a portfolio consisting of just Stocks and Long Term Treasuries. That is a lot of volatility for a fixed income investment and as we know Stocks are volatile enough. This is why I used Intermediate Bonds to cushion Stock volatility. The standard advice was to use Intermediate Term Investment Grade Bonds to capture most of the yield of Long Term Treasuries but with a lot less volatility. . . . There is also the thing of stock volatility. Most investors cannot stomach the volatility of 100% stock portfolios.
I mean, the "standard advice" you are referring to was always to me ill-considered advice.

The rationales were typically some mix of backtesting and anticipatory psychological self-assessment, both of which are well-known to be utterly unreliable.

Indeed, it all seemed to me like an attempt to actually justify what is typically known in the literature as "myopic loss aversion". And the idea you can justify MLA to yourself, and then get around it by tweaking your asset allocation, is not plausible given how human psychology actually works. And indeed you can see it failing here every time there is a big negative market event. Do people without 100% stock portfolios all stay the course calmly? No, many of them freak out anyway, start making changes, and so on.

The better answer for people who couldn't sleep at night if they saw their retirement savings portfolios experience a NAV drop was always to stop looking at their portfolios! And the best way to do that would be to just use a Target fund and then go live their lives, never needing to look at financial news, read Bogleheads again, or so on.

But trying to make that point here is like going to a DIY forum, and telling people they really would be better off hiring a professional. I mean, that is kinda literally what that is.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

Taylor Larimore wrote: Thu Dec 01, 2022 1:51 pm It is helpful to know that Morningstar believes Total Bond Market ETF is "among the best." Read link below:

https://www.morningstar.com/articles/11 ... g-the-best
I note the thesis of that article is that "[t]he fund's broad scope and low fee should allow it to outperform its Morningstar Category peers over the long run."

I am sure that is true. That does not mean choosing this "Morningstar Category" of bond fund as your only bond fund, or indeed as any part of your fixed income strategy, is actually a good choice for any given personal investor. The article does not address that question at all, it just discusses how BND is likely to do versus other bond funds of the same type.

By the way, I think there is one particularly dangerous statement in that article:

"The main source of the fund's risk comes from its interest-rate sensitivity. As it captures the broad market, the fund's composition depends on issuance activities, which have tilted toward bonds with longer maturities in recent years. As of May 2022, the fund's effective duration was around 6.7 years, which was slightly higher than its average peer's. As a result, the fund tends to lag its peers when interest rates rise. Overall, its broad scope and low fee should provide a performance edge over category peers in the long run."

In context, if the risk in question is defined solely as the risk BND will underperform other bond funds in the same Category, OK.

But if you take that statement out of context, meaning assume that is the only source of risk in the fund generally, that would very much not be true.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

The comparison that I did above was the best I could do using real life examples. I used investor shares of Vanguard funds because I knew they would have the longest performance records. Fortunately, I could access data back to January 1992.

I cannot run these kind of comparisons back to the early 1970's, the period right after World War II, the Great Depression, or further back from that is that this is beyond the life spans of most mutual funds. Retail index funds were only available since 1976. Even if I use asset class data, Portfolio Visualizer only goes back so far. So I did the best I could with what I had.

The implication that I was dishonest with my presentation is amazing and really against the spirit of this forum. I used real life retail mutual funds that investors could buy, went back as far as the data went, presented what I found though the results weren't quite what I expected. Thirty years is a fairly long time with Portfolio Visualizer comparisons. As I recall, their asset class data only goes back to the early 1970's.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by vineviz »

Taylor Larimore wrote: Thu Dec 01, 2022 1:51 pm Bogleheads:

This topic has received several posts criticizing Total Bond Market Index Fund in The Three-Fund Portfolio.

It is helpful to know that Morningstar believes Total Bond Market ETF is "among the best." Read link below:

https://www.morningstar.com/articles/11 ... g-the-best
Artiles like this amount to little more than clickbait.

Each investor should choose their asset allocation to support THEIR OWN goals, resources, constraints, and preferences. Morningstar has no information about any of those things for any particular investor, which means any list of the "best" funds is likely to include some that are wildly inappropriate alongside others that are prudent and reasonable choices.

In any case, also on Morningstar's list of "The Best Index Funds" are several that most investors should probably prefer over total bond market funds including Schwab U.S. TIPS ETF (SCHP) and Vanguard Long-Term Bond ETF/Index (BLV/VBLLX).
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by cheezit »

Is there a reason we're all calling vineviz 'Vince' now? I don't see anything about his given name in his profile or signature, and I assume doxxing someone who has chosen to post pseudonymously is against some sort of policy...



Wrt. the discussion nedsaid was having with vineviz, I see this less as a matter of academics vs pragmatism and more as a matter of different views of the purpose of bonds in a portfolio. Here's a sampling of some teleological disagreements one might have about bonds:

* Are bonds purely fixed income?
* Are bonds meant purely as a means of matching future liabilities?
* Are bonds "meant for safety" in the sense that the principal of the bonds themselves must be at minimal risk at any given time?
* Are bonds "meant for safety" in the sense that they are supposed to reduce the risk (however you want to measure it) of the portflio as a whole?

Depending on how you answer these and related questions, your views on different types of bonds will differ greatly, and unspoken disagreement on the purpose of bonds will lead to endless talking past each other even if nobody has any mistaken notions of how bonds work or how suitable they are to fulfill any particular purpose.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Thu Dec 01, 2022 3:08 pmSo I did the best I could with what I had.
OK, but if the best you can do is something that is unreliable for the purpose at hand, then unfortunately this means that mode of analysis isn't helpful at all.

In other words, the fact there is no good backtest available to assess these issues is not a surprise to me. But that doesn't mean we should use a backtest that doesn't actually help, simply because it is the "best" available.
The implication that I was dishonest with my presentation is amazing and really against the spirit of this forum.
I apologize, because I sincerely did not intend to imply any such thing.

To clarify, what I meant by "internal contradiction" was not any sort of intentional dishonesty, but rather an inadvertent logical contradiction. I think we all do it sometimes, certainly I do it sometimes. That doesn't mean we are trying to deceive anyone, it just means (if true) that we have overlooked an issue with our reasoning.
Thirty years is a fairly long time with Portfolio Visualizer comparisons. As I recall, their asset class data only goes back to the early 1970's.
Right, this is part of why Portfolio Visualizer backtests are not generally a very useful mode of analysis. It isn't their "fault", but their datasets are very limited, and so even using all the data they have available, you still end up with very limited windows of time.

However, the even deeper issue is that the relevant financial markets, financial systems, legal systems, macroeconomic conditions, and so on are constantly changing.

And what this means is that the farther back in time you go to get your returns data, the less representative that data is going to be with respect to current and near-future conditions.

This is a deep problem not just for PV, but for this entire way of thinking. Some people seem to think the farther back we can go, the better. That's only a valid assumption if you assume what we are looking at is an unchanging system. If instead the system is constantly evolving, then the farther back we go, the worse!

So, yeah. I know PV is easy and fun to play with, and some people seem to think backtesting with PV is a useful planning tool. But there are very good reasons to believe that is actually not a good idea at all.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

cheezit wrote: Thu Dec 01, 2022 3:20 pm Is there a reason we're all calling vineviz 'Vince' now? I don't see anything about his given name in his profile or signature, and I assume doxxing someone who has chosen to post pseudonymously is against some sort of policy...



Wrt. the discussion nedsaid was having with vineviz, I see this less as a matter of academics vs pragmatism and more as a matter of different views of the purpose of bonds in a portfolio. Here's a sampling of some teleological disagreements one might have about bonds:

* Are bonds purely fixed income?
* Are bonds meant purely as a means of matching future liabilities?
* Are bonds "meant for safety" in the sense that the principal of the bonds themselves must be at minimal risk at any given time?
* Are bonds "meant for safety" in the sense that they are supposed to reduce the risk (however you want to measure it) of the portflio as a whole?

Depending on how you answer these and related questions, your views on different types of bonds will differ greatly, and unspoken disagreement on the purpose of bonds will lead to endless talking past each other even if nobody has any mistaken notions of how bonds work or how suitable they are to fulfill any particular purpose.
I have called Vineviz by his first name on occasion because he has made no secret of his real name. Others here have done the same. I put Vineviz into the search box on Google and different things popped up including his Instagram account and his Advisory firm. Clearly, he has made no attempt to hide who he is. Just like I call Randomwalker Dave, as he has posted his real first name, the only other things I know about him is that he is a Physician and that he is a Buckingham client. It isn't that I am violating someone's desire for anonymity. I would not doxx a fellow Boglehead.

You asked great questions and I will give them my best shot.

Are Bonds purely fixed income? I have argued that in effect that High Yield Bonds are Stock/Bond hybrids. The performance statistics that High Yield Bonds are in the middle between the performance of stocks and the performance of investment grade bonds. There is the discussion that Corporate Bonds and even TIPS have equity-like risk.

Are bonds meant purely as a means of matching future liabilities? No, there are reasons to purchase Bonds other than liability matching. Bonds are a source of income from the coupon payments and are used as ballast in a portfolio to reduce volatility. But this is a great question as insurance companies and pension plans use Bonds for this very purpose.

Your last two questions raise questions about safety. I have always felt that investors should focus on purchasing power and not just nominal dollars. "Safe" investments can be eaten alive by inflation and we are seeing this now. But safe can also relate to lessening portfolio volatility and guaranteed return of principal upon the maturity of a bond.

Your questions show that there are different ways of looking at the same issue, safety being one of them.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

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NiceUnparticularMan wrote: Thu Dec 01, 2022 3:43 pm
nedsaid wrote: Thu Dec 01, 2022 3:08 pmSo I did the best I could with what I had.
OK, but if the best you can do is something that is unreliable for the purpose at hand, then unfortunately this means that mode of analysis isn't helpful at all.

In other words, the fact there is no good backtest available to assess these issues is not a surprise to me. But that doesn't mean we should use a backtest that doesn't actually help, simply because it is the "best" available.
The implication that I was dishonest with my presentation is amazing and really against the spirit of this forum.
I apologize, because I sincerely did not intend to imply any such thing.

To clarify, what I meant by "internal contradiction" was not any sort of intentional dishonesty, but rather an inadvertent logical contradiction. I think we all do it sometimes, certainly I do it sometimes. That doesn't mean we are trying to deceive anyone, it just means (if true) that we have overlooked an issue with our reasoning.
Thirty years is a fairly long time with Portfolio Visualizer comparisons. As I recall, their asset class data only goes back to the early 1970's.
Right, this is part of why Portfolio Visualizer backtests are not generally a very useful mode of analysis. It isn't their "fault", but their datasets are very limited, and so even using all the data they have available, you still end up with very limited windows of time.

However, the even deeper issue is that the relevant financial markets, financial systems, legal systems, macroeconomic conditions, and so on are constantly changing.

And what this means is that the farther back in time you go to get your returns data, the less representative that data is going to be with respect to current and near-future conditions.

This is a deep problem not just for PV, but for this entire way of thinking. Some people seem to think the farther back we can go, the better. That's only a valid assumption if you assume what we are looking at is an unchanging system. If instead the system is constantly evolving, then the farther back we go, the worse!

So, yeah. I know PV is easy and fun to play with, and some people seem to think backtesting with PV is a useful planning tool. But there are very good reasons to believe that is actually not a good idea at all.
I also realize the limitations of back testing. Unfortunately the past is all we have and we can use what happened in the past as an imperfect guide as to what might happen in the future. I am not in the "all back testing is bunk" camp, doing analysis has its value but the value is limited. You do see certain patterns in the markets but the patterns don't repeat themselves exactly, each historical market era existed in its own context. For example, I can draw a lot of parallels between now and the 1970's, comparisons have some usefulness, but a lot of things are different too.

I actually teased someone here who discussed his back testing experiments if he had future tested them.

Your points are well taken regarding back testing. I have made these points many times myself including comparing data from decade to decade. But imperfect as it is, it is what we have.

The problem we can run into is to dismiss all of this as bunk and to say that all data is unreliable, this leads to bigger problems. At that point, not much meaningful discussion can occur.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by Northern Flicker »

Bitzer wrote: Thu Dec 01, 2022 10:15 am First, I'd like to say that I am honored that my thread has attracted such vigorous and useful discussion among such knowledgeable contributors.

My contemplated Avantis or DFA portfolio would consist of 50% US stocks, 20% International stocks and 30% taxable bonds. My tax bracket is not high enough to warrant the use of tax-free bonds. I would prefer to use ETFs to keep the tax drag low and keep it relatively simple with no more than 2 or 3 bond ETFs. I would purchase a DFA Target Date fund, but Fidelity (where I'd like to keep my account) does not offer these.

Thanks again for all of your contributions!
First, you can get some tax-advantaged space using Series I savings bonds. Purchases are with after-tax dollars, but interest is tax-deferred.

Treasuries and TIPS and savings bonds are exempt from state income tax, a benefit if you live in a state that taxes income.

I would suggest putting up to the maximum each year in I bonds ($10K/person/yr), and the remaining in a treasury bond fund. I'll risk the ire of vineviz by suggesting an intermediate treasury fund like VGIT.

State taxes aside, treasuries typically have done a better job than a total bond index of diversifying equity risk, as can be seen by looking at the sample volatility (standard deviation) and max drawdown in this backtest:

https://www.portfoliovisualizer.com/bac ... tion5_2=30

A longer test with market indices for equities shows the same effect:

https://www.portfoliovisualizer.com/bac ... tion4_2=30

If you reached a point where all of the bonds were I bonds, that would be the most tax-efficient scenario. You can purchase up to an additional $5K/person of I bonds by directing a tax refund to buy them.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by vineviz »

nedsaid wrote: Thu Dec 01, 2022 3:48 pm
cheezit wrote: Thu Dec 01, 2022 3:20 pm Is there a reason we're all calling vineviz 'Vince' now? I don't see anything about his given name in his profile or signature, and I assume doxxing someone who has chosen to post pseudonymously is against some sort of policy...
I have called Vineviz by his first name on occasion because he has made no secret of his real name. Others here have done the same. I put Vineviz into the search box on Google and different things popped up including his Instagram account and his Advisory firm. Clearly, he has made no attempt to hide who he is. Just like I call Randomwalker Dave, as he has posted his real first name, the only other things I know about him is that he is a Physician and that he is a Buckingham client. It isn't that I am violating someone's desire for anonymity. I would not doxx a fellow Boglehead.
I don't mind being called "Vince" or "Vincent" at all, by anyone.

As long as no one calls me "Vinnie" I'm perfectly okay with being addressed by my name.

I won't intentionally add any detail, since I don't want to even appear to be soliciting clients or business, but I'm not purposefully trying to be anonymous.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

vineviz wrote: Thu Dec 01, 2022 5:12 pm
nedsaid wrote: Thu Dec 01, 2022 3:48 pm
cheezit wrote: Thu Dec 01, 2022 3:20 pm Is there a reason we're all calling vineviz 'Vince' now? I don't see anything about his given name in his profile or signature, and I assume doxxing someone who has chosen to post pseudonymously is against some sort of policy...
I have called Vineviz by his first name on occasion because he has made no secret of his real name. Others here have done the same. I put Vineviz into the search box on Google and different things popped up including his Instagram account and his Advisory firm. Clearly, he has made no attempt to hide who he is. Just like I call Randomwalker Dave, as he has posted his real first name, the only other things I know about him is that he is a Physician and that he is a Buckingham client. It isn't that I am violating someone's desire for anonymity. I would not doxx a fellow Boglehead.
I don't mind being called "Vince" or "Vincent" at all, by anyone.

As long as no one calls me "Vinnie" I'm perfectly okay with being addressed by my name.

I won't intentionally add any detail, since I don't want to even appear to be soliciting clients or business, but I'm not purposefully trying to be anonymous.
Folks can call me Ned if they would like.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by abuss368 »

nedsaid wrote: Thu Dec 01, 2022 2:02 pm Taylor, I never thought I would be the guy mounting a spirited defense of Total Bond Market Index.
Hi nedsaid -

That was priceless! 😂

Hope you are well.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by abuss368 »

vineviz wrote: Thu Dec 01, 2022 5:12 pm
nedsaid wrote: Thu Dec 01, 2022 3:48 pm
cheezit wrote: Thu Dec 01, 2022 3:20 pm Is there a reason we're all calling vineviz 'Vince' now? I don't see anything about his given name in his profile or signature, and I assume doxxing someone who has chosen to post pseudonymously is against some sort of policy...
I have called Vineviz by his first name on occasion because he has made no secret of his real name. Others here have done the same. I put Vineviz into the search box on Google and different things popped up including his Instagram account and his Advisory firm. Clearly, he has made no attempt to hide who he is. Just like I call Randomwalker Dave, as he has posted his real first name, the only other things I know about him is that he is a Physician and that he is a Buckingham client. It isn't that I am violating someone's desire for anonymity. I would not doxx a fellow Boglehead.
I don't mind being called "Vince" or "Vincent" at all, by anyone.

As long as no one calls me "Vinnie" I'm perfectly okay with being addressed by my name.

I won't intentionally add any detail, since I don't want to even appear to be soliciting clients or business, but I'm not purposefully trying to be anonymous.
Hi Vince -

Thank you and hope you are well.

Appreciate the advice (even the head scratching advice regarding long term bonds 🤣)

Best.
Tony
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

abuss368 wrote: Fri Dec 02, 2022 8:56 pm
nedsaid wrote: Thu Dec 01, 2022 2:02 pm Taylor, I never thought I would be the guy mounting a spirited defense of Total Bond Market Index.
Hi nedsaid -

That was priceless! 😂

Hope you are well.
Tony
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Thu Dec 01, 2022 4:01 pm Your points are well taken regarding back testing. I have made these points many times myself including comparing data from decade to decade. But imperfect as it is, it is what we have.
The notable alternative to backtesting is using forward-looking probabilistic asset models which use current data as input variables. Those models can be derived from a combination of theory and carefully controlled and tested historic observations.

That is also imperfect. But it is a much better way to use historical information to inform our financial planning than backtesting.

Indeed, in a way, backtesting is doing the same sort of thing, just in a really obviously bad way.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

NiceUnparticularMan wrote: Sat Dec 03, 2022 4:35 am
nedsaid wrote: Thu Dec 01, 2022 4:01 pm Your points are well taken regarding back testing. I have made these points many times myself including comparing data from decade to decade. But imperfect as it is, it is what we have.
The notable alternative to backtesting is using forward-looking probabilistic asset models which use current data as input variables. Those models can be derived from a combination of theory and carefully controlled and tested historic observations.

That is also imperfect. But it is a much better way to use historical information to inform our financial planning than backtesting.

Indeed, in a way, backtesting is doing the same sort of thing, just in a really obviously bad way.
What you can do is see how asset classes performed under different conditions with backtesting. The limitation of course, is that market events and market eras don't repeat themselves exactly. There are things you can learn. And yes, you can use reasonable assumptions and modeling to see what the future might look like, models are just that, only an approximation of reality, some models are better than others, but the best are still imperfect. It boils down to random guesses versus educated guesses and I would pick the educated guesses every time.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by abuss368 »

nedsaid wrote: Sat Dec 03, 2022 9:29 am
What you can do is see how asset classes performed under different conditions with backtesting. The limitation of course, is that market events and market eras don't repeat themselves exactly. There are things you can learn. And yes, you can use reasonable assumptions and modeling to see what the future might look like, models are just that, only an approximation of reality, some models are better than others, but the best are still imperfect. It boils down to random guesses versus educated guesses and I would pick the educated guesses every time.
Hi Nedsaid -

Not that it impacts investments decisions, but it lends additional weight and support of folks with smart money: I read that Arnold Schwarzenegger owns part of DFA (in Santa Monica) and that his portfolio is indexed with DFA funds in addition to real estate.

And Arnold is no small businessman. He has a bachelor’s in business and was an investor before an actor after becoming Mr. Olympia. He built an investment empire.

Best.
Tony
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

abuss368 wrote: Sat Dec 03, 2022 9:45 am
nedsaid wrote: Sat Dec 03, 2022 9:29 am
What you can do is see how asset classes performed under different conditions with backtesting. The limitation of course, is that market events and market eras don't repeat themselves exactly. There are things you can learn. And yes, you can use reasonable assumptions and modeling to see what the future might look like, models are just that, only an approximation of reality, some models are better than others, but the best are still imperfect. It boils down to random guesses versus educated guesses and I would pick the educated guesses every time.
Hi Nedsaid -

Not that it impacts investments decisions, but it lends additional weight and support of folks with smart money: I read that Arnold Schwarzenegger owns part of DFA (in Santa Monica) and that his portfolio is indexed with DFA funds in addition to real estate.

And Arnold is no small businessman. He has a bachelor’s in business and was an investor before an actor after becoming Mr. Olympia. He built an investment empire.

Best.
Tony
I didn't know this about the Arnold until recently. It sounds like he is a really shrewd person, he knew early on how to promote himself and build an image. Trying to remember when he was featured in a movie about bodybuilding, I might have still been in high school. Also remember that I was in college when he started his acting career, Conan the Barbarian, if it wasn't his first major movie, was among his first. He has been around a long time, he must be in his seventies now. From bodybuilder to actor to businessman to Governor of California, married into the Kennedy family. Pretty amazing life.

As far as the DFA/Avantis discipline of Factor tilting, I believe this is the future of active management. If you are trying to beat the market, this might be the way to go. Of course no guarantees, but this is your best shot. Low cost, low turnover, a mostly passive way to invest. You would think that with my deep interest in factors that I would have DFA/Avantis ETFs in my portfolio but I do not. Still sticking with the Style Indexes.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by abuss368 »

nedsaid wrote: Sat Dec 03, 2022 9:55 am
abuss368 wrote: Sat Dec 03, 2022 9:45 am
nedsaid wrote: Sat Dec 03, 2022 9:29 am
What you can do is see how asset classes performed under different conditions with backtesting. The limitation of course, is that market events and market eras don't repeat themselves exactly. There are things you can learn. And yes, you can use reasonable assumptions and modeling to see what the future might look like, models are just that, only an approximation of reality, some models are better than others, but the best are still imperfect. It boils down to random guesses versus educated guesses and I would pick the educated guesses every time.
Hi Nedsaid -

Not that it impacts investments decisions, but it lends additional weight and support of folks with smart money: I read that Arnold Schwarzenegger owns part of DFA (in Santa Monica) and that his portfolio is indexed with DFA funds in addition to real estate.

And Arnold is no small businessman. He has a bachelor’s in business and was an investor before an actor after becoming Mr. Olympia. He built an investment empire.

Best.
Tony
I didn't know this about the Arnold until recently. It sounds like he is a really shrewd person, he knew early on how to promote himself and build an image. Trying to remember when he was featured in a movie about bodybuilding, I might have still been in high school. Also remember that I was in college when he started his acting career, Conan the Barbarian, if it wasn't his first major movie, was among his first. He has been around a long time, he must be in his seventies now. From bodybuilder to actor to businessman to Governor of California, married into the Kennedy family. Pretty amazing life.

As far as the DFA/Avantis discipline of Factor tilting, I believe this is the future of active management. If you are trying to beat the market, this might be the way to go. Of course no guarantees, but this is your best shot. Low cost, low turnover, a mostly passive way to invest. You would think that with my deep interest in factors that I would have DFA/Avantis ETFs in my portfolio but I do not. Still sticking with the Style Indexes.
Hi Nedsaid -

Many years ago there was an excellent poster on the forum, “Jerry Lee” (who also used another avatar for a while). He is a DFA financial advisor who I learned much from reading his articles and recommendations.

Jack Bogle, however, as far as I recall was not onboard with factor investing, but rather market capitalization weighted index funds.

Best.
Tony
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by NiceUnparticularMan »

nedsaid wrote: Sat Dec 03, 2022 9:29 am What you can do is see how asset classes performed under different conditions with backtesting.
Yes. But it is critical to understand those same conditions often will not apply today or in the future, and indeed that nowhere in the sample may be similar conditions to what we are currently facing, or likely to face.
And yes, you can use reasonable assumptions and modeling to see what the future might look like, models are just that, only an approximation of reality, some models are better than others, but the best are still imperfect.
Correct, even the best models are VERY imperfect, and indeed necessarily have huge "error" ranges around their central estimates. Such is life, and managing those risks is a big part of what we should be trying to do.

But again, the way people often use backtesting here is basically doing that sort of modeling, but in a really, really bad way. And on top of that, rarely do such people even try to report their "error" ranges. They instead treat the backtesting results as predictive point estimates, which is really not how that should be done at all.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

abuss368 wrote: Sat Dec 03, 2022 10:38 am
Hi Nedsaid -

Many years ago there was an excellent poster on the forum, “Jerry Lee” (who also used another avatar for a while). He is a DFA financial advisor who I learned much from reading his articles and recommendations.

Jack Bogle, however, as far as I recall was not onboard with factor investing, but rather market capitalization weighted index funds.

Best.
Tony
Hi Tony:

I might have stumbled upon a few of Jerry Lee's posts. I just went past 10 years as a poster here on Bogleheads and I was a lurker a few years before that. Can't remember when I found out about this forum, it might have been the famous article in Money Magazine called "Here Come The Bogleheads."

If I ever would start my own asset management company, I would think seriously of hiring a Philosopher on staff. I dunno, there are Moral Philosophers, Philosophers of Science, Religious Philosophers. Why couldn't there be such a thing as Investment Philosophers? We need people to really study and think things through to be sure that whatever we do in the investment field is based upon solid reasoning and evidence. To distinguish between what is truly timeless and what are just mere fads. To distinguish between trends in data and what amounts to statistical noise. To be more certain that when we analyze data that we aren't reading our own biases into them.

I have made attempts to do just that here. One reason I advocate for Investment Policy Statements. They can be sort of a Manifesto for an individual investor.

As a part of the discipline of Investment Philosophy, if any such things really exist, would be a clear understanding of human nature. What I am getting at is that this would be built, step by step, concept by concept. Rigorous debate as this is fleshed out. Rick Ferri, has made an effort at this as well.

Most investment books in 30 years will hardly be worth the paper they are printed on. There are a few authors whose works have a timeless quality to them: John Bogle, Bill Bernstein, Burton Malkiel, and others. I suppose the acid test of elements of a coherent Investment Philosophy is the test of time.

One step that I have made towards this is talking about the difference between the mentality of a long term investor versus that of a trader. Then when looking at long term investors, breaking it down to the school of thought that believes that markets efficiently set prices and those who believe that there are market anomalies that can be exploited. Stuff like that. We need some good minds to really think this through and to develop a good philosophical framework for investing.

So someone like Jerry Lee would say that there are market inefficiencies that can be exploited even by individual investors. John Bogle would say that market inefficiencies do exist but that costs will cancel out whatever performance premiums that can be achieved.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

I have taken into consideration recommendations that Vineviz has made on this thread. I sold some Fidelity U.S. Bond Index today in order to buy more of the Fidelity Inflation Protected Bond Index, I took my remaining position in Fidelity GNMA Fund and also swapped that for that TIPS fund. I have also thought about buying Fidelity Intermediate Treasury Index as a replacement for Fidelity U.S. Bond Index, I will have to mull that one over.

As I have mentioned elsewhere, Dimensional Fund Advisors have 2/3 of their Target Date Retirement 2025 fund in Intermediate-Term and Long-Term TIPS funds. Bobcat2 clued me into this, Dr. Robert Merton had a big influence in designing the DFA Target Date Retirement portfolios. I may also buy some PIMCO Long Term TIPS ETF shares if I decide to sell down more of U.S. Bond Index.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by 25millz »

I considered AVIG and reached out to them to see what the turnover was. They replied that they don't disclose targeted turnover but since inception (October 30, 2020) to August 31, 2021, the fund's portfolio turnover was 185%. That alone made it a no from me.
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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by Taylor Larimore »

nedsaid wrote: Fri Dec 02, 2022 11:23 pm
Never thought it would happen but I think I am becoming Taylor Larimore. :wink:
nedsaid:

Be careful what you wish for (I'm 98 years old). :happy

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Re: Thoughts on bond component for Avantis or DFA three fund portfolio

Post by nedsaid »

Taylor Larimore wrote: Mon Dec 05, 2022 2:16 pm
nedsaid wrote: Fri Dec 02, 2022 11:23 pm
Never thought it would happen but I think I am becoming Taylor Larimore. :wink:
nedsaid:

Be careful what you wish for (I'm 98 years old). :happy

Taylor
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I have 35 years to go at age 63 to get there. Hard to believe, next month you will be 99! My Dad made it to 91. I would say you are doing well and your mind is very sharp. Much to be thankful for.
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