Advise please on which Bond Fund to hold in my 401K:
For many years, I have held one bond fund in my 401K (Dodge and Cox Income 1 DODIX 0.42% expense ratio).
I do have the option of Vanguard Total Bond Index 1 VBTIX 0.035%
VBTIX has a far superior expense ratio (0.035% compared to 0.42 for DODIX), however, does the benefit of the expense ratio outweigh the following performance advantages displayed by DODIX compared to VBTIX? I don't know how to compute the math. Holdings $370K
DODIX has outperformed the Vanguard fund at EVERY mark: From Inception, 10 year, 5 year, 3 year. 1 year and has outperformed the benchmark over the same durations. Does the expense ratio outweigh performance? Here are the Return Results:
From inception: DODIX 6.15% VBTIX 4.50%
10 Year: DODIX 2.70% VBTIX 1.59%
5 Year: DODIX 2.10% VBTIX 1.24%
3 Year: DODIX .99% VBTIX -.24%
1 Year: DODIX -8.35% VBTIX -9.41%
I appreciate your help.
Advise please on which Bond Fund to hold in my 401K
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Re: Advise please on which Bond Fund to hold in my 401K
I think the better performance is due to the higher risk taken by the Dodge & Cox fund.investment guy wrote: ↑Mon Aug 08, 2022 3:40 pm DODIX has outperformed the Vanguard fund at EVERY mark...
If you compare and contrast the holdings you'll see what I'm referring to. For example, according to Morningstar, DODIX holds 27.2% in BBB bonds, while VBTIX holds 14.17% in BBB bonds.
Sources:
https://www.morningstar.com/funds/xnas/dodix/portfolio
https://www.morningstar.com/funds/xnas/vbtix/portfolio
Regards,
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Re: Advise please on which Bond Fund to hold in my 401K
When you take a closer look, they simply hold different types of bonds.
https://investor.vanguard.com/investmen ... omposition
https://investor.vanguard.com/mutual-fu ... IntExt=EXT
Total Bond has more government bonds where Dodge & Cox has more corporate bonds. Dodge & Cox is greater risk greater reward. The Vanguard fund isn't worse, it just has a different goal. If you're comfortable with more short to long term volatility you can certainly go with Dodge & Cox.
https://investor.vanguard.com/investmen ... omposition
https://investor.vanguard.com/mutual-fu ... IntExt=EXT
Total Bond has more government bonds where Dodge & Cox has more corporate bonds. Dodge & Cox is greater risk greater reward. The Vanguard fund isn't worse, it just has a different goal. If you're comfortable with more short to long term volatility you can certainly go with Dodge & Cox.
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Re: Advise please on which Bond Fund to hold in my 401K
I will take a closer look at both bond funds. Thanks for the input, much appreciated.