VCSH
Vanguard Short-Term Corporate Bond Index Fund ETF Shares
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Why does Vanguard’s VCSH 7-day SEC yield not even close to its 12-month annualized yield?
Can anyone way smarter than me explain what is going on with the bond markets?
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They are ok but honestly they won't pay much higher interest than gov bonds, plus be subject to state taxes The spread between corporate rates and goverment rates are low so it sort of depends if state tax exemption is worth it and if the slightly higher yield is worth the risk VCSH currently yields about 4.2%
VT and look into BND, VTIP, VCSH. I would probably go with 60% VT 20% BND 10% VTIP 10% VCSH but if you want simplicity 60% VT and 40% BND is fine, there aren't any rate hikes on the horizon.
I hadn't even heard of VBIL until you mentioned it. Looks good. A fairly recent addition to their lineup I think. I use VCSH for cash equiv and then tier up to VCIT, BIV, etc. All more volatile than VBIL or SGOV. Unf, if rates remain high, they'll continue to underperform.
I hadn't even heard of VBIL until you mentioned it. Looks good. A fairly recent addition to their lineup I think. I use VCSH for cash equiv and then tier up to VCIT, BIV, etc. All more volatile than VBIL or SGOV. Unf, if rates remain high, they'll continue to underperform.
VEA, BRKA, VCSH, BNDX and cash
I have a dumb question. Why are some bond ETFs dropping? VCSH, VWOB, FCBYX and many others. You would expect them to rise as interest rates fall, no?
VCSH lost 11% of its value in 2022 though, so there is some capital risk if interest rates rise again or if recession and corporate debt gets downgraded by the ratings agencies JEPI/JEPQ are just bets on +sp500/QQQ, so lots of negative capital risk if markets go down at all Since the Federal Reserve is concerned about inflation, they are unlikely to cut rates much this year so SGOV 4.19% should be fairly stable and there is zero capital risk or need for FDIC insurance since all TBills maybe put 50% into JAAA, has a 6.2% trailing 12 month payout and current 30day sec yield about 5.2%. This fund holds only AAA rated CLO corporate debt, and during 2022 only fell 3.2% and regained it all in next 15 months, so some capital risk but not too bad, and 2022 was the worst year for Bonds since 1777, so unlikely to get another bad year like that for another couple of Centuries. Anything other than Tbills is just degrees of Gambling so it's just about your comfort level.
You're smart to prioritize safety and preservation in this market! Your current strategy is a good starting point, but we can refine it. Here's what I'd consider : 1-Re-evaluate SGOV Allocation: While SGOV offers a decent 4.2% return, consider diversifying a portion into short-term corporate bond ETFs like VCSH or IGIB for potentially higher yields with relatively low risk. 2- Add Inflation Protection: With your focus on preservation, consider adding inflation-protected securities like TIPS (Treasury Inflation-Protected Securities) through ETFs like TIP or SCHP. 3- Review ETF Overlap: Your current ETF selection has some overlap, particularly in the US large-cap and dividend space. Streamline your holdings to avoid overexposure to specific sectors or factors. 4- Maintain Cash Position: Given your preference for safety and potential market volatility, maintaining a significant cash position is wise
With $200K in cash and a short-term horizon (a couple of years), your best strategy is to balance liquidity, safety, and yield. Here are some solid options: 1. High-Yield Savings or Money Market Accounts (4-5%) Fully liquid and FDIC-insured (if at a bank). Some accounts offer 5%+ APY right now. Good for keeping some funds accessible while earning something. 2. Treasury Bills (T-Bills) (5%+ APY, risk-free, short-term) 3, 6, or 12-month T-bills through TreasuryDirect or a brokerage. No state/local tax on interest (big plus in high-tax states). Roll them over if rates stay attractive. 3. Brokered CDs (5%+ APY, liquid if sold early) Higher rates than bank CDs. You can sell them before maturity (potential loss if rates rise). FDIC-insured up to $250K per bank. 4. Ultra-Short-Term Bond Funds (4-6%) Funds like JPST (JPMorgan Ultra-Short Income ETF) or VUSB (Vanguard Ultra-Short Bond ETF) offer higher yields than savings/CDs. More liquid than a multi-year private equity investment. 5. Short-Term Corporate Bond ETFs (5-7%) SPSB (SPDR Portfolio Short Term Corp. Bond) or VCSH (Vanguard Short-Term Corp. Bond) can provide a better yield than T-bills with some risk. Not FDIC-insured, but relatively stable. Best Strategy? If you need a mix of safety, liquidity, and decent returns: $50K in high-yield savings/MMF (for liquidity). $100K in T-Bills or Brokered CDs (safe, 5%+). $50K in short-term bond ETFs (slightly higher yield). This keeps you flexible while earning 5-6%+ without locking up your cash for years. If rates stay high, you can roll into new T-bills/CDs. Would you prefer more liquidity or are you willing to take some risk for higher returns?
I use VCSH as a pretty good proxy for the best you can do for very safe with limited risk to principal. That gets you to 4.85%. If you can keep the money tied up MYGAs are paying slightly north of 5.5%.
Well I guess you need to be more particular. Lots of banks are very financially sound. They don't really need FDIC and moreover it wouldn't matter much. For example I'd be comfortable with a HYSA at Amex, EverBank, Barclays, E*Trade, PNC... Funds like Pimco's MINT out to say Vanguard VCSH while not offering 100% security are pretty close. These diversify you, though a general banking collapse would still be bad for Mint and VCSH might be too volatile. That being said, if you want to avoid banks and treasuries and want 100% security of principal, setting up a high cash value permanent life insurance policy works. These held up wonderfully during the depression when we lost 1/2 the banking system because insurance companies invest much more conservatively then banks. That's not going to secure you on a dollar collapse however since you are denominated in dollars. For that you'll need something like a short term foreign bond fund. You want that hedged since the whole point I'm assuming is maintaining currency value. So something like DFA 5 year fixed. But ultimately if you are worried about financial stability the funds have to be held outside USA financial institutions.
BSV, SCHO, STIP, VCSH, and LQD. See my edit for why but idk anything so, you know, NFA.
Yes it is called cash drag. I never had an emergency fund. I had credit cards and margin. Even paying interest on them 1x in life would be far better than cash drag. Now I am starting to prepare for retirement, sequencing risk, and so I do need something like that. I'm boosting the yield via insurance products because I still hate cash drag. Two things that work well for emergency funds: 1. Risk parity structure. Do something like 70% VCSH, 15% FNDA, 15% AVEE. This should underperform stocks by a bit over 1% not massively like a pure money market. 2. Permanent life insurance. Returns before expenses that beat corporate bonds, tax treatment that beats municipals and liquidity close to a money market.
A short term investment grade corporate bond etf like VCSH will give a somewhat better return than treasuries with relatively low volatility and would be highly liquid (you wouldn't have to wait for a CD to mature). You would still want a HYSA for short term cash needs, but as HYSA rates come down, bond funds should give noticeably better returns.
I've designed portfolios for a lot of people simply using many of the ETFs that you have there. You can have a great diversification with VOO, VT, VTI, SCHD, AGG, VCSH, etc. Once you get your portfolio built, you're paying yourself first, reinvesting dividends, etc. you can then start foraying a bit into individual stocks. Long story short, I don't think you need to consolidate more from where you are. Fixed income should play a role but if you are younger then what you have is just fine. You can do very well with that plan you have. Good luck TJ [https://www.reddit.com/r/InnerCircleInvesting/](https://www.reddit.com/r/InnerCircleInvesting/)
Glad to see that you're looking to branch out. When setting up new portfolios for people, we always discuss risk tolerance, complexity, etc. You can set up a very nice portfolio with as little as 4-5 ETFs. If you want to add some individual stocks, that is something I tell people not to hesitate doing AFTER learning to pay yourself first and setting up a good diversified plan. Many times when setting up a portfolio, I'll simply suggest VOO, VT, VTI, SCHD and bond fund or two like VCSH, BND or AGG. It doesn't need to be a lot more complicated than that. From that point, you invest monthly and then as you gain confidence and experience, you can start exploring some individual stocks, expand your knowledge, etc. Good luck out there on your journey! You're on the right track! TJ [https://www.reddit.com/r/InnerCircleInvesting/](https://www.reddit.com/r/InnerCircleInvesting/)
Can anyone help me with an SEC yield problem? I took the past month's dividend from VCSH ($0.2669), divided it by a lower bound of the share price over the past month ($77.00), and plugged the result x into the following: SEC yield = 2 \* ((x + 1) \^ 6 - 1) This results in about 4% whereas the SEC yield, which is supposed to be based on the past month, is closer to 5%. Can anyone help me figure out the reason for the difference?
It really doesn't matter too much. 1. If you like banks my quick recommendation is a savings broker to jump between HYSA without lots of hassles: https://www.raisin.com/en-us/?preferred_locale=en-us 2. You can use something like MINT (an ETF) which is fine for savings, very little volatility and a bit extra yield. You can go a bit further if you are willing to give back potentially the year's interest in exchange for higher yield with something like VCSH. Right now duration risk is paying nothing, but that is not the norm. That being said if you are able to put away $20k/yr for an emergency fund and plan to keep this up you'll quickly start experiencing a lot of tax drag. If the goal is to say get this to $50k and stop not a big deal. If more then are you in a higher tax bracket or likely to be in one soon? If so you may want to consider tax advantaged (high cash value permanent life). It is less valuable since you don't plan to have children but you are at an amount that it is worth it in terms of taxes.
If you are thinking by no end date around a decade $200k taxable with potentially no end date. I'd say a high cash value life insurance policy (this means a heavy term blend) at $50k / yr. You'll be even by year 5 and be getting positive arbitrage on the mortgage for life. Very powerful tool If you are thinking more like 3 years... VCSH. If you are thinking more like.5 years... 70% VCSH, 15% FNDE, 15% FNDA.
I'm not sure what the money is for. It sounds like you are about 15% stock. At those levels increasing your stock allocation **decreases** your risk inflation adjusted. Going from about 15% to 25% is pretty much a free lunch. But that's nowhere near enough return for long term accumulation. If you can stomach: * 15% USA small cap value (ex FNDA) * 15% EM value (ex FNDE) * 70% USA short-term corporates (similar risk to savings and CDs) (ex VCSH) you'll be in a portfolio that will underperform a normal 80/20 by about 1-1.5% but with far far less volatility. I can suggest other portfolios like this designed to underperform stocks by a little in exchange for a lot more safety. But you are going to need to go up from where you are. In investing you get paid to hold other people's risk. Over the long term a refusal to take on risk turns the possibility of loss via risk into the certainty of more loss via decrease in expected return. You are way way under where you need to be. Sorry but that's the honest truth. If you were wealthier than you sound like I'd suggest insurance products. But those really make sense relative to expenses only if you have tax problems you don't have.
First off you are way ahead of the game. Congradulations! The problem you have are great. Your number one asset is your future wages. Putting yourself into poverty can be destracting and destructive to your most important asset. You clearly want to save and invest, but don't lose sight of what is most important to focus on getting great returns on $28k. You want to maintain liquidity for college. If ultimately it all goes to housing and board that's not a bad use of the funds. While early savings is great, having lots of excess income to save faster is better. Now in terms of retirement savings you can put $7k / yr into a Roth. You just missed the date for 2023 but 2024 is still open. If you don't know anything just throw it all into AVGE. That's a reasonable total portfolio. Keep doing that till you get to $100k and perhaps beyond. Now that probably isn't fast enough. A good way to accomplish both liquidity and growth is a taxable high draw portfolio. A taxable setup like: 15% AVUV, 15% AVEM, 70% VCSH will get you long term growth about 1.5% below 80/20 with liquidity not much worse than short term bonds. You can draw fast if you need to, but can leave it in there for years without hurting yourself too badly. BTW what you are doing isn't "passive income". Passive income is income (not capital gains) from investing. You are just having a subsidized standard of living.
First off for a long hold period I'd risk up. Over time underrisking converts the possibility of loss into the certainty of loss. I'd consider something like VCSH or MINT. You'll have 97% safety and better average return within 2 or 3 years you'll be doing better. If you can go further out but still need a lot of safety then a high draw portfolio can work. This will sound riskier than it is but something like: * 70% VCSH * 15% EM value * 15% Small cap USA value produces returns a bit more than 1% below 80/20 with a lot less volatility. There are all sort of variants of "risk parity", "butterfly"... Now assuming you do need 100% safety if you are taxable consider MYGA. That gets you tax deferral, better returns than a money market and very strong guarantees. Downside is if you need to start pulling lots of money out fast you will pay some penalties. Again the extra return, and advantage of deferral will exceed the penalties soon enough.
If you still have a legal USA address a good place to go CD shopping is: https://www.raisin.com/en-us/?preferred_locale=en-us Otherwise I'd skip CDS and just use VCSH for simplicity.
I don't know any short term AA-+, vanguard has VUSB/VCSH but they hold some A/BBB. Alternatively there are various treasury ETFs like VGSH, or SGOV/BIL for 1-3 month tbills.
What you’re looking for is a money market fund, maybe a 50/50 short-mid term corp/gov bond fund something like $IEI/$VCSH, it’ll get you about 4% / year, capital isn’t completely secured but the movements are pretty small
If you are talking decade ish time horizon and you wanted the safest way to do a 6% return I would do something along the lines of VCLT 60% and VT 40% then the last like 4 years switch to VCSH instead of VCLT to reduce volatility.
SGOV is one step away form a Money market fund. Good income in the moment, but not guarantee for more than a few weeks. I am in VGSH, VCSH, VCIT, VGIT, VWESX, and VUSTX - I am going for a mix of treasury and investment grade corporate bonds - some short term, some intermediate term, and some long term. I am about 50/50 Treasury/corporate and 25%, 60%, 15% short, intermediate, and long term
VCSH has a duration of 2.8 years. Risk is relatively minor damage in the event of rate cuts. SGOV has up to 3mo duration if that's too much.
If you would like to get a little higher return then just a treasury ladder, I would recommend looking at iShares High yield corporate bond etf $HYG. For a bit safer fund with less interest rate risk, Blackrock's $VCSH (short term corporate bonds) is a good choice too. If you don't mind shouldering a little extra risk, JP morgan's covered call ETF for the SP500 $JEPI, and their covered call ETF for the NASDAQ $JEPQ are both good choices. Both used covered call strategies to provide income to their shareholders and reduce volatility in their returns, but at the cost of a reduced return when compared to an index fund. I have invested in $JEPI for a bit and have been happy with the monthly income.
VOO vs VGIT vs BSV vs VCSH vs VCIT? I want to dump $280 a month into it and buy a rental property within the next 4 years.
Most popular bond funds like AGG, IGSB and VCSH pay a MONTHLY dividend. AGG is currently paying 3.02%. 350k+ of bond funds should generate some solid, stable, monthly income. Just what she needs at 72. Don't sell these funds without some professionals advice.
20% SCHD (Dividend Etf) 20% VDC (Consumer Stapes Etf) 20% VGT (Pure Tech Etf) 15% VGSH (Short term treasury etf) 15% VGIT (Intermediate Term treasury etf) 10% VGLT (Long term treasury etf) This is my 60/40 Portfolio. You can trade the treasuries for municipal bond etfs if you wish to lower your tax burden. People here will probably balk at having 20+ year treasuries in their portfolio, but we're just coming off its worst year in history. There are hedge funds short it, but I think that ship has sailed. You can exchange it with VCSH, which is a short-term investment grade corporate bond etf, but the nice thing about the 20+ treasuries is that they offer awesome downside protection when the market absolutely collapses. A general rule of thumb is investing your age in fixed income and the rest in equity (you are 42, so you'd invest 42% in fixed income assets and 58% in riskier assets). You can also remove 5% from any of the etfs and invest that into a gold etf, which decreases portfolio volatility in general but is otherwise useless lol (not a productive asset).
> Am i actually buying different bonds like how voo is like buying the different companies in the sp500 Yes. You're buying a basket of bonds in line with the fund's investment strategy - so for example BND would be a selection of bonds representing total market, TLT would focus exclusively on long duration treasuries, VCSH would focus on short duration investment-grade corporate bonds > Also what will drive the price up or down on these bond finds like the ones you posted? For investment grade bonds, mostly future inflation/interest rate expectations. The shorter the maturity, the more closely linked it is to the fed rate, but longer maturities are market priced. For non-investment-grade bonds, credit risk is a much more significant concern, and these prices tend to be somewhat correlated to the stock market as the future health of the economy is more important to them
I park some cash in my brokerage in the iShares® 0-3 Month Treasury Bond ETF (SGOV), SGOV currently yields around 4.6%. I also have some money in Vanguard Short-Term Corporate Bond ETF (VCSH), I just checked and it is now yielding around 5%. VCSH was yielding around 5.2% when I bought it a little over a month ago so I might move more towards SGOV now since VCSH is a bit more risky, although it is investment grade corporate bonds so I am not personally very worried about it based on my risk tolerance.
A blend of VT and VTI for stocks mixed with VCSH for the bond component could round out an easy retirement account. Re-adjust mix annually.
Red an interesting article on building a simple long term retirement portfolio. The suggested framework was VCSH for the bond percentage of the mix and VT for world stock exposure, with the possibility of mixing in VTI for a more US based stock mix. Simplicity is a novelty
You can go all the way from holding money market to a 20 year duration bond fund, also choose mix of treasury vs corporate bonds etc. The biggest question is how long is your investment horizon is - once you have an answer invest in a bond fund of that duration. If you hold till duration you will likely not loose money - see explanation below: https://www.bogleheads.org/forum/viewtopic.php?t=360575 Example of short term etfs are BSV and VCSH. As someone else said they are not paying much more than a high yield CD, so it's mostly a toss up. With both of you withdraw early you pay a penalty.
I got VCSH, almost the same share price as HYG
This is a good reason to own bond ETFs with different maturities rather than holding a total bond fund like BND. You can manage the allocations and it's a lot less painful selling VCSH to buy stocks than VCLT.
You got me curious so I looked it up. VGLT - long term treasuries, -31% VGSH - short term treasuries, -5% VCLT - long term corporate, -28% VCSH - short term corporate, -7% So pretty much depends on the duration risk, it was definitely a horrible year for pretty much everything outside commodities.
I am DCAing into ETF's slowly to start the year (and have been all 2022, hasnt worked out well but sticking with my plan for now). I have a decent amount of cash from a house sale sitting on the sideelines as well, I am debating if I should keep holding it until the market looks to be recovering and increase my auto invest or just increase my auto invest now. Also, I am making 3.3% on the cash in an m1 plus checking account, am hoping they come out with their 4.5% HYSA soon but while I am waiting, should I put the money in the schwaab money market making 4.2% currently? Also was considering putting some of it in short term bonds like VCSH or BSV, but I am not sure the risks of capital loss with those funds. If the fed raises again as expected, the value will go down, correct? ​ Thanks
I like to keep it simple- VCSH and VGSH for my corporate and government short term exposures. I bought VCIT- the intermediate corporate term bonds when it bottomed out in October. I got a little lucky with the timing on that one. I could see those retesting the bottom they reached earlier this year if inflation stays high and we have to keep rates "higher for longer" as the fed has been pushing that narrative pretty hard. I would also consider longer term maturities if we retested that same level again- hard to say if that is going to happen or not though. It's very clear inflation has rolled over, the economy is cooling, cyclical industries across the board are taking a beating, and the trend is in the direction that the fed wants. The question now becomes how deep does it have to go to get the desired result of inflation into target range, when does the pivot come, what levels do we plunge to on equities- we just need time to get there. Patience is key. The good news is that bonds are a fantastic hedge now against equities going down. I wouldn't be surprised if you start seeing "flight to safety" in the news within the next 6 months.
How do you plan to play the bond bounce? Short/intermediate/long term funds like VCSH/VCIT/VCLT?
Dumped some cash into VCSH. It doesnt move much but sits at a 1.7-2.2% rate and the price is down right now. When it jumps up Ill sell and grab gains on the price movement. Created a purchase ladder for 4/13/26 week TBills at for 1000$ a month for each bill until March 2023. Also created a purchase ladder for IBonds. These purchases are just for short term cash holdings to grab a small rate. Better than a bank account. My 4/13/26 rates from this weeks auctions are 2.703%/3.343%/3.981% respectively. Still adding to cash for equity share/calls. Added more APPL, AMD and BRK/B. Looking to build a new position in GSK, HUM and CMCSA. Even at a 50% reduction in forward earnings growth, these three are very fairly valued right now (less so HUM). I may look into LEAPs on these depending on breakeven this month. Cant find anything else to jump into. Short term calls/puts are off the table for me for awhile.
If you put $2k into VCSH you essentially can get Netflix for free. Follow me for more money management tips like “not buying a hotdog every day for a week will mean that every week you’ll save 7 hotdogs worth of money”. Passive income is easy.
I do a similar thing, as I also like having some cash outside my emergency funds. What I use is: * 50% High yield saving account * 32.5% Vanguard 1-3 year treasury ETF (SHY) * 10% Vanguard short term investment grade bond ETF (VCSH) * 5% Vanguard total stock market ETF (VTI) * 2.5% Gold ETF Since 2005, this has given me an annualised return of 2.3%, with the best year returning 6% and the worst year with a loss of -2%. Not investing advice.
BSV and VCSH are probably your best bet if it needs to be a safe investment.
VCSH, BSV, or NEAR. They are short term commercial bond ETF’s. They stay pretty stable barring Covid level collapses, and return a decent monthly dividend.
Added to GOOGL, NVDA, MSFT and HD. Restarted an AMD position I will add to in any weakness and started a PEP position. All long. Added to SPY, SCHD and VCSH longs yesterday. Analyst saying 7% up next week as investors/funds rebalance holdings. Ill take that as long as we head up 2-3% weekly from here. Im hoping CPI print for June comes in lower in July and we see Ukraine/Russia war ended. Great catalysts for a massive rally. Still sitting on my 3/17/23 SPY 500s I bought last July. Underwater atm by less than half. I would love to sell these 5-7$ above cost but I think SPY would need to get to 425-430 for that to happen. I can only hope.
agreed, I moved out of VCSH when rates started rising a while back. Nearing time to go back in. already maxed on series i
Sigh, it looks like we are going to see more red. I’m hoping my value-tilted portfolio will hold up better in this downturn. This week’s FOMC is going to be interesting. If the Fed is more hawkish, we could see treasury yields go even higher. With the bond market plummeting, short duration bond ETFs are becoming a more attractive place to park cash. VCSH had a yield to maturity of 3.74% on April 30, 2022.
Are short term investment-grade corporate and government bonds a good buying opportunity right now for those with low risk tolerance? There’s very low credit risk, and the interest rate risk isn’t as high as longer term bonds. VCSH had a yield to maturity of 3.7% as of April 30, 2022. With interest rates rising since April 30, the yield to maturity is likely closer to 4%. This yield is much higher than what one can get from a savings account or a money market fund.
I'm in a similar position with an IRA recently rolled from an old-school firm to my discount brokerage. I put it to work right away: sold some puts for VTI with strike prices near the recent low, these expire in 20 days unless VTI dips back down to $195, at which point I'll have to find something else to do with those funds. I also bought some C and MPW. A bunch of it is now in SCHP and VCSH still, hoping to just beat inflation with that until more buy opportunities come up. I know for sure I didn't want that big chunk of change that had been invested just staying in cash for any length of time with inflation like it is.
For constant exposure to short-term corporate bonds, you could use VCSH. For bonds that will mature, you could use a target maturity bond fund like IBDP.
\>Is there a way to hold bonds without actually purchasing long term bonds? Like bond ETF’s? Yes there are bond ETFs. They are still quite interest rate sensitive. BND - intermediate term total US bond market is down 9.5% YTD total return. VCSH - short term corp bonds is down 5.1% YTD total return. With the almost certainty that the Fed will continue increasing interest rates for the next 18 months, bond funds will probably get hammered.
will be 64 y/o next week. no debt, moderate fund-based portfolio, 49% equity.. watching NAV erosion of bond funds and hearing dire forecasts of a bear bond market, how bonds are no longer offering protection in a traditional buy/hold pre-retirement portfolio. Occasional hourly advisor recently recommended adding to VCSH and making no adjustment in overall bond holdings... Floating Rate, ST Treasury, and most concerning to me VGIT (intermediate) as well as Munis (BABS) NAV losses on a seemingly certain path to continue. FA asserts i need bond funds as “insurance” in event an equity crash.... seeing commentary suggesting Bonds will continue to lose value and move in tamdem with lower equity performance rather than higher given the rising interest rate scenario - currently down 5% YTD ...Port. generates abt. 49k/year in dividend income with present AA. Am i wrong to stay the course - to use thst hackneyed old phrase...or is it a no-brainer to exit or greatly reduce bond fund positons? Appreciate any thoughts,
Might look at equal weighted nasdaq funds to be less concentrated in the largest caps, look at large cap corporate debt funds like VCSH and/or indexes that sell covered calls like JEPI or QYLD
Returns around 0% is due to low interest rates. Price falling by the amount of the income distribution on ex div date is because ownership of a fund is less valuable the day after cash leaves it than the day before. Same happens for most funds and stocks. >the value of JPST has fallen further and the returns are negative. Is this because interests rates are expected to rise Yes partly. As the market recalibrates yields higher in line with expectations for Fed hikes, bond prices fall. According to its [website](https://am.jpmorgan.com/us/en/asset-management/adv/products/jpmorgan-ultra-short-income-etf-etf-shares-46641q837#/portfolio), JPST owns bonds with an average term duration exposure of 0.37 years. That is short compared to the duration of an intermediate bond fund like AGG, which is why it has fallen less than half a percent while AGG has fallen several percent. The other reason seems to be credit spreads. Investment grade bond yields have risen (price fallen) relative to treasuries - you can see an example of the performance separation [here with VCSH vs VGSH](https://stockcharts.com/freecharts/perf.php?VCSH,VGSH). >Would the value of shares rise once higher interest bonds are added to the portfolio? No, the share price would not rise. They will receive $X from a maturing bond in the portfolio and buy $X amount of new bonds. Regardless of any differences between the two bonds, the total value has not changed. But the yield is already higher, thanks to the fall in prices. That higher yield will gradually be paid out as higher income distributions. Website reports 0.71% YTW as of Jan31, it's probably closer to 0.85% now but not sure exactly.
Thanks! Down about 100k YTD., which feels a little extreme for an allegedly moderate-conservative allocation with valuation hovering around 2.32M at this point, with about 35k in cash. Presumably those in 60/40 or higher equity PF's have taken a worse hit. Good perspectives to help me frame some questions for the advisor. I too question so much in SCHO. IT's safe but a pretty large allocation, and to me might as well be in MINT ultra-ST bond or money mkt. I don't have immediate significant withdrawal plans...just scaling back on work in the next 2 years and figuring on needing 40k a year from the PF once I "fully" retire which perhaps would be in 2-3 years officially. That 10% of the PF I left out is scattered across a lot of smaller positions...in equity, PFFD (Preferred) at about 2.7%, CCD and VCSH another 1%, VNQI/VNQ (Real Estate) about 2.7%, and the rest each fractions of a percent...comprising a diversified mix; Small/Mid-Cap, Healthcare fund GRX...a few individual stock positions. I just left them out for the sake of simplicity. Arguably having so many funds isn't productive for the greater good of the PF but my advisor feels it doesn't hurt so long as the sum total is reasonably diversified overall. I think he'd also be of the opinion that yields may not go much higher which is possible as you point out.
Yup. We haven't even seen a real correction yet. Folks complaining over a nothing burger. I lose 5% for breakfast. Let's see if equities drop a shoot 15-20% from here. May happen, that's reason enough to not be fully loaded on stocks. If you really are worried, the 2yr bond has already priced in around 5-6 hikes. VCSH is looking okay from these levels. Long bonds could have further down to go. But understand long rates are rising only because the economic data is still strengthening. If we see a legit real correction I'd expect long rates to come down. Its called the fed put friends.
Do a web search on high yield savings accounts. Anything else is still speculative and subject to loss. I parked money in VCSH short term bond fund and Vz stock with \~5% dividend. There has been more capital loss than the dividends. [Ally.com](https://Ally.com) pays 0.5% with no minimums, maximums, minimum transaction requirement, direct deposit requirement, etc. For a second tier of cash savings, I-Bonds are paying 7.12% for the next six months, but can't be redeemed until held for a year. There is a three month interest penalty for redemption between one and five years. I'm buying monthly so that I will have a ladder of cash available after a year. Good luck
I'm looking for somewhere to park cash with daily to weekly liquidity, and very little volatility that pays at least something. I want something that can be bought as a security in my investment accounts to park cash until I decide on an investment security. I'm aware of Ally Bank 0.5% MMF. My 401K has something like a MMF that has been paying a percent or so with no losses, but the fund is not available outside the 401K. I tried VCSH short term bond fund. That turned out to be a disaster. It has had \~4% capital loss and only \~1.5% in dividends. It would have been better to put the cash under the mattress. TIA
I don’t understand. If interest rates go up, won’t short term bond prices go down? And thus VCSH would go down?
Short term bond etf like VCSH is an easy way to allocate the other 15 percent. Short term bonds may do better than long term especially with interest rates set to head back up.
VCLT has higher yield than VCIT (since it's long term bonds), I think you probably mean VCSH which is shorter term and lower yield? FWIW, I've used both VCSH and VCLT in the past (mostly as a hedge, to book paper losses in my home currency when it strengthens against USD).
I did this about five years ago when we were saving for a house. I used VCSH, it's Vanguard's short-term corporate bond fund. It's pretty low risk because the fund focuses on short term bonds to well rated companies. I kept reinvesting dividends until we hit our downpayment goal. It's returns weren't great but beat a savings account, I think we netted something like a 3% return. No idea if rates make it attractive in today's market, ymmv.
I have zero wisdom in that area. I had a 2 year treasury note ladder until Jan 2020 when I moved over to a variety of mostly 1 year CDs. I do have BND and BNDX, but also VTEB (muni intermediate term) and VCSH (corporate intermediate) but they are all pretty ugly returns in this environment. Maybe someone else has some decent suggestions.
VTIP is good for short-term inflation-protected treasuries. VCSH is good for short-term corporate bonds. You seem to be describing municipal bonds with that tax advantage. CMF is okay if you live in California, but most municipal bond funds have higher expense ratios and lower yields than you see elsewhere.
If you park money you need in a crisis in a bond fund, make sure you pick the right bond fund. If you choose a long term fund like VGLT or VCLT, then your value can fluctuate +-20% over a year or two depending on interest rates and market conditions. You’d be getting around a 4% yield for this volatility. If you pick short term bonds like BSV or VCSH, your volatility is closer to +-5%, but your yield is only 0.35% right now. I’d rather just keep it in a savings account getting 0.5% and not have to worry about protecting my principle during market fluctuations due to crashes or interest rate hikes
Ah, I should have clarified. My money is partly in USD, partly in CAD, partly in CHF, and partly in EUR, due to the various countries where I've lived in the past decade and the fact that I worked for a US company that gave me a lot of US stock (that I sold). My plan was to buy something like VCSH for each currency. Real Estate ETFs are interesting too though, I'll look into it, thanks.
Unless the currency of your home country is USD, I don't think it makes sense, mainly due to the currency risk. SEC yield of VCSH is only 0.83%. A currency exchange rate can easily move more than that in either direction within a year. You could hedge the currency risk but it's most likely not worth it. As you want to buy an apartment in your home country, have you checked whether there are saving accounts with positive interest rates in your home country, that you may already be able to open before moving back? Or alternatively, are there bond ETFs denominated in the currency of your home country? Or is the interest rate situation the same as where you are right now? If the above is not feasible, is there a Real Estate ETF for your home country? That way you may be able to hedge real estate price increases. There would still be a risk that such an ETF falls in price without your future apartment getting cheaper.
If I want to invest a few hundred thousands for one year only in a way that minimizes risk and just limits the impact of inflation, what's the easiest way to do it? I want to buy an apartment in a year as I'll move back to my home country. I owned a lot of ETFs that I just sold for a pretty good gain and now I just want to keep my money "in standby". There are no savings account with decent rates in the country I currently live in. Would buying a short-term corporate bond ETF like VCSH and holding it for a year make sense?
It depends on the nature of the crisis, in most cases I'd rather be in healthcare REITs during a crisis than shopping malls or something. Farmland would survive, though FPI might endure a crisis better than LAND, due to what crops they grow. Timberland would probably fall more during a housing crisis like 2009, but that's the opposite of our situation today, with housing shortages & surging home prices. Self-storage would do okay during a housing crisis but PSA is at a pretty elevated price right now. It's really complicated & probably not the best question to ask. Like during the Covid crash, healthcare REITs suffered because senior housing occupancy dipped, but it has mostly recovered already. Casinos crashed hard for obvious reasons, but Casino REITs collected rent the whole time & have since recovered. I guess investors thought their tenents could go bankrupt if Covid lasted many years, but those REITs should continue to collect rent unless there's a prolonged depression. As I hinted at above, what you'll find is that during any crisis almost all stocks fall significantly; partly because people sell even their "safe" holdings to buy the stocks that have crashed the most. So you're essentially asking what REITs will fall 25-40% instead of 35-50% during a crisis, & that's hard to say without knowing what the crisis is exactly. If you're truly trying to invest with an imminent crisis in mind, I would just buy bond funds like VCSH (short term corporate bond fund), or even lower yielding government bond funds. For stocks look at what did well in 2008/2009, very little but dollar stores, maybe Wal-Mart, self storage, some cash loan businesses... I like utilities since they basically have guaranteed profits from government regulated monopolies, but even they crashed in 2020 for the reasons I mentioned above & because they had less revenue from industrial & commercial properties. There's also refuse services like WM & RSG, there will still be trash to collect during a crisis. For REITs: PSA as I mentioned, cell towers like AMT should continue collecting revenue, things like that. But really I would not invest so much with a crisis in mind. There are always analysts predicting crashes, even at the big banks like you mentioned. Most people here will remind you that more money has been lost preparing for crashes than in crashes themselves.
It would be best to use a reliable broker like Schwab, Fidelity, or Vanguard rather than Robinhood. ETFs are like stocks in that it doesn't matter which brokerage you buy them in. I hold many Vanguard ETFs on Schwab and Fidelity accounts. You can do ACATs transfer between brokerages without selling. I have some money in VCSH, a corporate bond ETF with 2.8 year duration. That means that it will drop in price by about 2.8% if interest rates rise 1%. There is a tradeoff between risk and returns. VUSB is an ultra-short bond ETF by Vanguard. The yield is about the same as a high yield saving account. In other words, not very high. It is just a matter of what is most convenient for you. The first portion of your emergency fund should be immediately accessible. The latter portion you just need in reasonably stable investments, such as shorter duration bonds. Even I-bond are something to consider for a part of your emergency fund. They have good returns, but can only be bought in Treasury Direct and take a few weeks to sell.
$VCSH has gone nowhere in the past 5 years…
If by "for a 2 to 5 year timeframe" you mean you plan to use the funds in 2-5 years, then you should be looking at short to medium duration bond ETFs like VCSH. If you mean that you are swing trading and/or attempting to time the market and are trying to guess what has the best returns over the next 2-5 years I can't help you. My first guess is that what stocks you have that are hitting their price targets are the ones most likely to continue to do well over the next few years, unless you have a specific reason to believe otherwise.
VCSH is short term corporate bonds. BND is total bond market. VT is total world stock market. Short term bonds are less risky than medium or long term bonds. Stocks are riskier than bonds.
What makes VT and BND more risky than say VCSH?
Low risk: $TIP Lower mid risk: $VCSH Mid risk: $BND Upper mid risk: 70% $BND, 30% $VT High risk: 40% $BND, 60% $VT
You can use short term bonds or TIPS, e.g. something like VCSH.
If you do go bonds, maybe short term like VCSH. Otherwise a HYSA or TIPS, it's not sexy but it does the job.
Treasuries pay so little because they are the safest, lowest risk investment. To earn slightly more you have to take on slightly more risk: corporate bond ETFs. Examples of corporate bond ETFs include VCSH and VCIT (there are others so look around). You can buy shares of those and get paid dividends each month. They’re diversified, because you’ll effectively be buying thousands of different bonds all at once.
YOLOing VCSH Is VCSH going to moon?
Short or mid term US treasury is the lowest volatility. I've also used short term corporate, my approach is not very systematic, because the amounts are large but not huge... I used BSV and VCSH recently, but also BND and AGG at various times in the past. There are new ultra-short bond ETF now that I have yet to look into.
with interest rate so low, it's not worth too much mental energy trying to maximize tax savings on cash. I prefer short-term high quality corporate bond funds right now as cash equivalent holdings. Be careful with bond funds that have non-trivial management fees though VCSH
Send a male genitalia cake to Thornton McEnery at market watch, buying more GME, maybe some more BLK, VOO and VCSH. Take a swim in the pool, than dinner at STK and back home to buy more GME
Bonds come in at least three major types: Corporate, Municipal, and Federal (US Treasuries). Take a look at bond ETFs such as: * VCLT - Vanguard Long-Term Corporate Bond ETF * VCSH - Vanguard Short-Term Corporate Bond ETF * VTEB - Vanguard Tax-Exempt Bond ETF (These are municipal) * VGLT - Vanguard Long-Term Treasury ETF * VGSH - Vanguard Short-Term Treasury ETF They pay dividends monthly. And I’m not saying invest in specifically those, but take a look at them.
I am 31, Canada, have a business making roughly $1 mil a year. Purpose is to build a fixed income portfolio that will outperform my bank's measely APY of 0.5%. Time horizon is forever. Cannot risk this money in stocks unless they are bluechip because I need access to it for my business at some point. Right now its sitting in the bank account, no debts. I need to park a lot of money belonging to my business which is just sitting idle at roughly 0.5% APY at Bank of Montreal (low 8 digits consists of 30% CAD, 70% USD, lets say $10 million) and do not want to buy stocks or REITs. So about 90% of this should be as close to cash as possible and business bank accounts are super stingy about yields. I am thinking of money market, treasuries, and possibly bonds from canadian blue chip companies (last resort). This is what I found out so far (I put ? because I'm not sure if number is accurate): SWVXX - transfer in and out everyday, 2% (?) SPAXX, FZXX, FCASH - 1.8% (?) BSV, GSY, VCSH - these ETFs seem to have dips but BSV has low volatility it seems (?) psa.to (cad) and PSA.u.to (usd) - guaranteed 2.2% (?) TIPS, T-bills, what else? - Not confident about TIPS especially after the 1.9 trillion stimulus passed this morning. possibility: AQN, CU, FORTIS, Telus, Rogers - canadian energy utilities and telecom (can't ever not need electricity and internet + government protected regional monopolies) ​ If I want to protect my business cash would it make sense to invest only what IBKR loans to me at 1.5%? so if I move $10,000,000 to IBKR could I get a margin account with extra $10 million? If so, do I put only the $10 million loan into those assets I described above and get (2-1.5%) OR do I put both $20 million in above assets (double the income?) OR just leave it in the bank for like 0.5% return (the cash I'm sitting on is from a business and thats the maximum rate Bank of Montreal will give me only on CAD)
If you need the cash at any moment, investing is a bad idea. If you insist however, you can try shirt term bonds, maybe something like VCSH.