VWEHX
VANGUARD HIGH-YIELD CORPORATE FUND INVESTOR SHARES
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Seeking a short-term cash parking lot. Why is the "SEC Yield" so high on iShare's $TIP and what are some other good options?
The most optimal way to invest Bond Mutual Funds Dividends and Capital gains.
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I recently started putting my extra cash into VWEHX. Not so sexy, but I like the yield. If it tanks, I’ll sell it.
Good to know, I didn’t realize there were different corporate bonds. How about VWEHX?
I think both BEMB and EMB invest in USD denominated bonds so they should not have currency risk exposure. LEMB invest in local currency and does have currency risk. Both EMB and HYG have higher correlation to US equity than investment grade corp or treasury bonds. It's on the order of 0.6-0.7 for both depending on the time period. If you want to see extended historical data look at PREMX for EM bond history back to 1994, VWEHX or FAHYX for high yield bond history back to 1980, and VWESX or VFICX for investment grade corp bond back to 1980.
He wants a more diverse holding with some bonds in there. I'm assuming the 4.8% draw is inflation-adjusted and dual-life. That's not super high but it is not trivial either. A robo advisor might be a good idea if they don't know what they are doing at all as this can pay out income. If you aren't going to dp that assuming they are not all that well off ($4k / mo). Then I'd recommend 50% high yield bonds (VWEHX), 50% diverse portfolio (AVGE for example) will produce slighly more income consistently than they are asking for. Use excess income to buy more AVGE (there won't be too much excess and not for long). Replenish the bonds as little as needed when the income becomes too low.
> I found more users saying to invest in them later in life and that my goal right now should be targeted towards obtaining as much growth as possible. this line of reasoning is based on the assumption: "stocks for growth until close to retirement, then emphasize bonds for stability" the reality is "stocks for growth until close to retirement" is a form of market timing. the reality is bonds can outperform stocks for years at a time, stocks are not always the best performing asset class over long periods, and there's a place for bonds in every portfolio. reddit skews very young, and hasn't experienced a period where bonds beat stocks for several years. when it happens again, there will be widespread shock and consternation, weeping and wailing and gnashing of teeth, dogs and cats living together, mass hysteria. but if you've got even a bit in bonds, you gain some of the upside. - in 2000, 2001 and 2002 bonds beat the S&P 500 by over 20% each year. https://www.thebalancemoney.com/stocks-and-bonds-calendar-year-performance-417028 - bonds beat the S&P 500 from 2000 to 2020. https://www.nytimes.com/2020/05/01/business/bonds-beat-stocks-over-20-years.html - long-term US treasury bonds beat the US market 1981-2011, and 1968-2008. https://www.cbsnews.com/news/bonds-beat-stocks-over-30-years-so-what/ - three high-yield bond funds performed about as well as the US stock market over the long-term. VWEHX from Vanguard had a cumulative annualized return of 7.74% from 1978 inception. https://investor.vanguard.com/investment-products/mutual-funds/profile/vwehx#performance-fees FAGIX from Fidelity has a 9% annual average since 1977. https://fundresearch.fidelity.com/mutual-funds/performance-and-risk/316062108 EDIT SPHIX from Fidelity has averaged 7.5%/yr since 1999. https://fundresearch.fidelity.com/mutual-funds/performance-and-risk/316146406 - Jack Bogle of Vanguard recommended a *minimum* 20% bond allocation for all investors. “...why would an intelligent investor hold any bonds at all? First, because the long run is a series of short runs, and during many short periods, bonds have provided higher returns than stocks. In the 117 years since 1900, bonds have outpaced stocks in 42 years [37.5% of the time]; in the 112 five-year periods, bonds have outpaced stocks 29 times [25.9% of the time]; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times. [12.6% of the time]”. from the 2017 edition of his book *The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns* numbers in [square brackets] are my calculations.
I typed this up for another question, so here's why everyone should consider bonds: reddit skews very young, and hasn't experienced a period where bonds beat stocks for several years. when it happens again, there will be widespread shock and consternation, weeping and wailing and gnashing of teeth, dogs and cats living together, mass hysteria. but if you've got even a bit in bonds, you gain some of the upside. - in 2000, 2001 and 2002 bonds beat the S&P 500 by over 20% each year. https://www.thebalancemoney.com/stocks-and-bonds-calendar-year-performance-417028 - bonds beat the S&P 500 from 2000 to 2020. https://www.nytimes.com/2020/05/01/business/bonds-beat-stocks-over-20-years.html - long-term US treasury bonds beat the US market 1981-2011, and 1968-2008. https://www.cbsnews.com/news/bonds-beat-stocks-over-30-years-so-what/ - three high-yield bond funds performed about as well as the US stock market over the long-term. VWEHX from Vanguard had a cumulative annualized return of 7.74% from 1978 inception. https://investor.vanguard.com/investment-products/mutual-funds/profile/vwehx#performance-fees FAGIX from Fidelity has a 9% annual average since 1977. https://fundresearch.fidelity.com/mutual-funds/performance-and-risk/316062108 EDIT SPHIX from Fidelity has averaged 7.5%/yr since 1999. https://fundresearch.fidelity.com/mutual-funds/performance-and-risk/316146406 - Jack Bogle of Vanguard recommended a *minimum* 20% bond allocation for all investors. “...why would an intelligent investor hold any bonds at all? First, because the long run is a series of short runs, and during many short periods, bonds have provided higher returns than stocks. In the 117 years since 1900, bonds have outpaced stocks in 42 years [37.5% of the time]; in the 112 five-year periods, bonds have outpaced stocks 29 times [25.9% of the time]; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times. [12.6% of the time]”. *The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns* numbers in [square brackets] are my calculations.
>I wouldn't envision a long-term portfolio holding bonds until about 10 years closing in on the horizon. your assumptions are flawed. your assumption is "stocks for growth until close to retirement, then emphasize bonds for stability" the reality is "stocks for growth until close to retirement" is a form of market timing. the reality bonds can outperform stocks for years at a time, stocks are not always the best performing asset class over long periods, and there's a place for bonds in every portfolio. reddit skews very young, and hasn't experienced a period where bonds beat stocks for several years. when it happens again, there will be widespread shock and consternation, weeping and wailing and gnashing of teeth, dogs and cats living together, mass hysteria. but if you've got even a bit in bonds, you gain some of the upside. - in 2000, 2001 and 2002 bonds beat the S&P 500 by over 20% each year. https://www.thebalancemoney.com/stocks-and-bonds-calendar-year-performance-417028 - bonds beat the S&P 500 from 2000 to 2020. https://www.nytimes.com/2020/05/01/business/bonds-beat-stocks-over-20-years.html - long-term US treasury bonds beat the US market 1981-2011, and 1968-2008. https://www.cbsnews.com/news/bonds-beat-stocks-over-30-years-so-what/ - two high-yield bond funds performed about as well as the US stock market over the long-term. VWEHX from Vanguard had a cumulative annualized return of 7.74% from 1978 inception. https://investor.vanguard.com/investment-products/mutual-funds/profile/vwehx#performance-fees FAGIX from Fidelity has a 9% annual average since 1977. https://fundresearch.fidelity.com/mutual-funds/performance-and-risk/316062108 - Jack Bogle of Vanguard recommended a *minimum* 20% bond allocation for all investors. “...why would an intelligent investor hold any bonds at all? First, because the long run is a series of short runs, and during many short periods, bonds have provided higher returns than stocks. In the 117 years since 1900, bonds have outpaced stocks in 42 years [37.5% of the time]; in the 112 five-year periods, bonds have outpaced stocks 29 times [25.9% of the time]; and even in the 103 fifteen-year periods, bonds have outpaced stocks 13 times. [12.6% of the time]”. *The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns* numbers in [square brackets] are my calculations.
But the value of VWEHX is going down. A large portion of your assets will underperform the market long term. You will make more money in the long run just keeping everything in VTSAX.
Exactly. Which is why I am wanted to put as much dividends into VTSAX as possible. With this strategy, I'd get to contribute 16 dividend payouts (12 from VWEHX and 4 from VTSAX) back into VTSAX. Would this not lead to faster compounding?
ok, unlike the other ignorant answers I don't think there's necessarily anything wrong with holding bonds or high yield bonds. this is Bogleheads and Jack Bogle recommended a minimum 20% bond allocation for everyone. half of the contributors to /r/bogleheads are gonna have strokes the next time bonds beat the stock market for 5 or 8 years straight. but there's no advantage to taking dividends from this bond fund to buy VTSAX. you're moving cash from your right pocket to your left, and somehow thinking you've made yourself wealthier. you're not gaming the system or hacking the system to contribute to your Roth IRA above the limit. you could just as easily take the VTSAX dividends to buy VWEHX
>VWEHX has severely underperformed the market over justabout any time frame. VWEHX has performed about as well as the stock market since 1978 inception with a cumulative annualized return of 7.74%. https://investor.vanguard.com/investment-products/mutual-funds/profile/vwehx#performance-fees and VTSAX is not a benchmark for every investment on the face of the planet. just because something's under-performed the US market doesn't mean it's a bad investment.
> junk bonds do not do well when the market crashes maybe, maybe not. this vanguard fund crashed hard in 2008, but held up OK in 2000, 2001 and 2002. https://finance.yahoo.com/quote/VWEHX/performance?p=VWEHX I swear, all thees answers are based on 100% preconceptions. nobody bothered to look up the actual data.
> If the market crashes VWEHX is going with it. not necessarily. the US market lost over 10% a year in 2000, 2001 and 2002. VWHEX lost less than 1% in 2000, and gained over 1% each year in 2001 and '02. https://finance.yahoo.com/quote/VWEHX/performance?p=VWEHX
VWEHX is a poor diversifier to VTSAX. High yield is correlated to the stock market. A better strategy would be to put 100% of your money into VTSAX. I can't see a reasonable scenario where a 90/10 split would give you a better return or a better risk adjusted return (Sharpe Ratio) over a long period of time.
Why having anything in VWEHX at all then. That doesn’t make any sense.
If the dividends go into a fund that is growing (VTSAX) instead of one that is not (VWEHX) wouldn't you get more growth? Why reinvest dividends from VWEHX when the fund depreciates long term compared to putting it into VTSAX which appreciates?
Just one question...why? VWEHX has severely underperformed the market over justabout any time frame. While a dividend is nice you'll get it by *limiting your overall upside*. Now if you are getting older and want bonds for security it might not be so bad, but a person under 40 shouldn't be doing this strategy. You'll just...profit less.
You are making a contribution… you are taking the dividends from VWEHX and BUYING VTSAX
>Something like VWEHX which is mostly junk bonds with average duration of 4 years is probably not a good choice. What is the expected return of it? 4.76%? Is this estimated or "assured"?
If you have a time frame of 3-9 months, you typically will want to use a fixed income product with an average duration of similar time frame. Something like VWEHX which is mostly junk bonds with average duration of 4 years is probably not a good choice.
VWEHX in my Vanguard Roth IRA, and MDXBX through T Rowe Price (regular investment account). The dividends for the latter are triple tax-free if you're a Md resident.