Gyroscopic Investing

I am curious if any Fidelity folks here use FUAMX for bonds. See here:

https://fundresearch.fidelity.com/mutua ... /31635V257

It's 7-10 year treasuries with a current duration (as of 11/30/21) of 6.68 years. This would be a bullet approach as opposed to the barbell. Expense ration is 0.03% with a 30-day yield of 1.36%.

Incidentally, our daughter holds some of this in a retirement account that is kind of a stock-rich GB allocation. That was a choice that I made for her a few years ago but, for some reason, it's harder for me to do the same for me and my wife.

Thanks in advance for any input.

nope fumbx .... the shorter version

barrett wrote: ↑Mon Jan 03, 2022 10:02 am , for some reason, it's harder for me to do the same for me and my wife.

Funny, I usually find it easier to do anything in my own account but harder in others’. Or even to give advice, because if they don’t like the performance, even short term….

I held that fund you mentioned for some time. I have a solo 401k at Fido. Right now I just hold treasuries directly in there.

mathjak107 wrote: ↑Mon Jan 03, 2022 10:27 am nope fumbx .... the shorter version

I see that FUMBX has a duration of about 2.7 years which is consistent with your view that one should avoid longer dated treasuries at the moment.

exactly

dualstow wrote: ↑Mon Jan 03, 2022 10:38 am

barrett wrote: ↑Mon Jan 03, 2022 10:02 am , for some reason, it's harder for me to do the same for me and my wife.

Funny, I usually find it easier to do anything in my own account but harder in others’. Or even to give advice, because if they don’t like the performance, even short term….

I held that fund you mentioned for some time. I have a solo 401k at Fido. Right now I just hold treasuries directly in there.

Well, in my case, I have made decisions for both my wife and our daughter because neither of them wanted to do so at the time. Daughter is now working and earning money and mostly buys individual stocks for the time being. But it did make an impression on her in 2020 when her mix of roughly 50% stocks, 20% gold and 30% FUAMX held up well during the stock market plunge. We started funding a Roth for her when she started earning money at age 18 and I had to decide on something.

Wife just considers bonds to be bonds without any interest in duration, quality, etc.

I've just struggled holding long bonds in the past even though I understand the PP theory. It's a behavioral issue. Just thinking that a fund that is less volatile might be easier for me to hold without checking on the 30-year yield three times per day.

barrett wrote: ↑Mon Jan 03, 2022 11:44 am I've just struggled holding long bonds in the past even though I understand the PP theory. It's a behavioral issue. Just thinking that a fund that is less volatile might be easier for me to hold without checking on the 30-year yield three times per day.

If you are after something less volatile, a 20/20/60 gold/shares/int-treasury allocation looks perfect

That’s a great looking portfolio. Trying to figure out if there is catch. It’s closer to my holy grail of building a US based Aussie gold smith portfolio but with ETF’s not mutual funds.

Apologies Hal. Didn't see that post from you until just now when I saw the one from ppnewbie. Don't think either of you were around (back before the earth's crust had cooled) when we'd discuss the "Desert Portfolio". We have a member here (and I sure wish he'd come back) who goes by Desert and he runs a portfolio that is roughly 10% gold, 30% stocks and 60% ITTs. My understanding is that he's not dogmatic that all the "bonds" be of the same duration or quality, so the 60% ITTs is kind of an average. Can't remember why Tyler took that one off his sample portfolios on PortfolioCharts, but it's easy enough to back test it and see that it's had low volatility and consistent returns.

For me I feel like I have to invest in order to stay ahead of inflation. And the asset that consistently does that over longer periods is stocks. Because I am risk averse, the issue kind of becomes how can I hold a decent slice of stocks and not have a lot of gut churning when that slice is getting whacked. These lower stock allocations seem like a good approach, though I do think 20% might be too low.

It used to be on Tyler’s site, but the page that references it gives a broken link now.
https://portfoliocharts.com/2015/07/25/ ... portfolio/

barrett,

I feel your pain, but I am not exchanging LTTs for ITTs.

I bought most of my LTTs from Fidelity via the secondary market in 2013-1014; a lesser amount in 2015-2017. They are all still in the black and they produce a small income stream (though not as big as I would like!) I do keep about 10% in TLT for re-balancing purposes and a smaller chunk in EE bonds. All my T-bonds are held in tax-deferred or tax exempt (Roth IRA) account (except the EE’s, of course).

When I changed my portfolio to the HBPP in 2013, I was 80-90% in stocks and sick of riding the Wall Street rollercoaster. As Bill Bernstein said somewhere, equities are poison for retired folks. Diversifying away from equities is probably the best investment decision I ever made. To be sure, LTTs can indeed be quite volatile in the short run but, paradoxically, I am convinced that they lower the volatility of the entire portfolio in the long run (10 years and over).

Understanding the paradox of T-bonds is essential to learning to live with them.