Gyroscopic Investing

Current AA is 60/40 distributed across 401K and IRA accounts. PRPFX comprises 15% of this mix and is the only non FI investment maintained in a taxable account. The amount is too large in comparison to the balance of the portfolio to exclude from AA calculations.

75% of the fixed income holdings are in an Intermediate-Term Bond index, 15% in TIPS and 10% in a Limited-Term Tax-Exempt municipal fund. I am considering exchanging the muni fund for PRPFX in taxable, replacing 10% of IT Bond Index and all of TIPS for a Stable Value and Short-Term Investment Grade bond fund respectively.

The main objectives are to counterbalance bond duration after exchanging the muni fund for PRPFX and replace TIPS with a Short-Term investment grade fund.

An alternative approach would be to replace TIPS with PRPFX in tax-deferred as well. What do others think of this strategy?

Best,
Budd

Are others replacing tax-exempt municipal bonds or cash holdings with PRPFX in a taxable account? I am contemplating switching VG Limited-Term TE for PRPFX to restore AA to 65/35 from 60/40.

I exchanged my tax-exempt Vanguard muni bond funds for the relative safety of VG short-term treasury and some VG intermediate-term treasury. These two funds are really a mix of my PP cash holdings and my emergency fund. Actually am over-allocated on the cash front, so I ventured into the intermediate term treasuries...

I still have munis as part of my vP. Following Harry's advice, I call it money I'm willing to lose and can afford to lose.