Author Topic: Rebalance Portfolio Help  (Read 2127 times)

flyersman

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Rebalance Portfolio Help
« on: July 21, 2017, 08:30:55 AM »
I am way out of whack where I want to be with allocations. Want to be 80/20 (34 yrs old) or US - 64% /  Intl - 16% / Bond 20%

Here is my current. The questions I have is around PTTAX which has an ER ratio of 0.86. I was thinking of moving all SLMCX into that fund which would get me close to 20% bond however that ER ratio seems high. Could anyone offer up a solution? I have a lot of cash on the side but will redeploy once I shift around current funds.


Taxable
$150,581 - FSTVX (https://fundresearch.fidelity.com/mutual-funds/summary/315911800?type=o-NavBar)
$30,432  - FTIPX - (https://fundresearch.fidelity.com/mutual-funds/summary/31635V653?type=o-NavBar)

Roth
$10,781 - FSTVX (https://fundresearch.fidelity.com/mutual-funds/summary/315911800?type=o-NavBar)
$12,362 - FSITX (https://fundresearch.fidelity.com/mutual-funds/summary/31635V653)


401K - These are through Merrill whom my company uses - Not Fidelity. Just posting the link for fund details. No Load Fee's. Just E/R.
$211,814 - BSPIX (https://fundresearch.fidelity.com/mutual-funds/summary/066923558) - Only index fund avail with low ER
$31,192 - PTTAX - (https://fundresearch.fidelity.com/mutual-funds/summary/693390445)
$55,050 - SLMCX - (https://fundresearch.fidelity.com/mutual-funds/summary/19766H429) - High ER but strong growth in tech sector over last 6-7 years





Here are 401K options in case you want to see them
Ready Assets Government Liquidity Fund - MRAXX
Putnam Stable Value Fund Web Report -
Prudential Government Income Fund - Class A - PGVAX
PIMCO Total Return Fund - Class A - PTTAX
JPMorgan High Yield Fund - Class A - OHYAX
PIMCO Real Return Fund - Class A - PRTNX
Templeton Global Bond Fund - Class A - TPINX
American Century One Choice In Retirement Portfolio - Class A - ARTAX
American Century One Choice 2030 Portfolio - Class A - ARCMX
American Century One Choice 2040 Portfolio - Class A - ARDMX
American Funds Capital Income Builder Fund - Class R3 - RIRCX
BlackRock Global Allocation Fund, Inc. - Investor A Class - MDLOX
Franklin Income Fund - Class A - FKINX
Invesco Equity and Income Fund - Class A - ACEIX
Columbia Dividend Income Fund - Class A - LBSAX
Lord Abbett Fundamental Equity Fund - Class A - LDFVX
Putnam Equity Income Fund - Class A -: PEYAX
iShares S&P 500 Index Fund - Institutional Class - BSPIX
MFS Massachusetts Investors Trust - Class A - MITTX
JPMorgan Large Cap Growth Fund - Class A - OLGAX
MainStay Large Cap Growth Fund - Class R2 - MLRTX
AB Discovery Value Fund - Class A - ABASX
Columbia Mid Cap Index Fund - Class A - NTIAX
Eagle Mid Cap Growth Fund - Class A - HAGAX
JPMorgan Mid Cap Growth Fund - Class A - OSGIX
Columbia Select Smaller-Cap Value Fund - Class A - SSCVX
Goldman Sachs Small Cap Value Fund - Class A -GSSMX
iShares Russell 2000 Small-Cap Index Fund - - MDSKX
Eagle Small Cap Growth Fund - Class A -HRSCX
Templeton Foreign Fund - Class A - TEMFX
Janus Henderson Overseas Fund - Class A - JDIAX
American Funds EuroPacific Growth Fund - Class R3 - RERCX
American Funds Capital World Growth and Income Fund - -: RWICX
Oppenheimer Developing Markets Fund - Class A - ODMAX
Oppenheimer Gold & Special Minerals Fund - Class A - OPGSX
Neuberger Berman Real Estate Fund - Class A - NREAX
Columbia Seligman Communications and Information Fund - Class A - SLMCX

kenaces

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Re: Rebalance Portfolio Help
« Reply #1 on: July 21, 2017, 11:07:48 AM »
16% international seem too low imo.  I feel like a lot of people suffer from this home country bias.  The US GDP is only something like 25% of world GDP, and International/EM are relatively cheaper than US equities at the moment.

I would also be looking to dump any fund with ER of 0.86, so SLMCX would be a sell for that reason alone - but also consider that 6-7 years of over performance might be clue that is OK to take your profits, and SP500 index is ~20% tech stocks anyway so not like you won't still have exposure to this.

I would consider how much cash you have to deploy before making and buy/sell decisions in taxable account. 

Don't forget to consider something like MUB or state specific muni ETF if you are in high tax state as a option of the 20% bonds if you are in at lest middle tax bracket.

flyersman

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Re: Rebalance Portfolio Help
« Reply #2 on: July 21, 2017, 12:54:20 PM »
Well, I am not selling anything in my taxable. I am going to pump more in to international.

I need to get my Bonds % up to around 20.

In order to do this, I want to sell my SLMCX which has a super high ER in my 401K however the lowest Bond option would be to pump it into PTTAX at .86%.

The only other option would be...

1. Move SLMCX to BSPIX (S&P 500 tracker).
2. Keep or sell current PTTAX and move to BSPIX.
3. Sell the FSTVX in my Roth and buy more FSITX and then even out the remainder in my taxable with Muni's

Radagast

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Re: Rebalance Portfolio Help
« Reply #3 on: July 21, 2017, 01:56:20 PM »
The only funds I would use in that list are BSPIX and NTIAX. I would hold bonds in the Roth IRA, or else in taxable possibly using tax exempt bonds.

flyersman

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Re: Rebalance Portfolio Help
« Reply #4 on: July 22, 2017, 08:46:43 AM »
I think I might do all BSPIX in my 401k, move my who role to FSITX and redeploy capitol to bonds in my Taxable to even it out to 20%. That means having about 80k of bonds in taxable. Yikes. What would be a good one to use from fidelity

Saw FTABX http://www.morningstar.com/funds/XNAS/FTABX/quote.html
« Last Edit: July 22, 2017, 09:57:28 AM by flyersman »

Chesleygirl

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Re: Rebalance Portfolio Help
« Reply #5 on: July 22, 2017, 10:56:17 AM »
I
Here is my current. The questions I have is around PTTAX which has an ER ratio of 0.86. I was thinking of moving all SLMCX into that fund which would get me close to 20% bond however that ER ratio seems high. C

I have been looking for a bond index fund, and most of them seem to have high expense ratios. I'm not sure why. I'm looking at a bond fund index now that has the lowest ER I could through Fidelity find of 0.70. Although I have not done an exhaustive search yet.

Are you trying to do an 80/20 risk for your portfolio? (80% stocks, 20% bonds)?

maizeman

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Re: Rebalance Portfolio Help
« Reply #6 on: July 22, 2017, 11:16:49 AM »
16% international seem too low imo.  I feel like a lot of people suffer from this home country bias.  The US GDP is only something like 25% of world GDP, and International/EM are relatively cheaper than US equities at the moment.

Yes that's true if you look at GDP numbers. However, because so many international companies are based in the US, the American stock market is between 45-55% of all the value of all the stock markets in the world depending on the year. VT (Vanguard Total World) is about 52% american stocks right now.

Now that said, I also think the OP could also probably increase their international allocation a bit, the above is just a pet peeve of mine.
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flyersman

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Re: Rebalance Portfolio Help
« Reply #7 on: July 22, 2017, 11:19:12 AM »
80% Stock / 20% Bond

Us stock 70% and Intl 20 %

That makes it 64% US / 16% Intl / 20% Bond

FTABX is 0.25% ER. Would that be better in taxable or go the PTTAX route in 401k with er of .86

In the grander scheme of things and a 15-20 year horizon is it really worth the hassle. I could eat the .86 with pttax and keep it simple having bonds on 401k, move fstvx to fsitx in roth.

In future I'll just then continue contributions to 401k BSPIX and Fstvx/ftipx in taxable
« Last Edit: July 22, 2017, 11:25:20 AM by flyersman »

maizeman

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Re: Rebalance Portfolio Help
« Reply #8 on: July 22, 2017, 11:21:36 AM »
80% stocks * 30% of stocks are international should mean 24% international stocks, not 16%, right?
"Itís a selective retirement," Richard explained, "a retirement from boring s**t."

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flyersman

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Re: Rebalance Portfolio Help
« Reply #9 on: July 22, 2017, 11:26:36 AM »
80% stocks * 30% of stocks are international should mean 24% international stocks, not 16%, right?

Your right, i made a boo boo. I'm open between 16-24% international across the whole portfolio

maizeman

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Re: Rebalance Portfolio Help
« Reply #10 on: July 22, 2017, 11:33:06 AM »
Definitely ditch the SLMCX. What bugs me more than the expense ratio for the pimco total return is that if I'm reading the summary link correctly you'd pay a close to 4% front load fee to buy into it. Expense ratios are always going to exist, but there is no excuse for front load fees like that in this day and age.

Looking through all the other bond funds avaliable in your 401k is there anything with a similar expense ratio but no load?
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flyersman

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Re: Rebalance Portfolio Help
« Reply #11 on: July 22, 2017, 12:46:16 PM »
Definitely ditch the SLMCX. What bugs me more than the expense ratio for the pimco total return is that if I'm reading the summary link correctly you'd pay a close to 4% front load fee to buy into it. Expense ratios are always going to exist, but there is no excuse for front load fees like that in this day and age.

Looking through all the other bond funds avaliable in your 401k is there anything with a similar expense ratio but no load?

I'm pretty sure there isn't a load on any of the 401k funds through Merrill. Might show it but it's waived. The only Bond Fund worth it is PTTAX with .86.

Should I use that for my bonds or go all BSPIX then fill Roth with FSITX and remainder in taxable with  FTABX http://www.morningstar.com/funds/XNAS/FTABX/quote.html

Chesleygirl

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Re: Rebalance Portfolio Help
« Reply #12 on: July 22, 2017, 12:48:29 PM »
If you want some international, Fidelity has some bond index funds called multi-sector, that include both domestic, government and international bonds.

JGIAX is a multi-sector bond fund that Fidelity lists with an ER of  0.65% which doesn't seem as high as most of the others. Has a four-star rating.

I agree with the above poster to forget about SLMCX, paying load fees will eat away at your investments.
« Last Edit: July 22, 2017, 12:52:07 PM by Chesleygirl »

Radagast

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Re: Rebalance Portfolio Help
« Reply #13 on: July 22, 2017, 01:31:42 PM »
go all BSPIX then fill Roth with FSITX and remainder in taxable with  FTABX http://www.morningstar.com/funds/XNAS/FTABX/quote.html
That is what I would do. FTABX looks fine. There are also ETF's like MUB which could work.

flyersman

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Re: Rebalance Portfolio Help
« Reply #14 on: July 22, 2017, 08:05:12 PM »
go all BSPIX then fill Roth with FSITX and remainder in taxable with  FTABX http://www.morningstar.com/funds/XNAS/FTABX/quote.html
That is what I would do. FTABX looks fine. There are also ETF's like MUB which could work.

I'm reading a lot about short, intermediate and long term bonds. What is each and what are implications in a taxable account.

Are these fund tax free on disto gains  and how about when I go to sell them?

Why would I want MUB or NJ bond/CA binds over FBATX

flyersman

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Re: Rebalance Portfolio Help
« Reply #15 on: July 24, 2017, 06:12:57 PM »
Someone recommended buying a combo of VTEB for 4.95 and FTABX in taxable.

I was also told Muni's can act as cash reserve. Don't understand this.

On a side note I'm 34 

Here are two options.

OPTION 1

Taxable
$150,581 - FSTVX
$112,432 - FTIPX
$117,000 - VTEB/FTABX

Roth
$23,143 - FSITX

401k
$298,056 - BSPIX


OPTION 2

Taxable
$150,581 - FSTVX
$89,985 - FTIPX

Roth
$23,143 - FSITX

401k
$89,000 - PTTAX
209,056 - BSPIX
« Last Edit: July 24, 2017, 06:17:18 PM by flyersman »

Radagast

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Re: Rebalance Portfolio Help
« Reply #16 on: July 25, 2017, 07:19:18 PM »
I would go with Option 1. Any reason for the VTEB/FTABX split? Nothing wrong per se, just curious. FTABX has a little higher risk, while VTEB is a total index. If you want to balance out the slightly higher risk of FTABX with a lightly lower risk tax exempt bond fund VWIUX might be good.

OPTION 1

Taxable
$150,581 - FSTVX
$112,432 - FTIPX
$117,000 - VTEB/FTABX

Roth
$23,143 - FSITX

401k
$298,056 - BSPIX

flyersman

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Re: Rebalance Portfolio Help
« Reply #17 on: July 26, 2017, 09:12:50 AM »
I would go with Option 1. Any reason for the VTEB/FTABX split? Nothing wrong per se, just curious. FTABX has a little higher risk, while VTEB is a total index. If you want to balance out the slightly higher risk of FTABX with a lightly lower risk tax exempt bond fund VWIUX might be good.

OPTION 1

Taxable
$150,581 - FSTVX
$112,432 - FTIPX
$117,000 - VTEB/FTABX

Roth
$23,143 - FSITX

401k
$298,056 - BSPIX

This is where I struggle to understand how much I am saving or gaining in the long run between the options. If its $100-2000 over 10years than either option works. How do you determine that Option 1 is better. Trying to understand the boiled down numbers. I also don't know what part of VTEB would be taxed if any since its tax exempt.

28% Tax bracket/ PA state 3.1%

My target allocation for bonds is 20% of my portfolio ($117k)
At the moment the only Bond Fund in 401k is PTTAX with ER 0.86%.

Taxable
VTEB 1.92 - SEC Yield ER .09
FTABX 2.23 - SEC Yield ER .25
MUB 1.75 - SEC Yield ER .25
401K
PTTAX  2.15 - SEC Yield ER .85

Would it be an even wash holding the bonds in the 401k with high ER vs the other or would one better than the other. Not sure if my plan wouldn't more more in taxes in the taxable.


kenaces

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Re: Rebalance Portfolio Help
« Reply #18 on: July 26, 2017, 01:56:20 PM »
When I looked up PTTAX it showed up as class A shares with a 3.75 front end load(sales charge)?  Does your 401k charge this?  If so you have easy decision so avoid this fund.

In general I prefer ETFs for taxable account as you never get surprise taxes distributions, but the finds you listed in option 1 look pretty tax efficient as the are indexes with low turnover.

flyersman

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Re: Rebalance Portfolio Help
« Reply #19 on: July 26, 2017, 02:39:54 PM »
When I looked up PTTAX it showed up as class A shares with a 3.75 front end load(sales charge)?  Does your 401k charge this?  If so you have easy decision so avoid this fund.

In general I prefer ETFs for taxable account as you never get surprise taxes distributions, but the finds you listed in option 1 look pretty tax efficient as the are indexes with low turnover.

No front end load at all in 401K. Just ER

Radagast

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Re: Rebalance Portfolio Help
« Reply #20 on: July 26, 2017, 10:18:23 PM »
This is where I struggle to understand how much I am saving or gaining in the long run between the options. If its $100-2000 over 10years than either option works. How do you determine that Option 1 is better. Trying to understand the boiled down numbers. I also don't know what part of VTEB would be taxed if any since its tax exempt.

28% Tax bracket/ PA state 3.1%

My target allocation for bonds is 20% of my portfolio ($117k)
At the moment the only Bond Fund in 401k is PTTAX with ER 0.86%.

Taxable
VTEB 1.92 - SEC Yield ER .09
FTABX 2.23 - SEC Yield ER .25
MUB 1.75 - SEC Yield ER .25
401K
PTTAX  2.15 - SEC Yield ER .85

Would it be an even wash holding the bonds in the 401k with high ER vs the other or would one better than the other. Not sure if my plan wouldn't more more in taxes in the taxable.
Part of this is my opinion that bonds are for money you need soon, so if they are in a retirement account that can't be tapped for more than 5 years I think why are they even useful? Not everyone has that opinion. The high expense ratio makes me feel that more strongly.

You will pay 3.1% PA tax on all those tax exempt funds, but avoid 28% federal.

Vanguard has a PA tax exempt (from everything) fund but it is probably even higher risk and should not be more than half your bonds.

Anyhow it doesn't probably matter much either way. As I said in a recent thread we are talking maybe 0.1% per year between the best and worst choices overall. To make things even more pointless, it is hard to know in advance which one will be best.

flyersman

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Re: Rebalance Portfolio Help
« Reply #21 on: July 29, 2017, 08:16:53 AM »
What would be thoughts on just doing a big Ally 5 year cd at 2.25% over the bond strategy.

A few other places I read say VTEb wouldn't be best option for taxable and go the CD route.

kenaces

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Re: Rebalance Portfolio Help
« Reply #22 on: July 29, 2017, 10:49:29 AM »
Seems pretty close on risk adjusted return basis.  You get higher after tax interest rate on munis but you do take a bit more credit and interest rate risk.  I own some laddered CDs and munis in account that is sort of blended(part Efund/savings/retirment).  If you are uncomfortable with all minus you can just go 50/50?

flyersman

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Re: Rebalance Portfolio Help
« Reply #23 on: July 31, 2017, 09:51:46 AM »
Seems pretty close on risk adjusted return basis.  You get higher after tax interest rate on munis but you do take a bit more credit and interest rate risk.  I own some laddered CDs and munis in account that is sort of blended(part Efund/savings/retirment).  If you are uncomfortable with all minus you can just go 50/50?

Is the below more accurate based on todays numbers if they remained static for the next few years? I added in FTABX which actually looks like a great option over MUB and VTEB

Even with the higher ER, PTTAX also looks like the winner in the perfect world if nothing changed based on todays numbers and I don't need that money in the short term.


Now on the flip side, if I plan to use the invested money for a down payment of a house or something else, maybe go the Taxable Muni route. Yes potentially LESS yield however they are liquid and would only be hit with the state tax if I sell??

My take away from my Chart is PTTAX and FTABX are comparable with VTEB and MUB lagging behind.
« Last Edit: July 31, 2017, 12:45:11 PM by flyersman »

flyersman

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Re: Rebalance Portfolio Help
« Reply #24 on: August 06, 2017, 10:12:34 AM »
Thanks. With ultralow yields I'm wondering even why I would buy bonds in the first place.

I mean take $100k investment in taxable. I'm looking at about $1500-2500 return in a year right. Am I wrong to expect more from my money.

I'm struggling so much trying to calculate out potenial gains on a fund so I can make better informed decisions. What you guys say is great but I'm not understanding the math. I read a lot about yields and also see coupon rate mentioned but I can find coupon rate anywhere on the fund.

Radagast

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Re: Rebalance Portfolio Help
« Reply #25 on: August 06, 2017, 10:30:25 AM »
The SEC yield is the coupon rate of the fund. TTM yield includes both interest and capital gains. Bonds are useful in downturns, especially as you get ready to FIRE. If that is a long time away then it is up to you if your situation and mentality require bonds. FTABX is the fund I would pick of those mentioned, for myself, if I was choosing just 1.

neonlight

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Re: Rebalance Portfolio Help
« Reply #26 on: August 06, 2017, 10:38:20 AM »
Kudos for attempting to diversify by investing international.

I am headed the opposite way by buying more into US since I am a non US resident and started in Asia.

One area I am looking at is REITS in Asia. I look at the ones listed on SGX(Singapore) rather than HKSE(Hong Kong). HKSE is traded heavily because of Chinese investors, you can try to get in to speculate but SGX is safer hands. I try to focus on these two exchange as they are the biggest and most reputable. Japan and China exchange huge too but it's not as assessable and I really don't like the speculative nature of many stocks on Chinese exchange.

flyersman

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Re: Rebalance Portfolio Help
« Reply #27 on: August 09, 2017, 09:12:10 PM »
If I go the VTEB or FTABX route in taxable, i am reading about DRIP. How does this work? Someone mentioned it would throw off tax lots

Radagast

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Re: Rebalance Portfolio Help
« Reply #28 on: August 09, 2017, 10:35:51 PM »
You are really worrying about inconsequential things now! If you choose to automatically reinvest your bond fund dividends, they are paid out every month. Compare this to ITOT which pays them out every quarter, but each fund has its own interval. In the future if you sell and have realized capital gains (or try to claim losses) each month will be its own tax line item with its own little capital gain. Not a big deal now because brokers are required by law to track them for you, but a nightmare 10 years ago. Even so, I personally do not reinvest dividends automatically in my taxable accounts and instead invest them every quarter in whatever fund is looking low.