Author Topic: swapped my bond fund allocation to asset fund  (Read 1331 times)

PJC74

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swapped my bond fund allocation to asset fund
« on: May 13, 2021, 08:05:04 AM »
I had 10% of my 401k in a bond fund. With the current environment, I swapped it for a real asset fund last month Exp Ratio (Gross)
0.21%. It doesn't have a ticker symbol, but here are the details. Would love to hear input from you guys if this is a good idea or not

Objective
The Fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index (the "Index") over the long term. The Fund seeks to approximate its custom benchmark, which is comprised of 15% Dow Jones U.S. Select REIT IndexSM , 25% Bloomberg Barclays Roll Select Commodity IndexSM, 25% S&P Global LargeMidCap Commodity and Resources Index, 25% Bloomberg Barclays US Treasury Inflation Protected Securities (TIPS) Index and 10% S&P Global Infrastructure Index.
Strategy

The Fund is sub-advised by SSGA. The Fund seeks to offer diversification and a disciplined rebalancing process by investing in asset classes representing exposures of approximately 25% in commodities, 25% in global natural resource stocks, 15 % in U.S. Real Estate Investment Trusts (REITs), 25% in U.S. Treasury Inflation Protected Securities (TIPS) and 10% S&P Global Infrastructure Index. The allocation across the five broad assets classes seeks to provide a long-term targeted real return of 4% in excess of the U.S. CPI measure of inflation, while targeting a level of risk, as measured by standard deviation, relative to longer-dated U.S. TIPS over a full business cycle. Both of these metrics are based on SSGA expectations for future returns, risk and correlations across the included assets and cannot be guaranteed. The Fund's asset class exposures are rebalanced to the strategic asset allocation weights on a quarterly basis. Asset class misweights and increased portfolio risk relative to the Index may occur as a result of intra-quarter market movements. The Fund may allocate cash flows or partially rebalance the Fund in efforts to reduce the asset class misweights or to maintain an active risk level that is consistent with the objective. The Fund, or any of the investment pools in which it invests, may hold a portion of its assets in cash and cash instruments, including short-term investment vehicles managed by SSGA or an affiliate. SSGA will not normally enter into foreign currency exchange transactions for the Fund.
« Last Edit: May 13, 2021, 08:06:51 AM by PJC74 »

Motostache

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Re: swapped my bond fund allocation to asset fund
« Reply #1 on: May 21, 2021, 10:24:31 AM »
Isn't this just tantamount to market timing?  Call me crazy, but I'm leaving my 10% in bonds because that's what my asset allocation should be. 

PJC74

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Re: swapped my bond fund allocation to asset fund
« Reply #2 on: May 22, 2021, 07:54:54 AM »
just seems like bonds are going to be a near sure loser. This fund is supposed to offer diversification, and so far I've gained back all the $$ that bonds lost this year plus some.

cool7hand

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Re: swapped my bond fund allocation to asset fund
« Reply #3 on: May 22, 2021, 08:00:22 AM »
Isn't this just tantamount to market timing?  Call me crazy, but I'm leaving my 10% in bonds because that's what my asset allocation should be.

+1

MustacheAndaHalf

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Re: swapped my bond fund allocation to asset fund
« Reply #4 on: May 22, 2021, 10:57:31 AM »
That seems to roughly match this 401(k) fund:
https://copera401k.voya.com/einfo/fundinfo.aspx?cl=CORADO&pl=650301PU&page=investment_informationfundinformationperadvantagereal&domain=copera401k.voya.com

That's a very small allocation to stocks, so I personally would avoid it.

talltexan

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Re: swapped my bond fund allocation to asset fund
« Reply #5 on: June 10, 2021, 08:13:41 AM »
The purpose of bonds isn't appreciation: that's why you invest in stocks and real estate. I feel like this switch you've made is replacing a screwdriver with a wrench. A different tool, but you still need the same job.

ChpBstrd

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Re: swapped my bond fund allocation to asset fund
« Reply #6 on: June 11, 2021, 08:31:12 AM »
I don't think it's a bad idea. You've gone from a highly appreciated asset class with no upside that is also highly vulnerable to a possible increase in inflation to a fund that will partially hedge the rest of your portfolio from a possible increase in inflation.

Even if inflation continues to underwhelm expectations, as it has done for the last 20 years, the fund is likely to outperform your old bond allocation because REITs, commodity companies, infrastructure companies, etc. have higher ROEs than the yield on bonds. You'll have more volatility due to recessions and corrections, but you'll nonetheless have managed inflation risk better.

theolympians

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Re: swapped my bond fund allocation to asset fund
« Reply #7 on: June 13, 2021, 08:57:00 AM »
Isn't this just tantamount to market timing?  Call me crazy, but I'm leaving my 10% in bonds because that's what my asset allocation should be.

+1

Nothing wrong with periodically reassessing your asset allocation. We don't want to be so tied to a plan that we never adjust under any circumstances. If you have an underperforming fund we should be open to better performing options.

It isn't something we should do by the week or month. I "think" about asset allocation annually. With that, I had not moved any funds in many years (pre 08). This year. I did move a large portion money, but that was due to nearing fire.

Mr. Green

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Re: swapped my bond fund allocation to asset fund
« Reply #8 on: June 13, 2021, 12:06:16 PM »
So OP's asset allocation was presumably 90% stocks/10% bonds. It is now 93.5% stocks/2.5% bonds/2.5% commodities/1.5% RE. We typically hold bonds to decrease portfolio volatility. If that was your intent I might be questioning if my new AA serves me better.

 

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