41
votes
Accepted
Why does the Morningstar overview of VMMXX say 81% cash?
Morningstar's definition of cash includes "cash equivalents (fixed-income securities with a maturity of one year or less)". So I'm guessing 81% of its holdings are short-term enough to fall into this ...
- 16.2k
19
votes
Are social/responsible stock funds pointless?
It's not just about the ethics of investing in these companies. What if you believe (either hypothetically or with supporting evidence) that companies that show good environmental and social ...
- 142k
12
votes
Are social/responsible stock funds pointless?
If you hold a stock in a company you stand to benefit directly from the activities of the company via dividends or stock buy backs. You also benefit indirectly from the company's profitability. The ...
- 14k
12
votes
Accepted
How to buy bond index funds only when they are mostly composed by higher interest rate (%) bonds
For a retail investor looking at simplified funds, I think the core assumption should always be that any publicly traded funds are efficiently priced. This concern you have, about the composition of ...
- 43k
8
votes
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Pros and cons of bond ETF versus traditional bond mutual fund?
Bond ETFs are just another way to buy a bond mutual fund. An ETF lets you trade mutual fund shares the way you trade stocks, in small share-size increments. The content of this answer applies ...
- 431
8
votes
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If a bond index fund's income is re-invested, how can it be a fixed income asset?
No, you are not quite correct.
Assume you have a simple bond that costs you $100. There are 2 ways the bond provides you money: It might provide you with interest every month/quarter/year, or it ...
- 43k
7
votes
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How is a mutual fund and ETF priced?
The price of a traditional mutual fund is determined by something called the Net Asset Value (NAV). Each day after the market closes, this value is calculated by adding up everything that the fund ...
- 116k
6
votes
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When are bond ETF dividends taxed?
Is this tax withheld before the dividend is paid out to the investor?
Only if you've been naughty.
https://www.irs.gov/taxtopics/tc307
Topic Number: 307 - Backup Withholding
When it applies, backup ...
- 50.8k
6
votes
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Criteria for selecting Bond ETFs
I handle bonds similar to how I do stocks, which is to say I assume the rest of the market knows more than me, so I pick the cheapest, most generic index funds available. Just like I don't overweight ...
- 16.2k
6
votes
Does buying bonds individually offer an advantage over bond funds/ETFs in a low interest rate environment because bonds can be held to maturity?
I wrote about this a while back, and it boils down to risk profile.
If you hold the bond to maturity, then you minimize your capital risk: if you bought a $1,000 bond, once it matures, you are ...
- 433
6
votes
Are social/responsible stock funds pointless?
Owning stock (and owning a fund which owns stock is owning stock as far as I'm concerned) directly gives power to a company. As a result of your ownership of the company (or, of your ownership of the ...
- 35.9k
5
votes
If a bond index fund's income is re-invested, how can it be a fixed income asset?
I think you're taking "fixed income" a bit too literally. They are funds that consist of fixed-income investments.
They provide nothing unless you're able to sell for a higher price than you ...
- 142k
4
votes
Are social/responsible stock funds pointless?
Remember that funds are backed by actual stocks. It might not give you access to the general meeting of the companies, but when you buy into EvilFund, they go out and buys evil-stocks for the money. ...
- 386
4
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Criteria for selecting Bond ETFs
I've been doing some research on this, and found a great answer on a Bogleheads forum:
I think the value of bond diversification is frequently over-estimated
by simple (and flawed) analogy with ...
- 7,571
4
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If a US tax resident buys some shares in a municipal money fund and sells them shortly after, do they incur any taxes?
In the US, taxes are usually on income, property or sale of goods or services. There are no taxes on transactions. So no, selling them doesn't incur any taxes.
.
.
.
Recognizing income does.
PS: ...
- 185k
3
votes
Dividend amounts -- not just yield -- from my bond fund decreased over the past 18 months
After all, the bonds still exist like when I bought the fund.
Some of them do (or most of them, or none of them, depending on how long ago you bought the fund). Each individual bond has a maturity ...
- 9,553
3
votes
how to estimate bond ETF price once interest rate changes?
You would need to see the weight of each position in the fund. Then you just calculate the price change of each bond and calculate according to weight.
Formula for each bond i attached from ...
- 1,021
3
votes
Where to learn about Trusts and alike?
I would like to specifically address your second question. There are a number of great resources available online, but I found that when I was first starting out the website Investopedia was a very ...
- 63
3
votes
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I need cash. What funds or stocks should I sell?
Unfortunately there is no perfect answer for this. First, there is a huge difference between liquidating 5000-10000€ for a "new" used car, 20-30k for a new car and >>100k for a house/...
- 7,462
3
votes
Accepted
How can a bond fund have a higher current yield than the bonds it contains?
I think you're mixing up current yield, coupon rate and yield (which is typically defined as "yield to maturity").
The stated rate on a bond (e.g. the in "Tenet Healthcare Corporation 5....
- 142k
2
votes
Effect on Bond asset allocation if Equity markets crash?
I agree that the cause of the crash can make a huge difference in the effect on the bond market. Here's a few other possibilities:
The crash is due to some underlying business market problem (like ...
- 142k
2
votes
Effect on Bond asset allocation if Equity markets crash?
what will happen to the valuation of Tom's bond holdings after the equity crash?
This is primarily opinion based. What will happen is generally hard to predict.
Bond Price Bump due to Demand:
Is ...
- 57.2k
2
votes
Does a bond etf drop by the amount of the dividend just like an equity etf
Most bond ETFs have switched to monthly dividends paid on the first of each month, in an attempt to standardize across the market.
For ETFs (but perhaps not bond mutual funds, as suggested in the ...
- 121
2
votes
Does a bond etf drop by the amount of the dividend just like an equity etf
It may be true for a bond fund. But it is not true for bond etf. Bond etf will drop by the same amount when it distribute dividend on ex-dividend date.
- 21
2
votes
Are social/responsible stock funds pointless?
Unless you're extremely wealthy, the fact that you can't participate in investor meetings of stocks you own indirectly through a fund is hardly an issue. Most direct investors have little influence on ...
- 2,055
2
votes
Accepted
how to estimate bond ETF price once interest rate changes?
The key measure you are looking for is the effective duration of the fund. The effective duration of the fund indicates how much the value of the fund will change with every 1% change in interest ...
- 142k
2
votes
Bond Mutual Fund Dividend Dropped Dramatically in Dec Why?
From this Morningstar link, their answer doesn't appear to be b.s. It looks like they lost their shirts on a few futures contracts. See the top holdings section and look at the values. The top holding ...
- 1,523
2
votes
Accepted
How to know if an international bond fund is currency hedged
Most ETF will have it in its name already.
Otherwise it will be adressed in the fund prospectus. Also the fund hedge rate will be adressed (you do not have to hedge 100% of the currency risk).
Yet ...
- 1,021
1
vote
Accepted
How is that this UK corporate bond index has gone down during the last month, if the UK interest rates are historically low?
The base rate is a specific rate the bank of England sets that heavily impacts banks and consumer debt, but sits independently from longer dated UK bonds, and even further removed from non government ...
- 5,768
1
vote
Dividend amounts -- not just yield -- from my bond fund decreased over the past 18 months
There are different moving parts in this.
When interest rates drop, bond prices rise. That's a good thing for the fund owner.
But as existing bonds in the portfolio mature, new purchases offer ...
- 77k
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