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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 ...
Craig W's user avatar
  • 15.9k
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 ...
D Stanley's user avatar
  • 137k
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 ...
Charles E. Grant's user avatar
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 ...
Grade 'Eh' Bacon's user avatar
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 ...
OneTruDragonGirl's user avatar
8 votes
Accepted

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 ...
Grade 'Eh' Bacon's user avatar
7 votes
Accepted

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 ...
Ben Miller's user avatar
  • 116k
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 ...
Craig W's user avatar
  • 15.9k
6 votes

Why aren't bond mutual funds seeing huge selloffs now?

The Fed sets the overnight borrowing costs by setting its overnight target rate. The markets determine the rates at which the treasury can borrow through the issuance of bonds. The Fed's actions ...
not-nick's user avatar
  • 6,418
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 ...
RonJohn's user avatar
  • 50.7k
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 ...
tendim's user avatar
  • 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 ...
Joe's user avatar
  • 35.8k
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 ...
D Stanley's user avatar
  • 137k
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. ...
epa095's user avatar
  • 386
4 votes

How does a bond fund fall in value?

Bond funds go up and down depending on whether the underlying bonds go up or down in value. One reason that bonds may go down is, as you said, the risk of default. Besides defaults, the other main ...
Tom Au's user avatar
  • 6,021
4 votes

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 ...
minou's user avatar
  • 7,536
4 votes

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: ...
littleadv's user avatar
  • 177k
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 ...
Thomas 's user avatar
  • 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 ...
PerfAnalyst's user avatar
3 votes

Where to learn about Trusts and alike?

An investment trust is quoted just like a share. You just compare what you paid (your book cost) with its current share price, not the NAV, as a trust's price can be at a premium greater than the ...
Pepone's user avatar
  • 192
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 ...
yoozer8's user avatar
  • 9,513
3 votes
Accepted

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/...
Manziel's user avatar
  • 7,442
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....
D Stanley's user avatar
  • 137k
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 ...
User1996's user avatar
  • 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.
Sang Luu's user avatar
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 ...
D Stanley's user avatar
  • 137k
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 ...
Dheer's user avatar
  • 57.1k
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 ...
Barmar's user avatar
  • 1,995
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 ...
D Stanley's user avatar
  • 137k
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 ...
T. M.'s user avatar
  • 1,523

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