Gas Exchange wrote: ↑Wed Dec 29, 2021 8:42 amI am semi-retired with a DW who is a more conservative investor than I am (both aged 66). Consequently, I am looking to shift several million dollars in retirement accounts, mostly to Treasuries over the next few months, to bring it to 50% of assets. Though initially inclined to use Vanguard short and intermediate treasury funds (VSBSX, VSIGX), I also looked at ETF versions (VGIT, VGSH). In large part because of reading William Bernstein's books I have shifted towards doing this myself by buying treasuries through my Schwab account. He also is quite negative about Bond ETFs v Bond Mutual Funds out of concern about ability to correctly price the underlying bonds throughout the day, especially when volatility hits.
For my taxable account I am likely to use VNYUX for Tax Free municipal bonds. Although called "NY Long Term Tax Exempt Admiral" its recent duration is more intermediate (5.79) though I might supplement with some individual highly rated or insured NY or NYC bonds with shorter duration to lower portfolio duration during this current period, to avoid interest-rate risk. Yes that is making a market call of sorts. For example, if interest rates don't go up much for years staying short on duration would have been wrong.
See AlsoBuying a Treasury Marketable Security — TreasuryDirect6 Month Treasury Rate Market Daily Analysis: Daily Treasury Yield Curve RatesHow to Buy Treasury Bonds and BillsWhat you need to know about treasury billsSo I realize I have embedded cascading issues/questions:
1. Are there sufficient price advantages buying individual treasuries at auction v secondary market to make up for the disadvantages of waiting for those auctions?
2. Do folks think that individual treasuries are worth the work v MF/ETFs? I wouldn't do this for other bonds as I don't want to generally be selecting corporate bonds or municipal bonds.
3. Do folks think that ETFs are now proven to be as stable a wrapper as MF for Bonds, despite thinner trading of bonds (perhaps not true for treasuries, but true for corporates and municipals).
4. Although both stock and bond ETFs seem to sport lower ER than twin Admiral MF, when I look at actual returns the ETFs do not seem to do better.
4. Is keeping a bond portfolio duration short (? 2 years) of intermediate (4-5 Years) wise in these super low interest times to avoid interest-rate risk, or too much of a market call for market agnostics?I appreciate input and apologize that a focused question turned into a wider-ranging array of issues. But the issues do all intersect, no?
I've seen someone else on this board who's educated opinion/experience is that a bond mutual fund's NAV price can be difficult to determine since some of the underlying bonds may not trade very frequently. Their view is that bonds ETFs are generally priced more accurately. For example, during the craziness in 2020, Vanguard's total bond mutual fund's NAV was higher than what the ETF share class was trading at, offering a rare arbitrage opportunity for those who held the mutual fund to sell at a higher NAV and rebuy the exact same holdings by purchasing the ETF version.
In the cases of Vanguard mutual funds that have ETF share classes, the performance difference is only going to be the difference in the ER, which might be only 0.01. That may not be enough to see charted out, depending on the precision.
For example, this chart shows three different share classes of Vanguard's total US stock market fund:
https://www.portfoliovisualizer.com/bac ... ion3_3=100
You can see that the ETF was worth about $280 more than the admiral share class and $1500 more than the investor class. That's the ER difference.
Your actual experience with the ETFs can vary, though, due to both intraday pricing changes as well as the bid/ask spread. For a buy-and-hold investor, it doesn't really matter. Unless you happen to need to sell at that exact moment, the potential crazy swings in ETF prices don't matter to you.
Note that if you can shift several million dollars to make your wife sleep better, what you do is likely not to matter much. At "only" $5M net worth, you are in the top 2% of households in the US.
