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Posted by RML on November 19, 2006, 11:47 am
With the future intention of moving (rolling over) 401k (403B) funds
into an IRA upon retirement, I am considering using either Fidelity or
Vanguard. Any opinions welcome.
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Posted by anoop on November 19, 2006, 12:01 pm
RML wrote:
> With the future intention of moving (rolling over) 401k (403B) funds
> into an IRA upon retirement, I am considering using either Fidelity or
> Vanguard. Any opinions welcome.
Pros for Vanguard:
- Better selection of index funds. They are especially better
when it comes to bond index funds.
Pros for Fidelity:
- Cheaper stock trades.
- Many local branches.
Anoop
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Posted by Mark Freeland on November 19, 2006, 2:06 pm
>
> Pros for Vanguard:
> - Better selection of index funds. They are especially better
> when it comes to bond index funds.
What are the virtues of a bond index? Unlike equities, bonds mature, so
there is forced turnover. All (?) bond index funds sample, so there is a
management factor in any case. Costs of actively managed funds can be
comparable as well. I don't see the usual advantages of index funds with
bond funds.
For example, compare Vanguard's intermediate bond index fund (VBIIX) with
its intermediate term investment grade fund (VFICX):
VBIIX VFICX
expense 0.18% 0.21% (index fund charges $10 for <$10K)
duration 5.9 4.9 years (lower means less interest rate risk)
yield 5.08% 5.29%
R2 vs. 1.00 0.99
5-10 yr
Beta 1.00 0.83 (lower means less relative volatility)
Std dev 4.44 3.70 (lower means less absolute volatility)
Avg. grade AA2-3 Aa3
Turnover 76% 51%
All data except turnover, std dev from Vanguard (others from M*). Bond
grades for both are right at the high/medium border (slightly lower for
managed fund), turnover is less for managed fund (in spite of its lower avg
maturity), costs comparable, index tracking comparable, duration lower for
managed fund, volatility (and M* risk) lower for managed fund.
I do believe that Vanguard is somewhat better than Fidelity with bond
funds - their funds tend to be somewhat lower cost (10-20 basis points) than
Fidelity's, but otherwise pretty comparable. And in bond funds, cost is
almost everything.
Mark Freeland
BnetOnewsX@sbcglobal.net
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Posted by cporro on January 10, 2007, 8:15 am
> What are the virtues of a bond index?
from what i've read bonds will protect you in long bear markets. now if
you want a bond that is really secure you go with Treasuries that are
backed by the US government. there are corporate and munis but these
aren't sure things. they could go under. you could try and buy say 30
corporates in different sectors to diversify and stay safe but this
gets pricey. i've never bough a bond before, but i guess the bare
minimum on a lot can be a hefty sum.
so from what i gather (in a purely hands off, non-real world way :D)
bond funds are an easy way to play it safe if you aren't interested in
Treasuries and don't have at least 100,000 to invest.
and those bond index funds (i think) use a mechanical model to decide
whats in the fund. i don't think they are actively managed.
but then again, i'm figuring this stuff out myself.
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Posted by P.Schuman on January 15, 2007, 1:11 pm
are you looking at something like VBMFX ?
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