My first of the year rebalancing/repositioning is done. I haven't really made a lot of changes, but have consolidated and/or eliminated some smallish positions to keep it simpler. Bear in mind that my main goal these days is relative safety and fairly steady income with inflation protection for the future. I have both tax-deferred accounts and taxable accounts
In tax-deferred accounts my goal is to generate income within them sufficient to fund IRS "Required Minimum Distributions" (RMD) which are based upon life expectancy. The IRS guarantees (to themselves) that everything in them **will be taxed**. Since taxes are quite likely to rise, I have little desire to increase the total value per se of such funds at this stage. All gains are taxed the same as income, and the IRS is a full partner. So income with some inflation protection is key.
Half of all such funds are now in Vanguard's GNMA fund VFIJX with an average duration of 2.8 years (far shorter than normal but for a good reason), with a very low cost (0.11% per year), and paying 4.80% currently.
Another 12.5% of these funds are in HSTRX which is Hussman's managed Total Return income fund. Hussman has an eye toward inflation-hedged safety and typically has had a fairly high percentage in short duration TIPS. He also keeps 5-20% in gold stocks or gold ETF's and small amounts in dividend paying utilities. HSTRX only pays a regular cash dividend of about 1.5% or about the sdame as a money market fund, and that's the way to think of it, *except* that it has the flexibility to do a lot more underf the right conditions, and it almost always pays a sizeable year end gapital gains dividend which I plan to reinvest to preserve its inflation value. (The TIPS ETF's I know of are all too long in duration for my purposes compared to HSTRX.)
The remaining 37.5% is largely in the oil and gas trusts that I have discussed so much and in a fund TYG containing a lot of pipeline LP's which is structured so as to be suitable for a tax-deferred account. Also I have a very small position, which could be raised if they get cheaper again, in two bombed-out high dividend closed end funds in real estate and resource stocks, DRP and ETO. The oil and gas trusts and TYG are paying about 9% annualy on average. The trusts are of course wasting assets and their estimated reserves lives, ~13 years average at the moment, are very close to their effective stock durations ( see "
For the Duration") as measured by the price to dividend ratio.
