As OP, adding a clarification to my previous post:
Perhaps the term "buyer's yield" is not helpful after all. Allow me to rephrase and improve. Although I have read a book on TIPS, they still seem too opaque to me, at least in a fund context. The posited contexts are the first year of owning an individual bond, a nominal bond fund, or a TIPS bond fund, VAIPX or VTAPX.
** Individual bond: The yield I receive will be the bond interest payments per contract creating the bond, divided by my purchase price. This is very easy to calculate.
** Bond fund, nominal bonds (Treasuries, with no bond turnover as simplest case): The yield I receive will be the bond interest payments over the year, divided by my cost, both presumably per share.
** Bond fund, TIPS: The income I receive over the year will be a blend of two sources: The inflation adjustments to capital, and the weighted average coupon. adjusted by my purchase price to produce my pre-inflation yield, times the capital after inflation adjustment. How can I know this pre-inflation yield number for my purchase? How can I unravel the two distinct income sources? What would my TIPS fund income have been with zero inflation?
I see VAIPX at 0.9% weighted average coupon. That percentage obviously is not my pre-inflation yield and needs to be adjusted up or down based on the price I paid, which I of course do have. I do not see how to do this adjustment.
I do not so far see anything in TIPS bond fund reporting that separates out inflation adjustment income from straight pre-inflation income based on the weighted average coupon adjusted for my purchase price to create my pre-inflation yield.
Knowing this information would help me better decide on when to own or sell TIPS funds. The inflation adjustment is not the only relevant feature. The pre-inflation rate, and the yield I bought at a specific price, is the other key feature area.
Perhaps the term "buyer's yield" is not helpful after all. Allow me to rephrase and improve. Although I have read a book on TIPS, they still seem too opaque to me, at least in a fund context. The posited contexts are the first year of owning an individual bond, a nominal bond fund, or a TIPS bond fund, VAIPX or VTAPX.
** Individual bond: The yield I receive will be the bond interest payments per contract creating the bond, divided by my purchase price. This is very easy to calculate.
** Bond fund, nominal bonds (Treasuries, with no bond turnover as simplest case): The yield I receive will be the bond interest payments over the year, divided by my cost, both presumably per share.
** Bond fund, TIPS: The income I receive over the year will be a blend of two sources: The inflation adjustments to capital, and the weighted average coupon. adjusted by my purchase price to produce my pre-inflation yield, times the capital after inflation adjustment. How can I know this pre-inflation yield number for my purchase? How can I unravel the two distinct income sources? What would my TIPS fund income have been with zero inflation?
I see VAIPX at 0.9% weighted average coupon. That percentage obviously is not my pre-inflation yield and needs to be adjusted up or down based on the price I paid, which I of course do have. I do not see how to do this adjustment.
I do not so far see anything in TIPS bond fund reporting that separates out inflation adjustment income from straight pre-inflation income based on the weighted average coupon adjusted for my purchase price to create my pre-inflation yield.
Knowing this information would help me better decide on when to own or sell TIPS funds. The inflation adjustment is not the only relevant feature. The pre-inflation rate, and the yield I bought at a specific price, is the other key feature area.
Statistics: Posted by Carsson3 — Wed Jun 19, 2024 4:15 am — Replies 5 — Views 506
