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Frequent Contributor

2019 - Bond OEFs

Let’s look at several bond OEFs

.........Fund......1 month...YTD

  •   Multi/MBS
  •   SLISX......1.1....7.65
  •   PDIIX……..0.6……6.5
  •   JMUTX.....0.9.....4.8
  •   JGIAX......0.7.....5.5
  •   PIMIX......0.9.....3.9
  •   EIXIX.......1.8...13.5
  •   VCFAX.....0.6.....3.45
  •   IOFIX......0.9.....3.3
  •   SEMMX....0.6......2.0
  •   Bank Loans/Floating rate
  •   EIFAX......1.8.....6.15 
  •   Uncontrain/Nontrad
  •   PMZIX......0.4....1.9   
  •   PUTIX.......0.6…..2.7
  •   HY Munis
  •   PHMIX…....0.8......4.7   
  •   MHMAX.....0.9......5.6  (duration > 10 year)
  •   MMHAX.....0.5......3.8   
  •   OPTAX......0.9......5.45   
  •   GHYAX......0.8......4.8
  •   Inter Term Bond
  •   DBLTX.......0........2.0
  •   BCOIX......0.2......3.9
  •   BND…........0.......2.95
  •   HY +EM
  •   HYG.........1.0......8.65
  •   PHIYX......1.2......9.0
  •   FNMIX……..0.9……..6.8

 

Observations:

HY+EM had another good month.

Bank loan (EIFAX) did better than HY last month + a good YTD. 

The best muni OEFs cleared the 5% mark for YTD, Muni are on a run since 11/2018.  Munis have 2 major advantages, Fed tax free and “safer” than other categories and compared to other higher rated bonds they did much better. 

Multi- There is no magic, funds like PDIIX,STISX,PLSFX that made more YTD had HY and/or EM bonds. JGIAX is the next in line, mostly MBS but smaller % in HY than PDIIX,STISX,PLSFX and still did pretty well ST and LT. Basically, the following are ranked according to SD low to hi(PIMIX,JGIAX,PDIIX,STISX=PLSFX), a one year chart shows why PIMIX has the best risk/reward. For a huge AUM like PIMIX, one month at 0.9% was a nice return.

But as usual, all you need is one fund to the exception like EIXIX(link) which has 72% in RMBS + 14% in IO(interest only) MBS.  MBS bonds work well when rates go down or steady but IO MBS work well when rates rise.  The managers are using both to cover rates up/down/steady.

===========================

The following is what I did last month and not recommended to anybody. Do your own DD.

PIMIX (since early 01/2019) continues to be my largest holding; EIXIX and OPTAX(since late 02/2019) are not far behind. JGIAX is my newest position (early 04/2019) but much smaller % than the others. Stocks are doing great YTD but when many bond funds are doing 1% or more per month there in nothing to complain. I use(mainly trade) stocks instead of HY/EM bonds because a good trade that last days-weeks is worth months of bonds performance. 

Investors, who don't mind and uderstand the risk, may use SEMMX+PUTIX as a cash sub LT (and never forget Munis).  I remember so many posts in 01/2019 about MM/CD.  

 

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Frequent Contributor

Re: 2019 - Bond OEFs

FD1000:

I would not based my decision on 2008.  I will supply the numbers and you can do what you want, the following are based on 3 years(link).  GHYAX is the clear winner for rsik/reward.  It has the best performance(=CAGR).  It has the second best SD(=volatility) after VWALX but much higher performance (and why it's worth it). GHYAX has the best of all the others too.  OPTAX is not recommended LT.

For 5 years the numbers are much closer(link).

Fund

CAGR

Stdev

Best Year

 Worst Year

 Max. Drawdown

 Sharpe Ratio

 Sortino Ratio

PHMIX 

5.04% 

4.30%

 9.81%

-0.65%

-6.61% 

0.91

1.23

MMHAX 

4.74% 

4.30%

 8.60%

-1.35%

-6.55% 

0.84

1.15

GHYAX 

6.12% 

4.15%

 9.00%

0.74%

-5.68% 

1.18

1.67

VWALX 

3.97% 

3.91%

 7.95%

-0.95%

-5.95% 

0.73

1

 

=====================

perrywinkle:

Thanks FD. I've looked at some of these numbers in the past. GHYAX looks good on a CAGR basis.  Most of its CAGR edge is based on appreciation vs. income as it generates the same or a bit less income than the others, when you have Portfolio Visualizer show the income in addition to the total return. Not clear where they take the additional risk to get the additional NAV gains. The 2% early redemption fee has also been a negative but its ability to rebound from drawdowns in the last few years mitigates this to some degree. Your analysis provides more food for thought.  Thanks again for your repsonse.

=====================

FD1000:

The perception for many is that extra performance comes with extra risk but it’s not true for several funds we know over the years.  GHYAX higher performance came with better risk attributes.  I invest based on numbers not perceptions :smileyhappy:

The 2% penalty for the first 60 days shouldn’t be a problem for most investors, after all, most hold for months and years.  Even I(as a trader) bought it in 2 chunks in the past.

Again, there are no guarantees for future performance and market conditions may change the outcome.

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Frequent Contributor

Re: 2019 - Bond OEFs

Realistically, though, don't the risk statistics reflect, at least to some degree, the performance?  If something contains assets which are 'working', wouldn't that ALSO be reflected in good metrics?  And isn't it theoretically possible for a fund to be doing poorly, but still have good risk attributes (just invested 'wrongly')?  I mean, these are just rhetorical questions; I'm not really sure about the answers.  Just seems logical that a poorly performing fund wouldn't be very volatile, for example.  Upside/downside capture should be useful.  Deviation(s), not so much.

It comes down to looking at multiple stats which, ideally, measure different things; not merely things which are related to one another; albeit non-obviously.

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Frequent Contributor

Re: 2019 - Bond OEFs

I'm always looking at performance first then risk attributes.  This means great risk attributes without performance don't interest me. You must have both. 

Good funds have better performance + similar risk attributes.

Good funds have similar performance + better risk attributes.

The best funds have better performance + better risk attributes and GHYAX have both when looking at my example.

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Frequent Contributor

Re: 2019 - Bond OEFs

The first 4 months of 2019 were one of the best for stocks and bonds. 

Based on 1) this can't go on for long and I like to lower my risk  2) checking trends in the last 2-3 week  3) My stocks trades made close to 12%  4) I made my yearly goal performance already in 03/2019...and I will probably switch.

Looking at one month chart of PIMIX,EIXIX(MBS),OPTAX(HY Muni) + "riskier" Multi (JGIAX,PDIIX,STISX)...then change to starting date of 4/14 and performance is PIMIX 0.4...EIXIX 0.55...OPTAX 1.0...JGIAX,PDIIX,STISX 0.3.  

The result: Sell JGIAX and add to EIXIX+OPTAX to end up with PIMIX,EIXIX,OPTAX

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Contributor ○

Re: 2019 - Bond OEFs

How they have performed - earned in my portfolio is what is important to me, not their stats.  I haven't been trading cefs lately - for a number of reasons. Hesitant to buy any one of them in large quantities as I do with oefs.

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Frequent Contributor

Re: 2019 - Bond OEFs

This thread is about OEFs :-)

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Contributor ○

Re: 2019 - Bond OEFs

You mention your stock trades, in a bond oef thread. Funny rules...

 

 

 

 

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Frequent Contributor

Re: 2019 - Bond OEFs


@jmrdnc wrote:

You mention your stock trades, in a bond oef thread. Funny rules...

 

 

 

 


+1.  I mentioned it as part of my explanation of why I'm reducing my risk.

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Re: 2019 - Bond OEFs


@FD1001 wrote:

The first 4 months of 2019 were one of the best for stocks and bonds. 

Based on 1) this can't go on for long and I like to lower my risk  2) checking trends in the last 2-3 week  3) My stocks trades made close to 12%  4) I made my yearly goal performance already in 03/2019...and I will probably switch.

Looking at one month chart of PIMIX,EIXIX(MBS),OPTAX(HY Muni) + "riskier" Multi (JGIAX,PDIIX,STISX)...then change to starting date of 4/14 and performance is PIMIX 0.4...EIXIX 0.55...OPTAX 1.0...JGIAX,PDIIX,STISX 0.3.  

The result: Sell JGIAX and add to EIXIX+OPTAX to end up with PIMIX,EIXIX,OPTAX


OK, get it.

One question, why not OMFYX class (instead of OPTAX which has a Load I believe)?  

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Frequent Contributor

Re: 2019 - Bond OEFs

OPTAX is load-waived at Schwab or Fidelity. OMFYX is Institutional Only not retail.

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Frequent Contributor

Re: 2019 - Bond OEFs

This morning I was looking for the following: bond funds with mostly higher rated bonds, dist > 3.5%, more Corp bonds(because they are "better" than Gov bonds).  My thinking is that rates are not going up, this category is doing well for one week, one month +YTD.  VCIT is a good ETF but I want more diversification.  M* may call this category inter-term core plus.

Found USIBX(NTF at Schwab, ER=0.63), at Fidelity UITBX(NTF but ER=0.9%), if you want to buy USIBX you will pay $49.95.  See YTD chart of BCOIX,USIBX,VCIT,FCDDX.  All have a nice chart and good YTD performance.  Change to one month and since 5/2 and USIBX leads.  USIBX also have a good LT performance for 1-3-5-10 years the fund ranks at 1-13 in its category.  Also see a nice 3 year performance + risk attributes from PortVis(here in this category.  I know that FCCDX category at M* but I don't pay attention, it has IG bonds around 84% so it's close to the others.

USIBX had over 90% in IG bonds. From the total about 75% in Corp bonds, 7% Gov, the rest is in MBS, Muni, other.

================

HY Munis continue to perform very well for 1-4-12 weeks and YTD, I increased my % in OPTAX to be my biggest fund.

 

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Explorer ○

Re: 2019 - Bond OEFs

One of my favorites EIBAX.

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Frequent Contributor

Re: 2019 - Bond OEFs

Munis: this category is on fire for 6 months.  YTD...OPTAX 6.5%...NHMAX 6.5%...GHYAX 5.7%...PHMIX 5.5.  Last week they made 0.5-6%.  Running these 4 funds thru PortVis(link) shows that GHYAX has the best risk/reward, then OPTAX. So, for LT I would own GHYAX(the 2% ST penalty for 60 days isn't an issue).  I use OPTAX since 02/2019.

According to M* OPTAX has 10% in Puerto Rico...GHYAX,PHMIX 5%...NHMAX 3%..  The first 3 are inter duration while NHMAX  (link) Duration = 9.57, leverage=22.1% and it competes well with Muni CEFs with better risk attributes.

Over the years I have used all 4 funds.  Looking at the break down below and OPTAX bonds are rated higher than GHYAX 

GHYAX break down

AAA    0.7
AA     16.1
A        23.7
BBB    22.8
BB      7.5
B        3.0
CCC    1.7

NR      21.7%

OPTAX breakdown

Type% Bonds
AAA2.3
AA27.12
A26.68
BBB14.55
BB1.45
B2.18
Below B5.45
Not Rated20.27

 

As usual, the above is just presenting the numbers not a recommendation.  Please do your own due diligence.

 

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Participant ○

Re: 2019 - Bond OEFs

FD1000,

Thank you for your postings. I have tweaked my bond funds based on your postings.

Thanga

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Re: 2019 - Bond OEFs

You can purchase NHMIX, NVHIX, GHYIX, OMFYX from WellsTrade.

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Frequent Contributor

Re: 2019 - Bond OEFs

Suppose I wanted to hold several bond OEFs without much trading.  I searched at Schwab the following

Taxable Bond;

 Morningstar CategoryIntermediate Core Bond, Multisector Bond, Nontraditional Bond, Ultrashort Bond

Morningstar Overall4 Stars, 5 Stars

Standard DeviationLess than or equal to 3.6

Total Return (3 Month)Greater than or equal to 2Average Annual Return (3 Year)Greater than or equal to 5Average Annual Return (1 Year)Greater than or equal to 4.5;   This criteria is to ensure a fund with good performance for 3-12-36 months to cover ST+LT performance.

Fees/LoadsOneSource Funds (no-load, no transaction fee)Open to New InvestorsYes

The following are pretty good choices I can live with (select 4-5 funds from the following VCFAX+PIMIX+JMUTX+CLMAX+PUCZX+JGIAX+IOFIX).

Selected Funds.PNG

 

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Frequent Contributor

Re: 2019 - Bond OEFs

 

FD, thanks for continuing your approx. annual BOND THREAD here on the new M* website.

I personally placed a high reliability and confidence in your bond thread and posts, and the posts of others.  Got many of my bond fund choices and decision considerations therein.

Remains to be seen if the other traditional bond thread posters follow you here..I wish they do.

R48.

 

 

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Explorer ○○○

Goldman Fund Makes Record Retreat From Muni Junk Bonds Over Risk (GHYAX / GHYIX)

This article is about GHYAX / GHYIX and has comments from Ben Barber the lead manager of the fund.  They have reduced risk by moving more to investment quality munis from lower quality.

https://www.bloomberg.com/news/articles/2019-05-16/goldman-fund-makes-record-retreat-from-muni-junk-...

Thanks to @Beliavsky who posted the article in the CEF forum.

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Frequent Contributor

Re: Goldman Fund Makes Record Retreat From Muni Junk Bonds Over Risk (GHYAX / GHYIX)

First, I wouldn't panic, the trend is your friend, it will be obvious when Munis are not working...if you look at a one year chart, you can see that on 09/2018 Muni funds were declining.

Second, I already showed in my previous post...as per 3/31/2019, OPTAX Munis are rated higher than GHYAX.  According to the article GHYAX managers increased the fund bond rating.

GHYAX break down

AAA    0.7
AA     16.1
A        23.7
BBB    22.8
BB      7.5
B        3.0
CCC    1.7

NR      21.7%

OPTAX breakdown

Type% Bonds
AAA2.3
AA27.12
A26.68
BBB14.55
BB1.45
B2.18
Below B5.45
Not Rated20.27

 

Third, I already found a HY Muni fund and all the bonds are IG (BBB and above)...See GWMEX

Type% Bonds
AAA0
AA1.59
A48.81
BBB49.61

But wait, this fund has the best one-month performance in the HY Munis category and a good YTD too...one month chart for GWMEX+OPTAX+GHYAX but as usual, no matter the fund, managers or the history, I sell (or switch) when the fund I hold starts to lose money.

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