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Frequent Contributor

Re: 2020 - bond funds analysis

I wanted to see how different M* categories bond OEFs performed.

group1 WK1 month3 Months
Multi0.20.36.6
HY Muni0.61.75.4
Core0.30.93.4
Core +0.30.854.7
NonTrad0.20.14.7
Bank Loan0.25-0.95.3
HY0.25-0.86.9
Stock Large blend1.4-0.613.35
IOFIX1.12.220.25

 

HY Munis has the best short-term (1-4 weeks) performance + a good 3-month performance and why it's my favorite category for weeks ;-)   Second, are Core & Core plus.

You can see that Bank Loans + HY have higher correlation to stock.

IOFIX lost a lot but also making a lot.  Other Multi concentrating in MBS/securitized(SEMMX,DHEAX,VCFAX) are doing better than the M* category.

Of course, you can find several funds with much better performance than the M* category.

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Frequent Contributor

Re: 2020 - bond funds analysis

FD,

Why didn't you tell us to buy IOFIX right after it crashed? It doesn't do me any good now.

N.

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Frequent Contributor

Re: 2020 - bond funds analysis

Look at this ridiculous chart. This isn’t investing, this is Russian roulette. People can’t be serious.

https://www.morningstar.com/funds/xnas/iofix/performance

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Frequent Contributor

Re: 2020 - bond funds analysis

I just mentioned IOFIX as an outliner.  I sold it close to the top and didn't buy it back.  I knew IOFIX would come back strong but that isn't the risk I like to take when I can't assess market conditions.  If I want to stay within very high % in MBS/securitized EIXIX, DHEAX are an option or PTIAX (lower % in MBS) as a lower SD choice.

Russian roulette is in the eye of the beholder.  As a retiree, I would never stay in a fund all the way down to 20-30-40% loss.

The usual, invest based on your goals and style and do your own DD.

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Contributor ○

Re: 2020 - bond funds analysis

Because I have not yet sold IOFIX, I would like to report that it did not do anything for a number of days recently and then went up 0.85% yesterday.  So, the 1 wk and 1 mo performance numbers do not say the entire story.  From a risk reward point of view, this is not a fund to get into until you attend / see the fund’s Q2 investor presentation and assess along with a host of other Covid related developments.  May be a trading tool not an investing too at this time.

Edit: fixed editing errors.

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Frequent Contributor

Re: 2020 - bond funds analysis


@Anitya wrote:

Because I have not still sold IOFIX, I would like to report that it did not do anything for a number of days recently and then went up 0.85% yesterday.  So, the 1 wk performance number does not say the entire story.  From a risk reward point of view this is not a fund to get into until you attend / see the fund’s Q2 investor presentation and assess along with a host of other Covid related developments.  May be a trading tool not an investing too at this time.


This is how I look at it.

What is the best way (risk/reward) to achieve my goals and why I "gambled" on HY Muni.  

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Contributor ○

Re: 2020 - bond funds analysis

Since we get caught up in life so much, it is good for investment health to review periodically some logical fallacies. 

https://youtu.be/Qf03U04rqGQ

I learned about fallacies recently, and it's nice to have a way to put a name to ways in which we don't think or argue logically. Follow up video: Chesterton...
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Frequent Contributor

Re: 2020 - bond funds analysis


@chang wrote:

Look at this ridiculous chart. This isn’t investing, this is Russian roulette. People can’t be serious.

https://www.morningstar.com/funds/xnas/iofix/performance


I WILL say that it could be a great trading vehicle if you can get the timing right, but that abrupt drop didn't provide much time to exit!

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Contributor ○

Re: 2020 - bond funds analysis

I have never seen a bad trading vehicle.  Every trading vehicle has something for somebody.  As such, all trading vehicles are great trading vehicles.  Not everything is an investing vehicle.   

What you trade, like inventory, is a short term asset on the balance sheet.  In just-in-time business models you can trade even without owning something you trade - traders of financial assets do that too.   You own what you invest in and is usually a long term asset.  

Note to self: too much cash, like inventory, is not a good store of value. 

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Frequent Contributor

Re: 2020 - bond funds analysis

@racqueteer I disagree, IOFIX is no trading vehicle, as I said it's Russian roulette. I use that analogy because Russian roulette:

  • Is a dangerous game involving a nontrivial probability of something very bad happening...
  • ...which is completely unpredictable...
  • ...and involves a loud bang...
  • ...and leaves a mess that needs to be cleaned up.

IOFIX imploded during a fairly short window; to the naked eye, I'd guess between 2-3 PM on March 19. You call that a trading vehicle? I call it a grenade.

The owners of AlphaCentric ("The Future of Investing") should be drawn and quartered.

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Frequent Contributor

Re: 2020 - bond funds analysis


@chang wrote:

@racqueteer I disagree, IOFIX is no trading vehicle, as I said it's Russian roulette. I use that analogy because Russian roulette:

  • Is a dangerous game involving a nontrivial probability of something very bad happening...
  • ...which is completely unpredictable...
  • ...and involves a loud bang...
  • ...and leaves a mess that needs to be cleaned up.

IOFIX imploded during a fairly short window; to the naked eye, I'd guess between 2-3 PM on March 19. You call that a trading vehicle? I call it a grenade.

The owners of AlphaCentric ("The Future of Investing") should be drawn and quartered.


I DID add: "if you can get the timing right".  I didn't say that it accomplished the goal of being a good trading vehicle, or that it was something easily accomplished!  It was clearly favorable for several years, and has been good since.  Agreed; the management put investors in a precarious position.  I will note that a decent argument might be made that a good trader might have headed for the exits on 3/12, where there was a clear break in the upward trendline.  That would have been PLENTY early enough.

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Frequent Contributor

Re: 2020 - bond funds analysis

@racqueteer I hear you, but ..... that chart just doesn’t pass the eyeball test for me. Speaking of eyes, I can’t see what happened on 3/12. Maybe I need to put the chart under a microscope. All I see is an earthquake on 3/19.

There are thousands of exciting stocks I can trade, with annual reports to read, scores of senior managers to talk to, and endless amounts of transparent and detailed information to sift through if I want trading vehicles. I need a black-box bond fund with charts such as this like I need an aperture in the cranial cavity.

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Contributor ○○○

Re: 2020 - bond funds analysis

How would you trade this? An equity can have a value put on it. How do you value a fund priced by the PM? Was it really worth the price before the crash?  I m not saying trading the 2 are similar. A momo trader night say it doesn't matter. Just follow the trend. 


@racqueteer wrote:

@chang wrote:

Look at this ridiculous chart. This isn’t investing, this is Russian roulette. People can’t be serious.

https://www.morningstar.com/funds/xnas/iofix/performance


I WILL say that it could be a great trading vehicle if you can get the timing right, but that abrupt drop didn't provide much time to exit!


 

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Frequent Contributor

Re: 2020 - bond funds analysis

Of course, IOFIX was worth it if you traded it correctly and I did ;-)

It had a 3-year (01/2017-01/2020) annual performance of 10.4% with SD=2.67(link) and amazing numbers of Max Draw, Sharpe, Sortino)...until a black swan arrived.

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
PIMIX5.79% 1.90%8.60%0.58%-1.11% 2.084.3
SPY14.63% 11.89%31.22%-4.56%-13.52% 1.081.59
IOFIX10.40% 2.67%14.04%1.77%-0.87% 3.0812.93

 

BTW, PCI lost as much(link), I know, they are not the same, just making an observation.  SPY 3-year performance now is so much better than PCI and why I never was excited about CEFs and have been saying it's a trade tool.

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Re: 2020 - bond funds analysis


@chang wrote:

@racqueteer I hear you, but ..... that chart just doesn’t pass the eyeball test for me. Speaking of eyes, I can’t see what happened on 3/12. Maybe I need to put the chart under a microscope. All I see is an earthquake on 3/19.

You have to go to the interactive chart...

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Frequent Contributor

Re: 2020 - bond funds analysis


@FD1001 wrote:

Of course, IOFIX was worth it if you traded it correctly and I did ;-)

It had a 3-year (01/2017-01/2020) annual performance of 10.4% with SD=2.67(link) and amazing numbers of Max Draw, Sharpe, Sortino)...until a black swan arrived.

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
PIMIX5.79% 1.90%8.60%0.58%-1.11% 2.084.3
SPY14.63% 11.89%31.22%-4.56%-13.52% 1.081.59
IOFIX10.40% 2.67%14.04%1.77%-0.87% 3.0812.93

 

BTW, PCI lost as much(link), I know, they are not the same, just making an observation.  SPY 3-year performance now is so much better than PCI and why I never was excited about CEFs and have been saying it's a trade tool.


I agree with that. Happily, I got out because of the ridiculous premium. Got back in on March 31.

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Frequent Contributor

Re: 2020 - bond funds analysis

BTW, over the years I was always afraid of IOFIX and why I was in/out several times. The whole MBS/securitized unrated/lower rating category was always on my mind including PIMIX and why I sold it several times when I thought volatility was irregular. I also had several discussions with the management of EIXIX(similar MBS) and the manager specifically raised a concern with IOFIX holdings, I made 1-2 posts about it too. 

Know what you are holding or just stay with indexes and/or managed funds you are sure are OK.  IMO, for a LT hold I only trust Wellington management funds.

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Contributor ○

Re: 2020 - bond funds analysis

From Feb 19, 2020 thru March lows, JNK fell 22%, ANGL fell 29%, and SPY fell 34% - but as of today their total return from that Feb date is exactly the same (approx a loss of 4.5%). 

As expected, 90+% of ANGL's constituents are rated BB (one hopes the rating agencies are not asleep until companies drop from BBB to below BB), while JNK has 50% of its constituents rated below BB.   What was surprising to me is how ANGL fell far worse than JNK during March?   It so turns out ANGL's under-performance is not limited to Covid swoon, it was also true during the 2018 market drop but not during the 2015 market drop.  In fact, coming out of the 2015 market drop, ANGL was very strong; so strong that SPY did not catch up to ANGL until the end of 2017.   

Any explantion for the change in ANGL's relative under-performance in 2018 and later?  I am guessing this has to do with a lot more BBB rated (and covenant lite) bonds being issued in the past 2+ years.

 

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Re: 2020 - bond funds analysis

Know what you are holding”

I don’t see how that would have helped. IOFIX’s implosion was sudden and catastrophic, and unpredictable. I don’t see how it could be considered an “investment” in any sense of the word, even as a short term trade.

In Russian roulette you know there is exactly one bullet in the cylinder and the chance of dying is 1/6. You know everything there is to know. But the knowledge does nothing to reduce the risk.

Day traders have thousands of stocks to choose from, and they can learn everything there is to know about them. Why buy a black box with a grenade inside?

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Explorer ○

Re: 2020 - bond funds analysis

well, if you did what FD does as regards exiting a fund, then you would have been out somewhat in time, or at least before the big slaughter.

FD: "I simply set a rule of max loss from the last top for each fund I own. Years ago it was 3% for bonds and 6% for stocks. Now it's 1% for any bond fund I own, at 0.5% I start checking why."

in the case of iofix, iirc, you could't have gotten out at 1% down. i think it dropped from less than that to over 2.5% in one day. but if you'd been on your toes, you could have pulled the exit trigger the next day and been out with around a 3% loss from the top. me, i was too shell shocked to do that and waited far too long to sell. sigh.
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