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Valued Contributor

Re: Bond OEF Investing for More Conservative Investors

Last year I posted that MWCIX had a unique 2019 and based on my research I don't see this fund doing anything close to previous years or keep up with the best funds.

ANGIX/ANGLX-I mentioned it's potential volatility and it happened.

DHEIX/DHEAX - I continue to think this fund is the best "cash sub" when you look at risk/reward   +   80+% IG bonds   +   yield. Yes, I know, it's not really a cash sub but it's worth it for some of your money. 

EIXIX - I mentioned it last year.  I had several discussions with the head manager, Leland Abrams.  I learned that he puts a lot of emphasizing on selecting higher-rated securitized than IOFIX (he specifically mention it) but also looking at dampening the volatility using IO(interest only) which are good when rates are rising.  It took him about 6 months to build the concept to its full potential. I know that many don't think 14 months on the job is enough but I look mainly at results and so far it looks pretty good including the last 2 weeks.  BTW, today when most bond OEFs lost money, EIXIX made money. I think this fund fits the profile of this thread and the yield is over 4.5%.  This is 3 months (chart).

The following comparison by Por Vis since 5/31/19 to 2/29/2020 (link).  I included 3 other securitized funds just for comparison and I know (VCFAX,IOFIX) are too volatile for this thread although the last 2 weeks proved they are not ;-) 

PortfolioReturnStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
VCFAX4.24% 1.65%2.40%1.80%-0.03% 2.2613.84
IOFIX9.95% 2.54%6.90%2.85%0.00%4.3272.56
SEMMX3.95% 1.22%2.13%1.78%0.00%2.7113.5
EIXIX5.45% 0.92%3.74%1.64%0.00%5.58280.96

 

I think you can hold both DHEIX and EIXIX longer term.  The usual, the above isn't a recommendation and there is no guarantee.

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Re: Bond OEF Investing for More Conservative Investors


@FD1001 wrote:

DHEIX/DHEAX - I continue to think this fund is the best "cash sub" when you look at risk/reward   +   80+% IG bonds   +   yield. Yes, I know, it's not really a cash sub but it's worth it for some of your money. 

Thanks, FD. But, I would use this fund not just as a "cash sub", it is also an excellent conservative bond OEF hat one could hold for a longer period of time. It may be particularly appropriate during the current unpredictable market environment.

Unfortunately, at Fidelity DHEAX is apparently only available with a 2.25% load. The search goes on ...

Fred

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Re: Bond OEF Investing for More Conservative Investors


@fred495 wrote:

@FD1001 wrote:

DHEIX/DHEAX - I continue to think this fund is the best "cash sub" when you look at risk/reward   +   80+% IG bonds   +   yield. Yes, I know, it's not really a cash sub but it's worth it for some of your money. 

Thanks, FD. But, I would use this fund not just as a "cash sub", it is also an excellent conservative bond OEF hat one could hold for a longer period of time. It may be particularly appropriate during the current unpredictable market environment.

Unfortunately, at Fidelity DHEAX is apparently only available with a 2.25% load. The search goes on ...

Fred


Absolutely. I can see DHEAX making 3% annually, SEMMX,EIXIX,VCFAX 4-4.5%, IOFIX 5+%.

At Schwab

DHEIX isn't available - only to institutions.
DHEAX-free to buy, min $2500, 90 days early redemption fee at $49.95 

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Re: Bond OEF Investing for More Conservative Investors

Totally ridiculous to charge 2.25% and give up most of the first year's gain.


@fred495 wrote:

@FD1001 wrote:

DHEIX/DHEAX - I continue to think this fund is the best "cash sub" when you look at risk/reward   +   80+% IG bonds   +   yield. Yes, I know, it's not really a cash sub but it's worth it for some of your money. 

Thanks, FD. But, I would use this fund not just as a "cash sub", it is also an excellent conservative bond OEF hat one could hold for a longer period of time. It may be particularly appropriate during the current unpredictable market environment.

Unfortunately, at Fidelity DHEAX is apparently only available with a 2.25% load. The search goes on ...

Fred


 

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Re: Bond OEF Investing for More Conservative Investors


@FD1001 wrote:

Last year I posted that MWCIX had a unique 2019 and based on my research I don't see this fund doing anything close to previous years or keep up with the best funds.

ANGIX/ANGLX-I mentioned it's potential volatility and it happened.

DHEIX/DHEAX - I continue to think this fund is the best "cash sub" when you look at risk/reward   +   80+% IG bonds   +   yield. Yes, I know, it's not really a cash sub but it's worth it for some of your money. 

EIXIX - I mentioned it last year.  I had several discussions with the head manager, Leland Abrams.  I learned that he puts a lot of emphasizing on selecting higher-rated securitized than IOFIX (he specifically mention it) but also looking at dampening the volatility using IO(interest only) which are good when rates are rising.  It took him about 6 months to build the concept to its full potential. I know that many don't think 14 months on the job is enough but I look mainly at results and so far it looks pretty good including the last 2 weeks.  BTW, today when most bond OEFs lost money, EIXIX made money. I think this fund fits the profile of this thread and the yield is over 4.5%.  This is 3 months (chart).

The following comparison by Por Vis since 5/31/19 to 2/29/2020 (link).  I included 3 other securitized funds just for comparison and I know (VCFAX,IOFIX) are too volatile for this thread although the last 2 weeks proved they are not ;-) 

PortfolioReturnStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
VCFAX4.24% 1.65%2.40%1.80%-0.03% 2.2613.84
IOFIX9.95% 2.54%6.90%2.85%0.00%4.3272.56
SEMMX3.95% 1.22%2.13%1.78%0.00%2.7113.5
EIXIX5.45% 0.92%3.74%1.64%0.00%5.58280.96

 

I think you can hold both DHEIX and EIXIX longer term.  The usual, the above isn't a recommendation and there is no guarantee.


FD, I think it is fine for posters to disagree with what may be acceptable bond oef funds for ownership during this market meltdown.  I am not sure why you think VCFAX is "too volatile for this thread".  VCFAX was one of the funds I listed in the original post that had a low SD and rated as "Low" risk by M*, in the multisector bond oef category.  Secondly, you seem to have this negative bias for ANGIX, just because it had a performance issue in the 2015/2016 interest rate temper tantrum--that was pretty common with many funds that existed in the interest rate temper tantrum period.  ANGIX has been an almost model for low risk performance since then, and even in this current market meltdown, it was positive yesterday and down only about .6% in the last week--very close to your IOFIX recommendation in this market meltdown performance.  IOFIX is one of the more controversial funds that has been evaluated--some love it and intend to hold it, but other very respected posters look at its underlying holdings as some of the most risky in the mortgage market.  Both IOFIX and EIXIX are relatively new funds, but if their short term performance is sufficient for investors to want to own it in this period, and maybe longer term, that is fine and their prerogative.  Regarding MWCIX, I do agree that its performance so far in this market meltdown has been surprisingly worse than I anticipated, but on a relative basis it has still only had about a 1% loss in one of the worst market meltdowns in our history.  I am curious if you think you think a 1% loss for a fund, in one of the worst market meltdowns in our history, is always a sell signal.

I guess I will also note that your "warnings" about MWCIX in 2019 appeared to be based on your argument that your list of the best funds (PUCZX, JMUTX, JMSIX) were relatively safe with SDs around 2, and better choices to own than MWCIX.  There were many of us who were very concerned about PUCZX, JMUTX, and JMSIX, and were "warning" others that it would be virtually impossible for these funds to sustain their record 2019 performance going forward.   

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Re: Bond OEF Investing for More Conservative Investors

FD: "looking at dampening the volatility using IO(interest only) which are good when rates are rising"

IOs are among the most volatile and risky MBS derivatives. To use them to dampen volatility is a high-wire act. I have warned about funds using them. Sure, those go up with rising rates but may collapse with falling rates [and re-fi]. Posters should brush up on IOs and POs [these behave more like MBS].

YBB
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Re: Bond OEF Investing for More Conservative Investors

DT, 

VCFAX-I missed the fact you listed it in the OP. 

IOFIX isn't "new" anymore, it has close to 5 years.  

To the question of " I am curious if you think you should sell a fund with a 1% loss in one of worst market meltdowns in our history, what is your sell criteria for a longer term investor?"  whatever answer I will give I will be accused as a trader.  This OP is about longer term investing.  All I will say is the following: in specific situations and markets cash is a good choice.  Investing is not an accurate science and why you can (if you like) be flexible.

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Re: Bond OEF Investing for More Conservative Investors


@FD1001 wrote:

DT, 

VCFAX-I missed the fact you listed it in the OP. 

IOFIX isn't "new" anymore, it has close to 5 years.  

To the question of " I am curious if you think you should sell a fund with a 1% loss in one of worst market meltdowns in our history, what is your sell criteria for a longer term investor?"  whatever answer I will give I will be accused as a trader.  This OP is about longer term investing.  All I will say is the following: in specific situations and markets cash is a good choice.  Investing is not an accurate science and why you can (if you like) be flexible.


I am not labeling anyone on this thread as any type of investor. You are welcome to offer your thoughts about appropriate funds for holding for a longer term, but regardless of how you invest, you were pushing PUCZX, JMSIX, JMUTX in 2019, as better and relatively safe choices compared to MWCIX, frequently citing their SD being around 2.  In less than 6 months, those funds have fallen from grace and do not appear on your list.  Many of us were issuing our own warnings in 2019 about the riskiness of PUCZX, JMSIX, and JMUTX because of their record double digit performance in 2019 not being sustainable.

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Re: Bond OEF Investing for More Conservative Investors

Interest rates have been dropping for a year now with no apparent effect on a popular fund that has done well this year. But the recent drops have been precipitous heading towards 0%.


@yogibearbull wrote:

FD: "looking at dampening the volatility using IO(interest only) which are good when rates are rising"

IOs are among the most volatile and risky MBS derivatives. To use them to dampen volatility is a high-wire act. I have warned about funds using them. Sure, those go up with rising rates but may collapse with falling rates [and re-fi]. Posters should brush up on IOs and POs [these behave more like MBS].


 

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Re: Bond OEF Investing for More Conservative Investors

Just to open up consideration for some other lower risk funds, as possible investments in this tough market, I will offer up FPFIX as a fund worth considering.  It is a newer nontraditional bond oef that is only a little over 1 year old, so it did not show up in my original posting list.  But it is from FPA, known for its very risk averse investing with funds like FPACX and FPNIX.  It has done well in this latest market meltdown, and its lead manager has  over $1million of his own money in the fund.  This new fund still has a small asset base, and ER of .39, and has plenty of flexibility to maneuver through this terrible market with a history of risk averse investing.  It does require a $100K initial investment at Schwab in a regular account, but in an IRA account it can be purchased for $5K.

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Re: Bond OEF Investing for More Conservative Investors

@fred495  Your post yesterday in which you quoted Lamar, that pretty much sums up exactly how I feel, and that is why I have sell orders for all three of my bond OEFs.  I also think that future income is probably going to have to come more from stock dividends, so I'm trying to load up during this current downturn.  I would love to just sit back with a predominately bond OEF portfolio, but I just don't see it, what with interest rates constantly coming down, and the world awash in money looking for a safe home, no matter how low the rates.  

When things change and I no longer understand the game, it seems logical to  move on.  

"It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change".  Charles Darwin

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Re: Bond OEF Investing for More Conservative Investors


@mlott1 wrote:

@fred495  Your post yesterday in which you quoted Lamar, that pretty much sums up exactly how I feel, and that is why I have sell orders for all three of my bond OEFs.  I also think that future income is probably going to have to come more from stock dividends, so I'm trying to load up during this current downturn.  I would love to just sit back with a predominately bond OEF portfolio, but I just don't see it, what with interest rates constantly coming down, and the world awash in money looking for a safe home, no matter how low the rates.  

When things change and I no longer understand the game, it seems logical to  move on.  

"It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change".  Charles Darwin


mlott, you and most of the world owns PIMIX and always reference its .0555 dividend, that has been consistently paid forever.  Are you in the camp now, that PIMIX will be lowering their .0555 dividend that so many investors reference as their reason for holding PIMIX through thick and thin?

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Re: Bond OEF Investing for More Conservative Investors


@dtconroe wrote:

@FD1001 wrote:

DT, 

VCFAX-I missed the fact you listed it in the OP. 

IOFIX isn't "new" anymore, it has close to 5 years.  

To the question of " I am curious if you think you should sell a fund with a 1% loss in one of worst market meltdowns in our history, what is your sell criteria for a longer term investor?"  whatever answer I will give I will be accused as a trader.  This OP is about longer term investing.  All I will say is the following: in specific situations and markets cash is a good choice.  Investing is not an accurate science and why you can (if you like) be flexible.


I am not labeling anyone on this thread as any type of investor. You are welcome to offer your thoughts about appropriate funds for holding for a longer term, but regardless of how you invest, you were pushing PUCZX, JMSIX, JMUTX in 2019, as better and relatively safe choices compared to MWCIX, frequently citing their SD being around 2.  In less than 6 months, those funds have fallen from grace and do not appear on your list.  Many of us were issuing our own warnings in 2019 about the riskiness of PUCZX, JMSIX, and JMUTX because of their record double digit performance in 2019 not being sustainable.


All you need to show is where I said the above. I bet you don't find it.

I looked thru several threads and found posts like this from ‎08-06-2019 03:29 PM

Someone with low % in stocks (or none) and using several funds should have no problem holding LT funds like 1) Multi=SEMMX,JMUTX,VCFAX,JGIAX/JMSIX(I would delete PIMIX from this list)  2) Muni=GHYAX,MMHAX,PHMIX. 

"I can't see why any retiree would go for his/her total portfolio to make 3-4% when you can make 4.5-5% using only bond OEFs and still have a total portfolio with SD<3.  The following is a 3 year 5 fund generic portfolio(link) that I created with SD < 2.   This portfolio yield is above 4% which is another plus.  I think this portfolio can make 4.5-5% annually in the next several years.  You can add/replace funds with PUCZX and PDIIX(riskier) and/or 10-20% stocks (or even better PCI) and have a good chance to make 6% annually and still have SD<3, see (link).           Past performance is not a guarantee of future returns "

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Re: Bond OEF Investing for More Conservative Investors

My observation is some or many of us sell funds to preserve capital gains rather than the expectation of dividend cuts. With CEFs, the fear of dividend cuts is based on anticipating other investors will sell on the cut announcement.

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Re: Bond OEF Investing for More Conservative Investors


@dtconroe wrote:

@mlott1 wrote:

@fred495  Your post yesterday in which you quoted Lamar, that pretty much sums up exactly how I feel, and that is why I have sell orders for all three of my bond OEFs.  I also think that future income is probably going to have to come more from stock dividends, so I'm trying to load up during this current downturn.  I would love to just sit back with a predominately bond OEF portfolio, but I just don't see it, what with interest rates constantly coming down, and the world awash in money looking for a safe home, no matter how low the rates.  

When things change and I no longer understand the game, it seems logical to  move on.  

"It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change".  Charles Darwin


mlott, you and most of the world owns PIMIX and always reference its .0555 dividend, that has been consistently paid forever.  Are you in the camp now, that PIMIX will be lowering their .0555 dividend that so many investors reference as their reason for holding PIMIX through thick and thin?


Paul:  As one who owns Pimco Income I can say I have never referenced its .0555 dividend as my reason for holding.  I own 6 bond OEFs in my bond OEF sleeve and 3 are Pimco:  21% Income, 11% Diversified Income and 11% Total Return.  I invest in Pimco because of my confidence in PMs (Ivascyn and Kiesel) and reputation of bond house.  I have similar confidence in Pimco with half of my bond CEF sleeve in Pimco CEFs.  I do not believe in the AUM bloat theory.  

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Re: Bond OEF Investing for More Conservative Investors

The munis are pummeled today as they ran the most this year and giving it all back in a single day. Whoa!

NHMAX is down 2.28%, the high flier that lost the most! VWALX is down 1.5%. 

OTOH, SEMMX shed a penny and VCFIX lost 2 cents. Not bad considering the carnage of the others. Wonder what will happen to PIMIX as they always price it after 6:30 EST.

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Re: Bond OEF Investing for More Conservative Investors

@dtconroe  I'm selling PONAX for the same reason that I'm selling my other two bond OEFs.  I simply do not understand the new rate environment.  I have no idea which fund will do what.  Lots of money chasing fixed income yield, which to me does not bode well.  People like you and FD can probably navigate these new and strange waters, but I can't.  Any new money, I would not know which fund or funds to put it in.  And most of all, I don't understand what bond OEFs will do in the future as lower rates prevail.  The PONAX dividend was not only not a consideration, that didn't even occur to me.  I'm never afraid of going into cash, but with stocks back to a more reasonable level, I'll pick up what I can before they move back up.

Don't remember who posted about the PONAX dividend, but I do not recall ever referencing it, other than I thought the dividend was generous, considering that it is not a HY fund, and I know that I posted more than once that I considered it my "risky" fund, and that was as far out as I wanted to go on the risk scale.  

 

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Re: Bond OEF Investing for More Conservative Investors


@mlott1 wrote:

@dtconroe  I'm selling PONAX for the same reason that I'm selling my other two bond OEFs.  I simply do not understand the new rate environment.  I have no idea which fund will do what.  Lots of money chasing fixed income yield, which to me does not bode well.  People like you and FD can probably navigate these new and strange waters, but I can't.  Any new money, I would not know which fund or funds to put it in.  And most of all, I don't understand what bond OEFs will do in the future as lower rates prevail.  The PONAX dividend was not only not a consideration, that didn't even occur to me.  I'm never afraid of going into cash, but with stocks back to a more reasonable level, I'll pick up what I can before they move back up.

Don't remember who posted about the PONAX dividend, but I do not recall ever referencing it, other than I thought the dividend was generous, considering that it is not a HY fund, and I know that I posted more than once that I considered it my "risky" fund, and that was as far out as I wanted to go on the risk scale.  

 


mlott, good luck with your investing decisions--there are lots of people going totally to cash in this "bear market"!

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Re: Bond OEF Investing for More Conservative Investors

It does seem DoubleLine Low Duration Bond I DBLSX and Diamond Hill Short Duration Total Ret I DHEIX, especially DHEIX is holding up well. As DHEIX is where it was on February 19th, not much loss for either fund. I continue to hold these and Vanguard VUSFX, which has not moved the past few days. I sold almost all my intermediate and lower credit, particularly corporate credit bond funds seem to be losing ground due to concerns about credit.

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Re: Bond OEF Investing for More Conservative Investors

I sold MWCIX yesterday. I did get to keep last years profit. I owned it in 2017 and 2019. I guess it is an odd year fund to own. I just felt it was not positioned well for this rate climate with HY. Possibly in the future it will be a buy again. I wanted to start a DHEAX position and may use the proceeds to do so or possibly rebalance into equities. 

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