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Re: Bond OEF Investing for More Conservative Investors

dt, ANGIX did better yesterday and today in the sea of redness! PIMIX lost a lot and JMSIX about 1/2 %.

It looks to me that PIMIX is in a freefall and so much for the best bond house with the best managers (past best?) weathering the storm!

Cash is the king in these markets or is the selloff already run it's course? I know that's a million dollar question.

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Re: Bond OEF Investing for More Conservative Investors


@Gary1952 wrote:

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. 


Diamond Hill Short Duration Total Ret would be a good one, but I would wait just a bit and see its yield before I buy. I have been buying a little into equities using ETFs,

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Re: Bond OEF Investing for More Conservative Investors


@RainGater wrote:

dt, ANGIX did better yesterday and today in the sea of redness! PIMIX lost a lot and JMSIX about 1/2 %.

It looks to me that PIMIX is in a freefall and so much for the best bond house with the best managers (past best?) weathering the storm!

Cash is the king in these markets or is the selloff already run it's course? I know that's a million dollar question.


Yep, ANGIX has been doing well the last few days. Hard to trust much of anything, outside of shorter term higher quality funds, but ANGIX is living up to its lower risk rating given to it by M*.  I have been monitoring closely a new fund I mentioned before, FPFIX, and it continues to be about the best performing nontraditional bond oef.  FPNIX is probably the best performing short term bond oef in this bear market mess.

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Re: Bond OEF Investing for More Conservative Investors

I am in no hurry to buy. I will let rates settle some.


@FatKat wrote:

@Gary1952 wrote:

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. 


Diamond Hill Short Duration Total Ret would be a good one, but I would wait just a bit and see its yield before I buy. I have been buying a little into equities using ETFs,


 

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Re: Bond OEF Investing for More Conservative Investors

The last week and month has been about as ugly as you can get.  Almost anything you have held is probably experiencing stress, although relatively some investments are much less stressed than other options. Trying to use this period as an educational and learning period, here are just a few thoughts:

1.  If you want to examine the concept of "cash subs", it is virtually impossible to find anything on a 1 week or 1 month basis that looks like a good alternative to holding cash, but if you go out YTD, there are some funds that shine and have a better return than a banking account.  Of course, we don't know what is going to happen tomorrow, next week, next month, or the rest of the year.  Some of our favorite funds mentioned are DBLSX and  DHEAX--not  good cash subs on recent short term, but still doing well YTD compared to cash.  FPNIX and FPFIX are doing relatively better than most other options, but they have not been immune from losses for the last week.

2. Multisector Bond OEFS have clearly reflected risk in this market.  ANGIX and VCFAX are holding up much better than most multisector bond oefs.  IOFIX has done relatively well, but in the past week it has been hit hard.  Those supposedly "slightly riskier" funds like PUCZX, PIMIX, JMUTX, JMSIX are getting beaten up badly and are showing they are much riskier than was portrayed just a few months ago.  If you look at this category like equities though, those "slightly riskier" multisector bond oefs offer potentially greater opportunities to recoup losses, once we hit a bottom, but the investing trick is being good at "market timing" and avoid trying to catch a falling knife.  I am not good at market timing, and I think predicting a bottom can be very painful, but like equity investing, you may want to figure out what is the greatest value going forward and see how much patience you have waiting for a turnaround.

3. NonTraditional Bond Oefs have clearly indicated that the concept of "absolute return" looks pretty laughable right now, as this category have very few options that are painless.  FPFIX is the standout in this category, with very small losses.  SEMMX and PMZIX have not performed as well as I expected, but are still relatively less risky than a fund like MWCIX, which is probably the most disappointing fund I owned that has not held up as well as its history suggested it would.  Funds like DFLEX has reflected much higher risk and losses than I would have expected from bond guru Gundlach.  Since this is supposedly an absolute return category, with great flexibility in using investing techniques to minimize losses, I am going to have to rethink how safe I consider this category.  I will have to re-evaluate what is worth investing going forward with preservation of capital objectives, but FPFIX and SEMMX  are looking the most promising with relatively small peak to trough losses.

4. HY Muni Oefs have pretty much been disasters.  This category had been one of the most hyped categories during 2019 and early 2020, but their losses in this market have been some of the most extensive.  "Low risk" funds like AAHMX and PDSZX show that there is much more risk in this category than I expected, but funds like NVHAX (one of the favorites in this category) have shown how very risky they are in reality.  It will be hard for me to look at any of these funds as appropriate in a cash alternative category in the future, and evaluating risk can be more obvious as a result of this recent period of performance.  If you can avoid the falling knife scenario, they may be falling into value opportunities if you are brave enough to invest in that category going forward.

Investing is tough, and it is tempting to go into your personal bunker, but it is much more clear to assess risk, and maybe look at opportunity, when you start considering where you want to be in the future.  If you are a very risk averse investor, then your losses are relatively much smaller than equity or more risky bond oef funds.  Some will be attempting to recoup their relatively small losses by just staying the course.  Others may choose to shift some of those assets from relatively small losses to other options that are more beat up and look like good "value options" for the future.  Best of wishes determining what you want to do going forward--I am guessing this terrible period has more pain in front of us but hard to assess how long that will last.

 

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Re: Bond OEF Investing for More Conservative Investors

Good overall assessment. During the last few years bond OEF investing has been fun and a challenge for me. I found out how good the funds I held worked as ballast for me. Because I am an equity/bond AA investor I have the opportunity to reinvest on the growth side now. 

1. It is apparent that core/core plus funds do not work any better or as well as low duration funds as ballast.

2. A favorite fund of many, ZEOIX, showed it's true color as a HY fund.

3. I am not sure this irrational market was a true test of how each fund type works is structured to work. For instance YBB has stated a fund like SEMMX could suffer due to its holding IO derivatives. I am not sure if that was the downfall of SEMMX or was it just another fund in this irrational market selling assets to provide liquidity for investors pulling out?

4. It turns out that 2008 may have provided a blueprint for this Black Swan event. 

5. Can SD and such really be used as metrics for judging funds to invest in? Everything works in good markets whether rates are going up or down.

I hope we can keep this thread alive to sort out the future.

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Re: Bond OEF Investing for More Conservative Investors

I will buy bonds funds again when Treasury rates are higher and stable. Haven't sold CEFs or ETFs at Schwab or Fidelity, but at Vanguard, everything is in federal money market settlement accounts. No appetite for speculation with the known risks much less the unknown ones.   

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Re: Bond OEF Investing for More Conservative Investors


See replies in Red below
@Gary1952 wrote:

Good overall assessment. During the last few years bond OEF investing has been fun and a challenge for me. I found out how good the funds I held worked as ballast for me. Because I am an equity/bond AA investor I have the opportunity to reinvest on the growth side now. 

I guess we all will determine how this impacts our investing approach.  Because I am not a good market timer, I tend to hold my very conservative funds and hope to mitigate overall losses.  I look at how well bond oefs performed the roles I chose them for, and I will take that into consideration regarding whether they were good or not so good choices for that role.  Regarding "ballast" roles, I tend to hold some very low risk bond oefs, as "ballast" for more risky bond oefs.  As such I will review how well I evaluated "risk" in my bond oefs.  What is reasonably clear to me is that bond oef funds like PUCZX, PIMIX, JMUTX, and JMISX are considerably more risky than how they were portrayed in the past because their SDs were just "slightly" higher than lower risk funds.  Funds I thought would be lower risk "ballast" funds like MWCIX, do not look near as good for "ballast" roles as I thought.  Funds like SEMMX are pretty good as "ballast" funds for more risky funds, but SEMMX is certainly far from being a cash substitute fund.Y

1. It is apparent that core/core plus funds do not work any better or as well as low duration funds as ballast.  These funds are often described as "multisector-lite" bond oefs, and for the most part that is how they have performed, and not all that great as "ballast" funds, at least for ballast roles that I look for.

2. A favorite fund of many, ZEOIX, showed it's true color as a HY fund.  ZEOIX performed much better than most HY bond oefs, but clearly it did not perform very well as a cash sub fund.

3. I am not sure this irrational market was a true test of how each fund type works is structured to work. For instance YBB has stated a fund like SEMMX could suffer due to its holding IO derivatives. I am not sure if that was the downfall of SEMMX or was it just another fund in this irrational market selling assets to provide liquidity for investors pulling out? I guess you have to define the role you bought SEMMX to perform.  It has not performed well as a cash sub, but it has been one of the best nontraditioanl bond funds regarding total return performance, and certainly has done better than most nontraditonal and better than most multisector bond oefs.  Based on what has happened so far, you might want to look at a nontraditional bond oef like FPFIX as a better choice for a low risk option, but SEMMX is still one of the safer nontraditional bond oefs in that category.

4. It turns out that 2008 may have provided a blueprint for this Black Swan event. Time will tell but I suspect the coronavirus meltdown will be much easier to predict its end, than dealing with all the bankruptcies and threat to our overall economy that was in effect in 2008.  I remember in 2008, I was wondering how well FDIC insurance would hold up and where I could safely put my cash.

5. Can SD and such really be used as metrics for judging funds to invest in? Everything works in good markets whether rates are going up or down.  I think SD has still allowed us to find the lowest risk funds in a given category, but SD is still only relevant to the category, and you can't generalize low SD in one category as a measure of equal low risk in another category.  ANGIX and VCFAX are two of the lowest SD funds in the multisector bond category, and they have far outperformed "slightly higher SD funds" like PUCZX, JMSIX, JMUTX.  Clearly those who use only SD for a fund like PIMIX has been shown that there are other factors affecting riskiness than just SD.  You still need to look at the underlying assets in a fund, and some funds are changing from what they use to be, and SD can reflect what a fund use to be, more than what it has become.  

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Re: Bond OEF Investing for More Conservative Investors

 Purchased PUCZX and JMUTX for a different market. Few, if any, knew this market would occur  a few months ago when I purchased them. I plan to sell them both. As to when, I thought perhaps they might make some gain this coming week if the market does not have a down day that soon? I'm not saying they are bad funds; I am saying an overpriced, very low interest market brought me to choose them. Probably best to sell then sooner than later.

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Re: Bond OEF Investing for More Conservative Investors

DT, good analysis.

In a time of very high stress in the market, the usual concepts of risk/reward don't work and correlation goes higher.  This should not dictate your long term and forever investment style.  If you that you will find yourself mostly in treasuries which are fine if you have lots of equities and/or you are a buy and hold for years.  Treasuries have their own problem too and especially the next several years.

When you want to make more with bond funds in lieu of some (or more) of your stocks, you must own more volatile funds and/or lower-rated bond funds otherwise performance will be much lower.

You got to have some flexibility and timing at crucial points is a must. It is not hard to distinguish the real meltdown from a "normal" one. 2008-9 was going on for months. The coronavirus was faster because things are faster + it was virus depended. When the president shut down the Chinese on Feb 2nd that was a huge red flag. Then we heard of global reports for several more weeks. It gave you a month to sell.  How much to sell? it's your choice. 

Another red flag is when most bond categories don't work and especially when rates are going down and most bond funds are going down too.

FPFIX is another high % securitized funds with higher-rated bonds HIGHER than DHEIX and why it was better lately. It's also a new fund started on 12/31/2018. It's nice to have 2 funds with 2 choices with close risk/reward, see PV(link) shows that DHEAX was a better choice but this can change after the end of March.  LT I can see DHEIX beating FPFIX by 0.5-1% based on it's higher yield.  BTW, Even MINT lost -0.6%

There is a good reason why securitized is my LT favorite category where great managers were able to find extra value.

Maybe you can use VIX as another flag. When ^VIX > 30-35 be alert.

The FD indicator  :-)   I posted on Feb 28 I'm mostly out of bonds and on March 9, I was completely out. Since 2009 I was never at 50+% in cash but twice I was in cash for about 3 weeks each.  This means I was invested at 99+% at about 99% of the time.

and as you know past performance is no guarantee of future returns. Just when you think you found a great fund it starts to disappoint you  :-)

at a minimum, you should have the flexibility to switch from riskier funds to lower risk funds every time you notice bigger problems.

Basically, you must have flexibility built-in within your portfolio.  Last but not least, fewer funds allow you more flexibility because you can switch 1-2 funds instead of 3-5 funds.

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Re: Bond OEF Investing for More Conservative Investors

Was watching closely to see how bond OEF performed in market rebound . High Yield Muni and all class of Muni did well . High quality securitized  did well but junkier IOFIX and EIXIX still down . Will be watching Thea closely . I still don’t think we go straight up from here . As cases go up we are still not out of the woods and will see downside is my viewpoint . 

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Re: Bond OEF Investing for More Conservative Investors

We are in a market fall that almost no one anticipated.  We are now beyond the correction phase, now in a bear market, and moving toward a recession.  Like many of the worst markets in our history, this one is different than previous ones--had anyone heard of "coronavirus" in 2019 and the beginning of 2020?  It is virtually impossible to compare one horrible market period, with previous horrible market periods.  Typical of these types of periods, many of our most vocal posters are very quiet now, many of our posts are how to handle this particular market period, many of our posts are now shifted from high flier total return funds to safe haven/safe harbor funds.  Here is the reality of where many of the more prominently mentioned funds stand in total return percentages:

Multisector Bond                  1wk             1mo       YTD

1. ANGIX                               -1.39            -.49        +.42

2. VCFAX                               -2.72            -2.42      -1.07

3. PUCZX                               -7.59            -8.20      -6.61

4. PIMIX                                -4.64            -5.69      -4.54

5. JMSIX                               -4.67            -3.95      -2.82

6. JMUTX                              -4.52            -4.42      -2.99

NonTraditional Bond

1. FPFIX                                 -.59               +.33        +.96

2. SEMMX                            -2.12              -1.93       -.47

3. PMZIX                              -2.16              -1.77       -.94

4. MWCIX                            -2.81               -2.59      -1.81

Short Term Bond

1. FPNIX                               -.50                 +.40        +.82

2. DBLSX                              -1.09                -.78         -.08

3. DHEAX                             -1.27                -.55         +.23

"Lower risk" Munis

1. BTMIX                              -2.42                -1.23       -.44

2. AAHMX                            -2.96                -2.50       -1.44

3. PDSZX                              -3.94                -2.98       -1.64

4. NVHAX                             -5.00                -4.60       -2.83

 

Of course there are many other bond oef categories, including even less risky categories like ultra short term bonds, government bonds, etc.  and many are now looking for bond oefs in the money market categories.  Others may want to add what is going on with some of their favorite bonds in other categories or others not mentioned.  

 

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Re: Bond OEF Investing for More Conservative Investors

Interesting point. Are we in a bond "bear" market along with equities? Or are the bonds feeling the effects of declining stocks?

R48 and ElLobo have been talking about a separate bond bear market for awhile. If this is truly a bear market would we want to be in anything other than cash? Personally I am viewing this as a deep correction and think the market will rebound once good news on coronavirus come out.


@dtconroe wrote:

We are in a market fall that almost no one anticipated.  We are now beyond the correction phase, now in a bear market, and moving toward a recession. ............


 

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Re: Bond OEF Investing for More Conservative Investors

I don't have a strong opinion on that debate.  Both stocks and bonds are getting hit hard right now, and I am trying to survive in the best way I can.  Hopefully, things will get back to normal in the near future.  If "normal" has been redefined in some significant way, I will have to adjust to whatever is working then.


@Gary1952 wrote:

Interesting point. Are we in a bond "bear" market along with equities? Or are the bonds feeling the effects of declining stocks?

R48 and ElLobo have been talking about a separate bond bear market for awhile. If this is truly a bear market would we want to be in anything other than cash? Personally I am viewing this as a deep correction and think the market will rebound once good news on coronavirus come out.


@dtconroe wrote:

We are in a market fall that almost no one anticipated.  We are now beyond the correction phase, now in a bear market, and moving toward a recession. ............


 


 

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Re: Bond OEF Investing for More Conservative Investors

I posted the following on another thread, but it is relevant to this thread, so I will post it here:

"I am not ignoring oversold values, that might be potential buy possibilities in this market.  Tons of posts about investors selling bonds and buying equities, quite a few posts about investors buying CEFs and ETFs.  In my past life of investing during major corrections and very severe market drops, I have chosen to put some money into what I consider "more risky" options.  Now at 72, I am not quite that daring, but I am considering putting some money into bond oefs, that are a step up in risk, than what I would have chosen more recently.  My focus right now are funds like PUCZX, JMSIX, JMUTX, which are still in a risk range that I don't think is too risky for my investing risk tolerance.  I am not there yet, because I don't think we have figured out the total impact economically on the market as a whole.  When we are discussing bailouts for big companies, it starts sounding like 2008, so I will wait and look at my options, with a little more information in the coming days/weeks.  I am not a good market timer, so I may start dollar cost averaging in some funds that I am interested in"

If I did decide to throw some money at some funds, that are slightly more risky, than I have used in the past, I would likely do that with the intent for holding them for the remainder of 2020, or longer.

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Re: Bond OEF Investing for More Conservative Investors

VCFIX (-1.31%) and SEMMX (-1.37%) are down today as well. I am sure JMSIX and PIMIX will be down even more.

Wow, what a carnage in the bond land, multi-sector OEF funds in general! No one wants these bond funds any more and not sure why it's tanking so hard? Any sane explanation? I know the 10 yr treasury is trading wildly but how can these bonds lose so much value all of a sudden?

Are all the companies going to stop paying these bonds and go belly up? Most of these OEF funds have high percentage in MBS and not sure why it's tanking so hard when the govt is bailing out with a *supposedly* huge package. And, the fed announced that they are buying all kinds of securities and wonder whether these MBS, that are in these bond OEFs, are part of that?

Time to bail out if this doesn't improve this week and move to stocks as the risk/reward looks better in the stock land.

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Re: Bond OEF Investing for More Conservative Investors

Well SD works as a guide until it doesn't work. My guess a part of the losses is selling holdings for shareholders to raise cash. Plenty on sale now.

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Re: Bond OEF Investing for More Conservative Investors

Since DBLTX, BCOIX, BAGIX, HABDX held up so well this year, is it time to bring core/core plus into this conservative discussion? I know, SD etc. will rule these out. But what is more conservative than not losing 2-4% in the usual funds discussed?

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Re: Bond OEF Investing for More Conservative Investors


@Gary1952 wrote:

Since DBLTX, BCOIX, BAGIX, HABDX held up so well this year, is it time to bring core/core plus into this conservative discussion? I know, SD etc. will rule these out. But what is more conservative than not losing 2-4% in the usual funds discussed?


With all the extreme ups and down in the market, who knows now what bond funds will do in a stable market? It is not only that the market is down so much that bothers me, it is the constant trading, making the market so volatile.  They buy the market up and then sell the next day, it gives me a headache.

I still prefer the ultra-short funds for the least volatility.

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Re: Bond OEF Investing for More Conservative Investors


@Gary1952 wrote:

Since DBLTX, BCOIX, BAGIX, HABDX held up so well this year, is it time to bring core/core plus into this conservative discussion? I know, SD etc. will rule these out. But what is more conservative than not losing 2-4% in the usual funds discussed?


I think they are very appropriate for this thread--go for it!  Waiting to read your analysis of which of these funds are the best to consider and why.  Feel free to ignore SD in your analysis!


 

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