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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing

No worries, rila3400.  

Just an FYI - I sold 20% of my USMV and moved proceeds into VDIGX, MOAT, and DSEEX (1/3rd each) - all three have value tilt.  I did not worry as much about sector allocations of the three.   I would have put 100% into VDIGX but I did not have enough room in the IRA at Vanguard.   MOAT went into a taxable account where I already have MOAT.  I already have a foothold of DSEEX at Fidelity IRA and so I added more DSEEX there.  

I might sell another 20% of USMV later this week and will have to figure out what to do with the proceeds.

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Explorer ○○○

Re: Low-Volatility SPLV, USMV After Rebalancing

It's good to allocate among a few different strategies, in my book--although not too many as it gets complicated with too much work.  I'm testing CDC, CFO, and JHQAX, along with some alternative long/short strategies, and will make a decision in a year or so which to keep or discard.  I also opened a position in VDIGX, also.  That's a great fund and seems to have the best risk/reward profile.

Fortunately, the other funds offer only the chance to "earn less" than market returns as they definitely over-emphasize safety first.  I'll see which seem to present the best risk/reward and hopefully it will be self evident. 

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Explorer ○

Re: Low-Volatility SPLV, USMV After Rebalancing

FDLO looks like a decent alternative to AUENX if you can't buy in for less than a million. I did not realize that was the minimum at FIDO. I have it in an IRA where my minimum purchase is $250. I just checked and it is a million if I try to buy it in another IRA or Roth or taxable account. The only thing I can think of is that I may have bought it before the minimum was raised and am being allowed to buy more.

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Explorer ○○○

Re: Low-Volatility SPLV, USMV After Rebalancing

Yes, a few months ago FIDO raised the minimum to 1m for auenx.   No explanation why.  I’ve seen this before with other non-FIDO oefs. 

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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing

Another day of disappointing performance from USMV when the broader market was down.  Decreased some more of my USMV holding.

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Frequent Contributor

Re: Low-Volatility SPLV, USMV After Rebalancing

I have now reached the conclusion that funds based on past low-volatility factor failed both in the fastmoving decline [2/19/20 - 3/23/20] and the fastmoving rebound [3/23/20- ]. Their recent rebalancing has made them more vulnerable. Although I didn't own ETF SPLV or USMV, I had global currency-hedged OEF VMVFX/VMNVX that I included in charts on this thread - there are other threads on it too. I was going to give it more time but changed my mind and switched to the newer world-allocation global Wellington VGWLX/VGWAX. This change is then from passive low-volatility factor to active strategy, and from all-equity global to 65-35 global.

YBB
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Participant ○○○

Re: Low-Volatility SPLV, USMV After Rebalancing

@yogibearbull 

Many thanks to you for your ongoing coverage and Insightful analysis of the investment world.  As an investor in both USMV and VMNVX I’ve been so disappointed in how the low volatility funds have performed during this period - a deeper fall and lower rise.  I had not been tinkering with currently owned equity funds until 2 days ago when I started moving VMNVX funds to VWIAX.  I also appreciate your warning that something is not passing the smell test in the market.

Best to all.

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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing


@Anitya wrote:

No worries, rila3400.  

Just an FYI - I sold 20% of my USMV and moved proceeds into VDIGX, MOAT, and DSEEX (1/3rd each) - all three have value tilt.  I did not worry as much about sector allocations of the three.   I would have put 100% into VDIGX but I did not have enough room in the IRA at Vanguard.   MOAT went into a taxable account where I already have MOAT.  I already have a foothold of DSEEX at Fidelity IRA and so I added more DSEEX there.  

I might sell another 20% of USMV later this week and will have to figure out what to do with the proceeds.


A quick update.  Of the three I switched to, MOAT had a reconstitution after last Friday Close.  Below is the new list (second page at the link) of new constituents and you can see why MOAT is lagging this week - 

https://www.vaneck.com/moat/moat-reconstitution.pdf

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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing

According to Stockcharts, 1 mo total return for USMV is a negative 1%, for SPY it is + 2%, and for VICSX (corporate bond fund) it is + 2.5%.  Of course, if you are in tech equities or growth equities, you have done fabulously well (some 7-10%).  

I am starting to question the merit in investing in USMV.  Yes, it might provide lower volatility in corrections (e.g., 2015 & 2018), but in a serious recession it performed worse, with an added uncertainty from untimely rebalancing.  I think I should invest for long term total returns and not worry about short term volatility, which might also simplify my portfolio.   

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Participant ○

Re: Low-Volatility SPLV, USMV After Rebalancing


@Anitya wrote:

According to Stockcharts, 1 mo total return for USMV is a negative 1%, for SPY it is + 2%, and for VICSX (corporate bond fund) it is + 2.5%.  Of course, if you are in tech equities or growth equities, you have done fabulously well (some 7-10%).  

I am starting to question the merit in investing in USMV.  Yes, it might provide lower volatility in corrections (e.g., 2015 & 2018), but in a serious recession it performed worse, with an added uncertainty from untimely rebalancing.  I think I should invest for long term total returns and not worry about short term volatility, which might also simplify my portfolio.   


I did lots of looking into low volatility ETF's using Portfolio Visualizer before creating a portfolio of them along with several T R Price MF's. LV is not meant to outrun other stock choices in market run ups. IMHO they are meant to do very well over longer terms with less volatility. 

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Frequent Contributor

Re: Low-Volatility SPLV, USMV After Rebalancing


@judger wrote:

@Anitya wrote:

According to Stockcharts, 1 mo total return for USMV is a negative 1%, for SPY it is + 2%, and for VICSX (corporate bond fund) it is + 2.5%.  Of course, if you are in tech equities or growth equities, you have done fabulously well (some 7-10%).  

I am starting to question the merit in investing in USMV.  Yes, it might provide lower volatility in corrections (e.g., 2015 & 2018), but in a serious recession it performed worse, with an added uncertainty from untimely rebalancing.  I think I should invest for long term total returns and not worry about short term volatility, which might also simplify my portfolio.   


I did lots of looking into low volatility ETF's using Portfolio Visualizer before creating a portfolio of them along with several T R Price MF's. LV is not meant to outrun other stock choices in market run ups. IMHO they are meant to do very well over longer terms with less volatility. 


I sold SPLV in my Roth 2 weeks ago because of anemic recovery from March low. I bought QQQ which is up 4% since Purchase. 

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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing


@judger wrote:

@Anitya wrote:

According to Stockcharts, 1 mo total return for USMV is a negative 1%, for SPY it is + 2%, and for VICSX (corporate bond fund) it is + 2.5%.  Of course, if you are in tech equities or growth equities, you have done fabulously well (some 7-10%).  

I am starting to question the merit in investing in USMV.  Yes, it might provide lower volatility in corrections (e.g., 2015 & 2018), but in a serious recession it performed worse, with an added uncertainty from untimely rebalancing.  I think I should invest for long term total returns and not worry about short term volatility, which might also simplify my portfolio.   


I did lots of looking into low volatility ETF's using Portfolio Visualizer before creating a portfolio of them along with several T R Price MF's. LV is not meant to outrun other stock choices in market run ups. IMHO they are meant to do very well over longer terms with less volatility. 


I think you mis-read my post.  My first paragraph is meant to catch readers up about effects of June rebalancing - the topic of the thread.  The sentence you highlighted is not a conclusion of my first paragraph and for a reason it was placed in the second paragraph where it is meant to serve as a headline for the second paragraph.   

March draw down for USMV was as bad as for SPY and far worse than TRBCX and rebound for USMV lags quite a bit.   Low volatility (like insurance) is important in bad times not in good times. 

I have owned USMV from its inception and added 100% more during the past 1 year with the hope of making it a core holding.  I think I have seen what it does in a full market cycle.   Unfortunately, I am not sold and so trimmed it back to pre-2019 holdings (tax handcuffs).  QQQ has been my largest equity holding for the past 15 years and never sold a single share.  I added more to it during 2008-09 and never regretted.  

If somebody fancies owning USMV, by all means. 

 

 

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Frequent Contributor

Re: Low-Volatility SPLV, USMV After Rebalancing

Min volatility show terrible 1-yr U/D CR and so-so for 3-yrs. I am done with them.

Edit/Add: That is using old M* Ratings & Risk page. Start with VFINX and then add by Compare SPLV, USMV, VMVFX.   http://performance.morningstar.com/fund/ratings-risk.action?t=VFINX&region=usa&culture=en-US

Screenshot 2020-07-03 18.56.31.png
YBB
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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing

Thanks for sharing, Yogi.

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Participant ○○○

Re: Low-Volatility SPLV, USMV After Rebalancing

I owned USMV and VMNVX long enough to conclude that allocation funds are better suited if I want low volatility in a single fund. I know the low vol factor has lots of academic and institutional support for its thesis but I'm no longer interested.

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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing


@wayoutwest wrote:

I owned USMV and VMNVX long enough to conclude that allocation funds are better suited if I want low volatility in a single fund. I know the low vol factor has lots of academic and institutional support for its thesis but I'm no longer interested.


Today, I looked at allocation funds.  In addition to the usual ones we discuss, JABAX is worth looking at.  There is also a SSIAX,  1919 Socially Responsive Balanced A, which M* rates Silver.

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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing

SSIAX is a very old fund but has less than $300M in AUM.   Low turnover.  Managed by some experienced hands.  I do not know if succession is an issue.  Would be good to get others' thoughts.

Edit: Available NTF at TD, Schwab, and Vanguard.  Institutional class (LMRNX) has a very high minimum of $1M.

Edit, Edit: I forgot to post earlier.  The portfolio holdings (quite defensive) tell us why the fund did well during Covid sell off.  60% equities in blue chip growth stocks and bond sleeve is also high quality.   So, it is anybody's call whether they want to hold this in post covid era.  I might only because I already have 8% allocated to PRWCX and JABAX also has fat AUM.

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Participant ○○○

Re: Low-Volatility SPLV, USMV After Rebalancing

@Anitya @yogibearbull 

I'm with you both on USMV and low vol funds. I sold VMNVX a few weeks ago and have been on the fence with USMV because I was hoping it would recover before selling. It dropped as much as S&P 500 but has not nearly recovered as much.  Yes, I bought into the notion that a low vol fund would offer “some” protection during a heavy drop - didn’t happen.

So for now, my solution is a balanced fund as well. I’ve been researching VLAIX which has gotten considerable chatter here earlier (when compared to PRWCX) and I cleaned out my couch cushions for a starter position last week.  Once I sell USMV, I’m thinking of adding to it.  JABAX looks promising as well

added: JABAX shows 47% equity; 55% AAA FI - 6% under IG;  2.5% cash.  VLAIX shows 61% equity; 69% AAA FI 1% under IG - 7.34% cash. So VLAIX is taking more risk with equity while JABAX invests a bit more in junk. Hmm...

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Contributor ○

Re: Low-Volatility SPLV, USMV After Rebalancing

Brian,

I added more info in my SSIAX post.  I also own VLAIX and might add to it because it is only at 3% of my PV.  

How do you manage allocation funds in taxable accounts?  

A

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Frequent Contributor

Re: Low-Volatility SPLV, USMV After Rebalancing

I own several allocation/balanced funds in different accounts [VWINX/VWIAX, VWELX, JABAX, etc]. But my low-volatility global equity VMVFX/VMNVX money went into the new global Wellington hybrid VGWLX.

I am not worried about articles or posts that have declared premature death of allocation/hybrid funds when they are doing just fine. When there are indications that they stop working, then I will change.

YBB
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