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Frequent Contributor

Barron’s Fund Quarterly (2020/Q1–April 6, 2020)

 

 

Pg L4: Active managers disappointed again – they were supposed to navigate well in turbulent times but didn’t. Since the market peak on Feb 19, only 4 of 9 M* categories had majority of funds beat their benchmarks – LC-blend, LC-value, MC-value, SC-growth. Some say that with wide dispersions in stock returns now, more active managers will outperform with time. Some active funds for choppy times: APGAX [low downside capture ratio], PRBLX [quality + ESG], IDIVX [dividend oriented], MCMSX [Chinese small-caps have domestic focus].

 

Pg L8: Only 4 of 19 M* taxable bond categories have positive returns YTD – ST/IT/LT-Treasuries and IT-core; hardest hit were HY, EMs. Corporate spreads widened a lot. Treasuries served as ballasts to equities [VSGBX, VFITX, PEDIX]. For a compromise between safety/ballast and income, consider IT core [RBFGX, BAGSX; largest M* category] and IT core-plus [PDBAX, WAPAX, TGLMX; 2nd largest M* category] and multisector [PONAX; some MS/NT funds were terrible].

 

Pg L10: Negative rates arise from central bank policies and market action [at a high enough price, any bond can have negative rate]. There are negative rates in Europe [due to ECB] and Japan [due to BOJ]; sovereign bonds at negative rates peaked at $ 17 trillion [30% of global bonds] in August 2019; now $10.6 trillion [18% of global bonds]. Institutions [banks, insurers, pension funds] trade negative rate bonds in the hope that they can sell when the rates become even more negative; it would be foolish to hold them to maturity. The US Fed is not inclined to drive rates negative.

 

Pg L11: March crash showed flaws in bond matrix-pricing [price of a bond that didn’t trade is deduced from the price of another similar bond that traded; only about 20% of bonds trade daily]. Many bond ETFs traded at large discounts to NAV and that meant that similar bond mutual funds were mispricing their bonds. This was quite obvious at Vanguard where its bond ETFs are another class of the bond mutual funds; notable price discrepancies arose between VBTLX and BND, etc. Large discounts developed for muni HYMB, etc. Bond funds hit with liquidity crunch included BDKAX, IOFIX.

 

Pg L12: Mutual funds that focus on high-quality companies [good balance sheets, cash-rich or net-cash, free cash flow] include RNWOX, POLRX, RYSEX, IVIOX, JENSX.

 

Pg L14: Look at how your portfolio does on a bad market day – several were in March alone, Mar 12, 16, 18, 20. Funds that showed relative strength include LC-value YAFFX, value NCAVX, SC-growth ARTSX, moderate/60-40 VBINX, conservative/40-60 VWINX, tactical SFAAX, core bond AGG, core-plus MWTRX. Look at downside capture ratio and standard deviation [absolute, relative].

 

Pg L40: In terrible 2020/Q1, among general equity funds, the best was SP500 -19.62%, the worst SC-value -37.60%. Among other equity funds, the best was health/biotech -12.76%, the worst Lat Am -45.93% [ignoring short and market-neutral funds]. Among fixed-income funds, LT -4.16%, world income -10.35% [not very refined in Lipper mutual fund categories listed in Barron’s].

YBB
7 Replies
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Participant ○○○

Re: Barron’s Fund Quarterly (2020/Q1–April 6, 2020)

IOPIX should be IOFIX?

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Frequent Contributor

Re: Barron’s Fund Quarterly (2020/Q1–April 6, 2020)


@wayoutwest wrote:

IOPIX should be IOFIX?


Fixed. Thanks.

YBB
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Explorer ○

Re: Barron’s Fund Quarterly (2020/Q1–April 6, 2020)

As always, thank you for you efforts each week.  A question.  There is a story about the 5 best funds to own now.  Could you list them or are you forbidden>  Thanks.

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Frequent Contributor

Re: Barron’s Fund Quarterly (2020/Q1–April 6, 2020)


@51 wrote:

As always, thank you for you efforts each week.  A question.  There is a story about the 5 best funds to own now.  Could you list them or are you forbidden>  Thanks.


See Pg L8 and L12 stories with fund tickers.

YBB
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Explorer ○○○

Re: Barron’s Fund Quarterly (2020/Q1–April 6, 2020)

Yogi, I missed this earlier.Thank you for your research in this area.

I recently received a letter from IOFIX explaining that they were forced to liquidate due to withdrawals and low liquidity of some assets resulting in loses. This was my first venture into this area, probably with larger than wise amounts, that also included PIMIX and SEMMX, all of which took very to lesser loses. IOFIX loses were startling. Is it likely that IOFIX and SEMMX will recover and if so when? I trust that PIMIX will come around.

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Frequent Contributor

Re: Barron’s Fund Quarterly (2020/Q1–April 6, 2020)

When derivatives go bad, the losses tend to be permanent. But there may be decent rebounds from the lows. Other than that, I don't know. Follow this thread where some posters are warming up already to the disasters from the bond crash [3/5/20 to late-March] that even spooked the Fed.   https://community.morningstar.com/t5/Bond-Squad/2020-bond-funds-analysis/m-p/699802#M6480

YBB
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Explorer ○○○

Re: Barron’s Fund Quarterly (2020/Q1–April 6, 2020)

Thank you, Yogi.

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