In his comments, David described the BlackRock marketing of the BlackRock Emerging Markets Long/Short Fund (BLSAX). Despite the marketing efforts, its performance since inception was underwhelming. However its close relative BlackRock Global Long/Short Equity Fund (BDMIX) seems to be quite interesting. It is only one year old, so one may wonder what will happen in the future and why it is so much better than BLSAX if it uses a similar strategy (in the developed markets)? But let us look at it anyway.
If one plots simultaneously BDMIX (blue line) and VT (Vanguard Total World Index, green line), and general market neutral funds (red), one finds that BDMIX during the one year of its existence produced essentially the same returns as VT, but with a much smaller volatility, even much smaller than MFLDX, which is one of the absolutely best global long/short funds. And it is way better than average market neutral funds.
An obvious problem with BDMIX is that it has $2M minimum, and its more accessible brother BDMAX has high sales load, but in general it is a very intriguing fund. If it were possible to buy it without load I would consider it very seriously. I wonder whether you have an opinion on this impressive newcomer?
Comments
Thanks for mentioning the Fido access, Finder. Definitely goes on my watchlist.
I called MFLDX and they told me that their high number 2.94% is the correct one because M* ignores some internal expenses of the fund associated with shorting.
Does it mean that the expensive BDMIX is in fact significantly less expensive than MFLDX?
What is the reason for the cancel?
Is the account you noted your 401k using Fidelity brokerage or otherwise?
EDIT: It went through fine at first. Then they cancelled it.
Is the Bid/Ask on ALFA $35/40??? Sure way to loose many.
Would GURU investment would be better with 20% in cash and 80% in GURU?
SPLV is probably more appropriate for this crowd, guess the high percentage utilities in the fund make it more like a balanced fund.
"Low Beta Bubble’ is ‘On The Verge of Deflating’: BofA"
http://blogs.barrons.com/focusonfunds/2014/01/06/low-beta-bubble-is-on-the-verge-of-deflating-bofa/?mod=yahoobarrons&ru=yahoo
I spoke to customer service, and they acted like it was my fault!!!! Which is ironic, since Fido needs to fix the "minimum investment" amount that pops up when you process a Buy.
Fido needs to work on their customer service.
Anyone know?
Old_Skeet
Note: Bonds were up today, so there was some green on the screen.
I like to look at down market days to see how these vehicles hold up vs. the major indices.
"Long/short equity has a variable beta, ie, can be neutral to the market, but also
net long or net short". Since market on long term is up 2/3rd of the time, L/S can be more volatile and may provide more return.
So I'm not sure which bucket BDMCX fits into, or whether that is all just semantics. The name of the fund contains the words "long/short". Obviously they are changing up their net exposure if they can capture that much in gains.
1/29
SPY -1.00% BDMIX +.09% MFLDX +.11%
1/30
SPY +1.13% BDMIX +1.11% MFLDX -.27%
Any comments about the new Robeco Global Long/Short fund BGLSX ?
I decided to test your assertion that being up on both up and down days was very rare or a coincidence.
Since BDMIX inception on 12/24/2012, the S&P has been up 57% of the days and down 43% of the days. On the down days, BDMIX has been up 54% of the time. On the up days, BDMIX has been up 73% of the time.
So, at least during this timeframe, it seems that BDMIX has had the ability to be up on down days and up on up days at a rate that seems pretty high to me.
I am not saying anything about the future here or in my original post. I'm just pointing out that they have done a good job over a couple of recent days and in their short history.
Regards,
Ted
Welcome JedClampett:
The worst case scenario is when the direction changes and holds roughly in the same time as their ability to reposition. Higher the volatility of the market, greater that chance and so more of damaging reversals. Leveraged funds also behave the same way but for different reasons. They did great in 2013 a fairly monotonic up year.
The repositioning for market conditions also gets tougher as fund gets bigger. Look at what happened to BPLEX. Did great during the 2008 and 2009 meltdown and the subsequent recovery. Assets grew too much and they closed it too late and kept it closed until the lack of similar performance created outflows. The fund does OK as a modest market neutral fund but not the miraculous great market neutral returns or "up when market is up or down" that people expect from long/short funds hoping to beat S&P.
BDMIX may turn out to be a decent L/S fund but the sort of consecutive daily behavior posted can result in unrealistic expectations from the fund.
That appears to not be the case as a blanket statement.
If a fund's net market exposure is quite small, then I don't see why it is too surprising that if they had chosen their longs and shorts well that they could do well on consecutive days of opposite market performance without having to reposition their portfolio in rapid fashion.
As you say, it gets harder to choose well as fund size increases. The month of January seems to be looking like a pretty big reversal from the previous 12 months and so far they are navigating pretty well. Time will tell what the future holds.
Didn't realize posting this kind of thing was offensive, so back to lurking...
http://www.etf.com/sections/index-investor-corner/21111-swedroe-the-absolute-return-rip-off.html?showall=&fullart=1&start=2