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Better than Marketfield?

edited January 2014 in Fund Discussions
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?


  • It looks like a good performing long-short fund. Performance was marginally better than ARLSX and BPRRX (which I believe contain mostly US stocks), but by eyeballing it, BDMIX may have done it with less volatility. PMHIX and LSOFX performed better, but with what looks like greater volatility (can't say for sure but my guess is both may be more long biased, and PMHIX may have a more concentrated portfolio). I'm looking forward to see how the new Robeco global long-short fund performs.
  • edited January 2014
    I found that Fidelity allows to invest in BDMIX in certain retirement plans accounts (such as 401k). In fact, I checked it experimentally, and it worked, though I paid the TF $50, but it is much better than the load. If you want to try it, just do it, some Fidelity representatives do not know it.
  • BDMIX is an interesting newcomer. A real smooth performer in its short life. And its not afraid to make use of "shorting", based on recent holdings.

    Thanks for mentioning the Fido access, Finder. Definitely goes on my watchlist.

  • The only complaint I have had with MFLDX has been its high expenses, especially given the size of the asset base. And I realize BDMIX is a relative newcomer. But the 1.75% ER is truly high with almost 1/2 $billion dollars in assets. On the other hand, so far it has been more active in its short positions than MFLDX. So we will watch this one.
  • another fund, not long/short does pretty good. SPLV

  • edited January 2014
    Reply to @BobC: The situation with price is more complicated: M* gives 1.53% for MFLDX and 1.75% for BDMIX. Meanwhile the prospectus gives 2.94% for MFLDX and 1.93% for BDMIX, which makes MFLDX significantly more expensive.

    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?
  • In terms of ETF, there is also ALFA, which is an index of top institutional holdings. If the S & P goes below 200 day at month end, it hedges.
  • Reply to @finder: A correction: A day after the system told me that I bought BDMIX, the trade was canceled. So things are not that simple as I expected...
  • Reply to @finder:
    What is the reason for the cancel?
    Is the account you noted your 401k using Fidelity brokerage or otherwise?
  • edited January 2014
    Reply to @finder: Bummer, I guess the trade I entered today will bounce as well.

    EDIT: It went through fine at first. Then they cancelled it.
  • Reply to @catch22: It was 403b account, the system allowed me to make the trade, but...
  • Reply to @scott:
    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.
  • On second thought there is just no free lunch: Better stick to good stock pickers

    "Low Beta Bubble’ is ‘On The Verge of Deflating’: BofA"
  • edited January 2014
    Just a heads up on BDMIX at Fido - they are not accepting trades of BDMIX even though the platform will allow you to enter with a supposed $2,500 minimum. The minium is still $2,000,000. I guess its a glitch, since they will cancel your trade later.

    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.
  • Just got in MFLDX this week at Schwab. Expected trade to be cancelled because it states only open to existing SH, but I was able to get in on employer self-directed account. Maybe Schwab aggregates so MFLDX only sees one big account. For BDMIX, maybe not enough people together for $2M min.
  • I have heard of Schwab doing this. I might check this out. I wonder if this is for a wrap type account where an asset management fee applies on the account value with a certain mimimum invested required?

    Anyone know?

  • FMLSX has been profiled favorably by MFO. 1.25 or1.27 ER after a waiver. Look at the Sept13th2013 thread for opinions.
  • Well, on a very down day S&P -1.26%, looks like MFLDX was (-.43%) and BDMCX held up REALLY nicely (-.09%). Even MERFX was down slightly more (-.19%) than BDMCX.

    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.
  • BDMCX is market neutral fund with no long term record, MFLDX is long/short equity that was down -13% in 2008.

    "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.
  • Reply to @equalizer: BDMCX returned over 18% for the past year. Only a few other "market-neutral' labeled funds returned over 10% over that time (Whitebox L/S and Causeway Global Absolute).

    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.
  • edited January 2014
    Really impressive two day stretch for BDMIX/BDMAX:

    SPY -1.00% BDMIX +.09% MFLDX +.11%

    SPY +1.13% BDMIX +1.11% MFLDX -.27%
  • edited January 2014
    MFLDX has been amazing since it opened about 77 months ago:

  • Yes, MFLDX is great, but will it continue that way with more than $20B AUM ?

    Any comments about the new Robeco Global Long/Short fund BGLSX ?
  • One ought to be careful about comparing day to day results in long/short funds. Being up on both up and down days are very rare exceptions or a coincidence. A mutual fund with reasonable assets cannot change its net long/short positions overnight. They may be making differential sector bets (for example, long tech short Gold) that may pay off a day or two when the movements favor their bets. Long short funds do well in gradual changes between up and down markets and suffer in transitions. If a fund is not doing that, I would look very carefully at what the fund is really doing to see if it is sustainable.
  • Reply to @cman: BDMIX is at last report running a very low net market exposure so in the end their return is a reflection of their ability to pick strong longs and weak shorts by whatever means.

    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.
  • Reply to @JedClampett: Normally Catch22, as the official MFO Discussion Board greater, would welcome you to the Board. However, he has been slacking off lately so I will welcome you.
    Welcome JedClampett:
  • Reply to @Ted: Weeelll doggies, much obliged.
  • edited January 2014
    Reply to @JedClampett: Tested the wrong assertion. Read what I said again. It is the transitions that are difficult for L/S funds. If you have a stretch of up (or down) days, the fund can be in sync a great portion of that time and so have a better average of being in sync. Being on the right side on consecutive days reversing is more difficult than over gradual changes except by luck or coincidence.

    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.
  • Reply to @cman: I'll be more specific. I was testing this assertion: "One ought to be careful about comparing day to day results in long/short funds. Being up on both up and down days are very rare exceptions or a coincidence."

    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...
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