The best bank loan fund many of us can't purchase

Junkster

Heads above the rest of the pack in the bank loan category SPFRX/SPFLX has led the way YTD with gains over 5%. It's low volatility and trend persistency has been a thing of wonder and just what I look for in a bond fund. I have tried month after month after month to buy this fund and with every penny of my next egg but to no avail. That's because it is only available in 20 states. After finally calling the company today, it appears they have no immediate plans to expand to other states.

scott

QLENX doing rather well, too. +10.5% YTD. SPFLX is interesting, thanks for pointing it out.

Junkster

scott said:

QLENX doing rather well, too. +10.5% YTD. SPFLX is interesting, thanks for pointing it out.

Thanks Scott, I just edited my header to say bank loan fund. I don't do "groupthink" funds and thought all AQR funds were in the mode of AQRIX/AQRNX - an ultimate "groupthink' and with lousy returns. But was unaware of QLENX and certainly not lousy returns.

Edit: Just looked at the YTD returns for all the many AQR funds. Quite a variance in returns and may dig a bit deeper into that fund family.

https://funds.aqr.com/daily-prices

Ted

@Junkster: Would you please enlighten us as to what 20 states the fund is available ?
Regards,
Ted

Junkster

Ted, they only told me it was available in 20 states and would not be available in KY anytime soon, if ever. So did not go any further with the conversation.

heezsafe

Late last year, we experienced (what was perceived as) a negative credit risk event. More macro and "anticipatory" than anything specific, it did cause junk corporates to pull back (nicely, IMO). What wasn't widely noted was the response of bank loans. They proved to be quite a bit more illiquid at that moment, when traders went to move them, than conventional thinking had predicted they would be. Many trades took up to 60 days to complete.
Has the situation improved for bank loan liquidity, with their covenant-light qualities? I suspect not. Consequently, I don't understand why one would want naked exposure to this fixed income asset class now; risk/reward without a "positive skew" and all.

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Junkster

heezsafe said:

Late last year, we experienced (what was perceived as) a negative credit risk event. More macro and "anticipatory" than anything specific, it did cause junk corporates to pull back (nicely, IMO). What wasn't widely noted was the response of bank loans. They proved to be quite a bit more illiquid at that moment, when traders went to move them, than conventional thinking had predicted they would be. Many trades took up to 60 days to complete.
Has the situation improved for bank loan liquidity, with their covenant-light qualities? I suspect not. Consequently, I don't understand why one would want naked exposure to this fixed income asset class now; risk/reward without a "positive skew" and all.

Bank loans got hit harder than junk corporates in 2008 down around 30%. And most bank loans are mainly souped up junk bonds. The full effect of the meltdown in energy junk issues probably hasn't yet been reflected in the junk market. I am not particularly enamored of junk corporates or bank loans. But so what? Some here trade what they see, not what they think or the so called experts think. The fact is SPFLX has been one heck of a performer with little to no volatility in its upward trajectory. I am sure the lucky few I know here that have as much as 85% of their liquid net worth in SPFLX will scatter like the wind when price turns. Because isn't that what it is all about - pure price action?

Dex

@junkster,
I'm missing something here. Is this the right fund?

http://finance.yahoo.com/q?s=SPFLX

The chart doesn't look like much to me, the yield is 4.89%

Junkster

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=spflx&insttype=&freq=&show=

Dex, the chart from the link above is a better visual of its trend persistency in 2015. The two steep declines are from its twice annual dividend payouts.

bee

M* chart smooths out these payouts:

TheShadow

SPFLX is available at Scottrade for low minimums and a trade fee.

Minimums

Initial 100.00
Additional 100.00
IRA 100.00
Additional IRA 100.00

Characteristics

For Sale at Scottrade -Available At Scottrade
Transaction Fee(TF) - Transaction Fees Apply
No Load(NL)- No Load

Thanks for the heads-up!

8/12/15 - minimum order went through with $17 T/F.

MikeM

SPFLX is available to me here in NY state through Schwab. $75 TF. Guess NY is one of the 20.

Junkster

Up today and up for the week and way ahead of its category which was a loser. Never been more frustrated since I am unable to purchase it here in KY. Then again am even more frustrated in that I have a small position in another bank loan fund I would have exited last week. I NEVER hold onto a losing position. But unbeknownst to me they added a 1% short term redemption fee. When I purchased it I was under the impression it still was redemption free. Luckily for me I still came out ahead for the week as I hold more in MMIIX, a junk muni fund.

Unrelated, still don't see much fear here. Imagine a sharp rally is in store but until the junk corporate market stabilizes don't see much of an everlasting one.