What sort of fund is LCV DSENX exactly?

davidrmoran

Large value, it's said. Below are its investments. Help. Not a balanced fund?

Collateralized Loan Obligations 20.5%
Non-Agency Commercial Mortgage-Backed Obligations 16.5%
US Government Bonds and Notes 14.3%
Non-Agency Residential Collateralized Mortgage Obligations 11.4%
Banking 7.9%
US Government / Agency Mortgage-Backed Obligations 5.9%
Short-Term Investments 4.1%
Utilities 2.2%
Oil & Gas 2.1%
Transportation 1.7%
Healthcare 1.7%
Telecommunications 1.4%
Foreign Government Bonds and Notes, Supranationals and
Foreign Agencies 1.3%
Finance 1.2%
Media 1.0%
Consumer Products 0.9%
Technology 0.9%
Building and Development 0.8%
Business Equipment and Services 0.7%
Retailers (other than Food/Drug) 0.6%
Mining 0.6%
Chemicals/Plastics 0.6%
Asset-Backed Obligations 0.6%
Food Products 0.6%
Industrial Equipment 0.6%
Electronics/Electric 0.5%
Food/Drug Retailers 0.5%
Insurance 0.5%
Automotive 0.4%
Conglomerates 0.4%
Pharmaceuticals 0.4%
Beverage and Tobacco 0.4%
Real Estate 0.4%
Leisure 0.4%
Construction 0.3%
Financial Intermediaries 0.3%
Hotels/Motels/Inns and Casinos 0.2%
Energy 0.2%
Aerospace & Defense 0.2%
Environmental Control 0.2%
Containers and Glass Products 0.1%
Pulp & Paper 0.1%
Cosmetics/Toiletries 0.1%
Other Assets and Liabilities (5.7)%

msf

If one goes by a "traditional" definition of equity, or even balanced, this ain't it - adding up CLOs (20.5%), Non-Agency MBOs (16.5% + 11.4%), Treasuries (14.3%), Agency MBOs (5.9%), Short Term (4.1%), International debt (1.3%), Asset-Backed debt (0.6%) - the fund's debt investments is pushing 3/4 of assets.

But it's all a game of derivatives and shades of gray. How does one classify an ETN based on an equity index? Technically it is pure debt, but the behavior is pure equity (unless the issuer defaults). Equity-linked securities or equity-indexed annuities that guarantee no loss of principal are just options (to provide the equity growth) coupled with bonds (to provide the guarantee). No stocks there, either.

This looks similar, though more complex. (Hey, it's Gundlach.) It's supposed to behave like equities (per prospectus: "The Fund will normally use derivatives in an attempt to create an investment return approximating the Index return.")

I'll punt on a detailed analysis - trying to figure out precisely what bonds a fund holds is hard enough; reverse engineering derivatives to figure out what behaviour is being mimicked is best left to professionals.

My view on funds like these is that you can take them on blind faith (something I never recommend), you can rely on third party commentary (which includes how they classify a fund as well as more detailed comments), or you can pass.

What I didn't include was relying on how well the fund has tracked whatever it says it is tracking. Though a fund may have tracked its target well so far this does not address how it will respond to a rapid market move. Pure replication will track nearly perfectly, good sampling pretty well. Derivatives and alternative strategies? Don't know without understanding them.

davidrmoran

Thanks much; same as my (previous) understanding; was just curious how to analyze their own listing anew, since I too was getting ~80% debt.
Regardless, so far, so good: chiefly either outperformance or mirroring, seldom underperformance.
Little third-party analysis.
Thanks again.