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I'm enjoying all the interesting facts and discussion on this fund, especially all the facts you have supplied @LLJB. You found information I couldn't find on my own. But all this talk about this "could" happen to the fund or the fund "could" be susceptible to that... I don't see where that should scare people away. That is a warning for any fund method. Bottom line is I bought into the fund at a fairly heavy percentage about 1 year ago, mostly my interest was intrigued by posts from @davidrmoran, and now my investment is up 23%. CAPE is a winning method if you believe in value investing IMHO. There is obviously some special management sauce that has made results even better than CAPE.
This fund is 15% of my self managed portfolio. I don't think that is any more risky then having 15% in the S&P 500 index or having 15% in "many" different large cap funds someone else might hold. I don't believe there is any value in 'manager diversification', especially in the domestic large cap field. Just my 2 cents.
1% outperformance by SP500 the last ten days of last October, a bit less than 1% SP500 outperformance for the last three weeks of that preelection month --- if that makes such a dramatic difference in the u/d calcs, I guess I will stop paying so much attention to them.
It's a short period to have an approx 1% delta in, I guess, but still.
$SPX down 0.23 today. DSENX up 0.07. I'm telling you part of the fund is short the market. And gundlach is not one to kiss and tell. M* will not even rate his funds (though I see the flagship is stuck in 'neutral'). DSENX is "Large Value", my foot.
It will work till it works, and then one fine day DSENX will also have its moment out of the sun. Until then, let's enjoy. I've been waiting for it to correct to add but the sucker refuses to do so. In the portfolio I own it, it's less then 9% of total.
@VintageFreak- With the market up 5.5% YTD, if DSENX was shorting consistently how could they be beating the market at 7.4%? That doesn't seem to compute.
Yeah, maybe I am brave, certainly daring, hopefully not foolish. I moved quite a lot (for us) of equity-fund moneys from SC, MC, REIT, and foreign and other into it. I had studied at some length how little true compensatory diversification our range of investments had afforded us for the last 30y. So at 70 (now) I decided that DSE_X plus PONDX (PDI, GABCX, FRIFX), (plus smidgens of some remaining MCV and REIT and foreign), was the way to go. So I did it. Did slightly similar for the one kid (of two) whom I advise. oh, and of course I left out some fool speculative stocks I have made and then lost (more) money with, and hold.
DSENX is my biggest equity fund (about 20% of portfolio) and it is growing together with my confidence. I am ready now to make it a core position (buy and forget) like a few other funds PRWCX, VWINX, PONDX.
Pimco has always been a fan of derivatives also. For example PSPDX has been at it since 1993:
"PIMCO helped pioneer the innovative StocksPLUS strategy in 1986 – the same award-winning approach used across our “PLUS” portfolios, which capitalizes on the depth and breadth of PIMCO’s global resources. Today, we manage “PLUS” portfolios across a range of objectives and market exposures."
"The investment seeks total return which exceeds that of the S&P 500 Index. The fund seeks to exceed the total return of the S&P 500 Index by investing under normal circumstances in S&P 500 Index derivatives, backed by a portfolio of Fixed Income Instruments. "Fixed Income Instruments" include bonds, debt securities and other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. It may invest up to 30% of its total assets in securities denominated in foreign currencies and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. "
@VintageFreak- With the market up 5.5% YTD, if DSENX was shorting consistently how could they be beating the market at 7.4%? That doesn't seem to compute.
I just meant it must have positions by design that are supposed to go up when market is down. However @DavidV had a better answer, so I'm wrong.
MikeM said "But all this talk about this "could" happen to the fund or the fund "could" be susceptible to that... I don't see where that should scare people away."
I agree. The goal wasn't to scare anyone away but rather to learn something about a fund I didn't understand very well previously and, because it's performance has been so good since inception, to figure out whether that's durable and/or what could derail it.
I don't think there's anything crazy about what either MikeM or davidrmoran are doing. As an approximation you can put the four sector etfs and a bond proxy into M*'s instant X-ray. You can use another Doubleline bond fund if you think one is reasonable or you can just use a Total Bond Market fund, which won't do a great job but I don't think its the most important part. Each of the etfs should get 12.5% and the bond fund should get 50% because that's effectively what he's doing, he's using the assets twice. Obviously the equity side is focused on the 4 sectors but everything else, from a statistical point of view, doesn't seem bad to me. The stock stats are a little high compared to the total S&P but I'd think that's what you'd expect. CAPE compares earnings to what you'd expect over the business cycle while M* just looks at the present.
>> Each of the etfs should get 12.5% and the bond fund should get 50%
? That would make it much more a balanced fund than I was arguing earlier or elsewhere. But the only balanced fund whose bonds goosed results rather than chiefly modulating them. (Still not fully persuaded given the tracking of CAPE with persistent slight but real outperformance.)
"? That would make it much more a balanced fund than I was arguing earlier or elsewhere."
Just don't forget that it's leveraged, so the argument against being balanced is that you have all the equity exposure as if you were 100% stocks. You can argue the detils in a number of different ways depending on what you want to emphasize or how you look at it, but I would tend to think about it the way you do- not a balanced fund but rather one where the bonds are intended to make your results better than the underlying equity exposure.
$SPX down 0.23 today. DSENX up 0.07. I'm telling you part of the fund is short the market.
VF - right on. That was my initial reaction too. Wouldn't have to be short equities however. He could be shorting the long bond. Doing so wouldn't preclude the fund's being long some other types of bonds. (I know G likes TIPS at present.) He might also be shorting gold. Whatever the reason, DSENX had a commendable showing on a day when most everything was down. PRWCX also bucked the trend, losing only .07%. I've been critical of Price lately ... but in positioning some of their funds very conservatively, they may know something most of us don't.
Of course, with the right number of derivitives in the right combination you can make water run uphill. Those CMOs that Michael Lewis wrote a book about ... Weren't they some type of derivative?
@MikeM & others: I'm also enjoying the discussion.
Comments
This fund is 15% of my self managed portfolio. I don't think that is any more risky then having 15% in the S&P 500 index or having 15% in "many" different large cap funds someone else might hold. I don't believe there is any value in 'manager diversification', especially in the domestic large cap field. Just my 2 cents.
1% outperformance by SP500 the last ten days of last October, a bit less than 1% SP500 outperformance for the last three weeks of that preelection month --- if that makes such a dramatic difference in the u/d calcs, I guess I will stop paying so much attention to them.
It's a short period to have an approx 1% delta in, I guess, but still.
Dunno about 'some bad numbers', exactly.
It will work till it works, and then one fine day DSENX will also have its moment out of the sun. Until then, let's enjoy. I've been waiting for it to correct to add but the sucker refuses to do so. In the portfolio I own it, it's less then 9% of total.
I had studied at some length how little true compensatory diversification our range of investments had afforded us for the last 30y.
So at 70 (now) I decided that DSE_X plus PONDX (PDI, GABCX, FRIFX), (plus smidgens of some remaining MCV and REIT and foreign), was the way to go. So I did it. Did slightly similar for the one kid (of two) whom I advise.
oh, and of course I left out some fool speculative stocks I have made and then lost (more) money with, and hold.
"PIMCO helped pioneer the innovative StocksPLUS strategy in 1986 – the same award-winning approach used across our “PLUS” portfolios, which capitalizes on the depth and breadth of PIMCO’s global resources. Today, we manage “PLUS” portfolios across a range of objectives and market exposures."
"The investment seeks total return which exceeds that of the S&P 500 Index. The fund seeks to exceed the total return of the S&P 500 Index by investing under normal circumstances in S&P 500 Index derivatives, backed by a portfolio of Fixed Income Instruments. "Fixed Income Instruments" include bonds, debt securities and other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. It may invest up to 30% of its total assets in securities denominated in foreign currencies and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. "
I agree. The goal wasn't to scare anyone away but rather to learn something about a fund I didn't understand very well previously and, because it's performance has been so good since inception, to figure out whether that's durable and/or what could derail it.
I don't think there's anything crazy about what either MikeM or davidrmoran are doing. As an approximation you can put the four sector etfs and a bond proxy into M*'s instant X-ray. You can use another Doubleline bond fund if you think one is reasonable or you can just use a Total Bond Market fund, which won't do a great job but I don't think its the most important part. Each of the etfs should get 12.5% and the bond fund should get 50% because that's effectively what he's doing, he's using the assets twice. Obviously the equity side is focused on the 4 sectors but everything else, from a statistical point of view, doesn't seem bad to me. The stock stats are a little high compared to the total S&P but I'd think that's what you'd expect. CAPE compares earnings to what you'd expect over the business cycle while M* just looks at the present.
? That would make it much more a balanced fund than I was arguing earlier or elsewhere. But the only balanced fund whose bonds goosed results rather than chiefly modulating them. (Still not fully persuaded given the tracking of CAPE with persistent slight but real outperformance.)
Just don't forget that it's leveraged, so the argument against being balanced is that you have all the equity exposure as if you were 100% stocks. You can argue the detils in a number of different ways depending on what you want to emphasize or how you look at it, but I would tend to think about it the way you do- not a balanced fund but rather one where the bonds are intended to make your results better than the underlying equity exposure.
my comment based off your 50% figure was uninformed and misleading
Of course, with the right number of derivitives in the right combination you can make water run uphill. Those CMOs that Michael Lewis wrote a book about ... Weren't they some type of derivative?
@MikeM & others: I'm also enjoying the discussion.
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