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RPHYX RiverPark Short Term High Yield: What role in your portfolio?
Reply to @MarkM: This fund compare to Ultra Short Term Bond funds and floating rate bond/credit funds.
Most of those funds in 2008 was investing in sub-prime mortgage bonds to generate higher yields than money market funds, this fund is investing in high yield bonds that are about to be called or mature. As such, the fund is pretty easy to understand.
Ultra short term bond funds and floating rate funds had extremely stable NAV until tail risk in 2008 suddenly eroded the NAV and redemptions much above normal levels forced fund to sell assets before maturity and suddenly jumping defaults did not help either.
Can this fund endure such a tail risk scenario? I don't know. We will probably not going to know until it actually happens.
Disclosure: I do own this fund for a small portion of my total retirement portfolio (~5%)
Reply to @Investor: Nice post Investor. I agree we shouldn't get all lathered up about this fund until we see how it handles a bear market. Adjusting for dividends, this fund declined around 1% during the nasty junk bond correction late last summer/early fall. All in all not too shabby but not my ideal of where I would want to park cash. A plain vanilla open end junk bond fund still seems a more rewarding bet using a prudent money management approach ( like a 1.25% to 1.50% trailing stop)
Reply to @Investor: I agree that redemptions pose a risk as well as NAV erosion at higher than normal levels. An unexpected default may do the trick or a market dislocation.
David S. asked this scenario of the manager and was satisfied with his answers of how it did as a managed account offering in 2008. His answers made sense to me and were logically consistent. The additional risk definitely exists but I deem the compensation adequate. I have banked the extra returns I have received as "insurance" against these additional risks.I have no anticipated ST needs for these funds.
Like I have said, I've been investing since 1987 so I know that there are no free lunches.
I hope these discussions have helped claimu, who asked the original question(s).
Reply to @MarkM: It has definitely been a very interesting and informative discussion and I appreciate everybody's responses. Always open to more views if there are still others that haven't chimed in.
Comments
Most of those funds in 2008 was investing in sub-prime mortgage bonds to generate higher yields than money market funds, this fund is investing in high yield bonds that are about to be called or mature. As such, the fund is pretty easy to understand.
Ultra short term bond funds and floating rate funds had extremely stable NAV until tail risk in 2008 suddenly eroded the NAV and redemptions much above normal levels forced fund to sell assets before maturity and suddenly jumping defaults did not help either.
Can this fund endure such a tail risk scenario? I don't know. We will probably not going to know until it actually happens.
Disclosure: I do own this fund for a small portion of my total retirement portfolio (~5%)
David S. asked this scenario of the manager and was satisfied with his answers of how it did as a managed account offering in 2008. His answers made sense to me and were logically consistent. The additional risk definitely exists but I deem the compensation adequate. I have banked the extra returns I have received as "insurance" against these additional risks.I have no anticipated ST needs for these funds.
Like I have said, I've been investing since 1987 so I know that there are no free lunches.
I hope these discussions have helped claimu, who asked the original question(s).