Any opinion on Metropolitan west unconstrained, MWCRX?

andrei

I have seen MWCRX mentioned by Hiyield007 two weeks ago, and the more I look at it, the more interesting it seems. According to M*, it generated 20% gain within less than a year of its existence, while having average effective duration 1.25 years, so it could be as safe with respect to rising interest rates as DBLTX. Of course its main gain was in the first 5 weeks since inception, but it continues doing great, and it has only about $60M, which is 500 times smaller than DBLTX, so probably it can be very nimble. One of its managers is Tad Rivelle, who also manages Metropolitan West Total Return (gold rating by M*) and TCW Total Return (bronze). He is the lead manager who replaced Gundlach at TCW.

I wonder what do you think about this fund. Is it too hot to touch or too brilliant to ignore?

AndyJ

From the M* performance pages, it looks like it's done really well in risk-on times and hasn't fallen far behind when it's risk-off; it's only had one negative month out of 11, and that was only -0.25%:

http://performance.morningstar.com/fund/performance-return.action?t=MWCRX&region=USA&culture=en-us

Guess the question would be how "unconstrained" and flexible it's going to be ...

andrei

This is an article in Barron's discussing Tad Rivelle and MWCRX few months ago:

http://online.barrons.com/article/SB50001424053111903715504577309670063311212.html#text.inc

Charles

Nice. MWCRX has done well since inception, and on par with other larger and established high yield bond funds, like the gold rated SPHIX at Fidelity, as shown below:


Just go in eyes wide open. Roll back a few years and you can see how this category of investment can quickly lose more than 20%:


But I like Tad Rivelle's attitude, reflected in the Barron's article you reference. When asked "What is the role of a bond-fund manager when the party ends?" Mr. Rivelle responded:

The foremost role of a bond-fund manager always is to protect capital, to keep himself and his clients out of trouble. It is going to get miserable at some point. There will be a rising-rate environment, with people flying headlong out of a variety of asset classes. The circumstances are always different, but that is always the case.

One other thing, just make sure its 2.86% EP keeps getting subsidized until it grows in assets.

andrei

I wonder whether this fund is as dangerous as SPHIX, or it is much more friendly, like MWTIX, which went down less than 10% in 2008 and then rapidly returned back in few months.

Hiyield007

I had mentioned this fund a few weeks ago but have since lightened up considerably moving much heavier into PONDX. I had thought MWCRX's exposure to residential mortgage backed securities would give it more of a lift but the only thing lifting is PONDX which apparently has more exposure to that market and the housing rebound. Being a momentum guy will continue adding to PONDX this week (selling some of my junk funds if necessary) as long as it keeps rising or remains stable.

Derf

Reply to @andrei: Thanks for the link. Very interesting !
Derf