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I didn't sell him my shares but I would like to buy him lunch sometime...so long as it's a "working lunch".
To me, this is a good sign. Dodge and Cox, T. Rowe Price and other fund families promote a culture of their managers "eating their own cooking". Looks like Mr. Ivascyn believes in this concept as well. One more reason to keep him driving my income bus.
Ted linked this article from M* a while back that looks at Manager ownership as one criteria for their new mutual fund rating system feature...Bronze, Silver, Gold, etc.
From Ted's thread I linked these three items that might be of interest to others if they missed his thread:
@Charles: despite the perfect graph, CEF's are much more volatile than open-end MFs and have additional premium/discount features. please do not jump in if you are not comfortable with the product space in general. Morning* Chart
Charles, fundalarm answered your question as well as I could. PDI is more volatile than PONDX because among other things it is more levered. I might add that all the love shown towards PONDX (and I am as guilty as anyone) is beginning to worry me. A technician will tell you it is about as overbought as it gets and ripe for some type of setback, small as that may be. So far in 2012, the worst setback has been a mere 10 cents and less than 1%. So anything worse here and I would be gone. Still, it is pretty darn impressive when a fund manager buys shares in his own closed end fund when it is trading at its highs. Normally, when they buy shares it is after some type of large selloff and the fund is trading at its lows. So Mr. Ivascyn must have a lot of confidence in PDI going forward.
Reply to @Hiyield007: correction... PDI is unlevered. unfortunately for me. the cost of leverage is low nowadays and the returns are high (just ask bee who took a mortgage to invest!). he bought it because, for a short period of time, it was trading at a discount. it is back to premium now. i didn't get as good a deal as the fund manager did, but my entry point is still reasonably priced.
45.83% effective leverage, through reverse repurchase agreements ... isn't that the Pimco way, to get effective leverage through derivatives of various kinds?
ok, ok, gentlemen - thank you. you've done better homework than i had before buying... used morning* and etfconnect for a quick check up. since leverage is a plus in my book (provided current market environment), i am fine with the holding. i wanted to add to mortgages for a long time, but JMT/JLS ran away from me. I can't make myself buy at the current premium. I was able to add PDI close to NAV. I wouldn't be surprised if the premium increases substantially going forward.
According to the Fidelity website, PONDX has an expense ratio of .91%. I thought that a CEF would have a lower expense ratio than the equivalent mutual fund, but I guess not.
PONDX is indeed 75, not 70. In both of my responses I haven't included interest expense so you can compare 75 to 115 if that's what's important to you. In my opinion, while it's important to understand the cost of leverage, it is absolutely useless to use it in calculating expenses. This disclosure requirement just confuses investors. For that matter you could ask for the average bid/ask spread on fixed income securities or commission rate on the equities or spread on swaps, etc. there are costs related to any business and a mature fund manager will know how to minimize them. also, all returns that you get are NET of any costs. Finally, when estimating costs, one needs to understand the investment strategy. investing in a large cap equity is much simpler than picking up non-agency paper of Countrywide, Merrill, Bear Stearns with all relevant credit analysis -- still at reasonable prices. If your large cap fund charges you over 1% for overweigting AAPL compared to its S&P500 benchmark, I would call it gross overpayment.
Reply to @Soupkitchen: i used the same page which under footnote (2) stated total expenses for Class D, minus interest expense @.75%. you compare 75 to 115 bps to have an apple to apple comparison. i bet closed end fund's interest expense is higher due to reverse repo.
Comments
To me, this is a good sign. Dodge and Cox, T. Rowe Price and other fund families promote a culture of their managers "eating their own cooking". Looks like Mr. Ivascyn believes in this concept as well. One more reason to keep him driving my income bus.
Ted linked this article from M* a while back that looks at Manager ownership as one criteria for their new mutual fund rating system feature...Bronze, Silver, Gold, etc.
From Ted's thread I linked these three items that might be of interest to others if they missed his thread:
mutualfundobserver.com/discussions-3/#/discussion/comment/14895
http://quote.morningstar.com/cef/chart.aspx?t=PDI&region=USA&culture=en-US&statePara={tickers:"XNYS:PDI_XNYS:PDI,XNAS:PIMIX_XNAS:PIMIX",colors:"0|4|",chartType:"max",range:"2012-5-25|2012-9-28",mcType:"a",slider:"1988-1-1|2012-12-30",isD:"true",isS:"true",hasF:"false",bMenu:"",prodCode:"null",maxp:"79"}
@Charles: despite the perfect graph, CEF's are much more volatile than open-end MFs and have additional premium/discount features. please do not jump in if you are not comfortable with the product space in general.
Morning* Chart
http://www.allianzinvestors.com/Products/pages/631.aspx
http://www.allianzinvestors.com/Products/Pages/631.aspx?ShareClassCode=ARTIFICIAL
45.83% effective leverage, through reverse repurchase agreements ... isn't that the Pimco way, to get effective leverage through derivatives of various kinds?
all ER's are total annual fund operating expenses:
Institutional class: .61%
Class P: .71%
Administration: .86%
Class D: .91%