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Non-agency Mortgages are expected to continue to perform in 2013
Happy New Year, all! Here is a Bloomberg article which refers to many funds we own, such as PIMIX/PONDX and their managers' view. Don't forget their closed-end fund cousins, such as PDI, JMT, etc.
I recently have been charting PONDX (any similar type fund would work) as well as any GNMA fund (VFIIX) with the rest of my portfolio of funds. One of the first things I want to point out is how these two funds fared over the last 5 years and especially how they reacted during the 2009 downturn. A GNMA funds in general fared very well during this market collapse. It also exihibits low volatility over long periods of time. In this low interest rate environment I consider these GNMA funds as a cash substitute in my portfolio. Here are the two funds charted over the last 5 years:
David S. has mentioned RPHYX as a cash vehicle in his portfolio... I like to use GNMA funds...what do you find works for your cash position?
A multisector bond fund like PONDX allows me to move some of my portfolio further out on the risk spectrum in the hope that slightly more risk will provide slightly more return compared to VFIIX. I also chart PONDX (or any other multisector fund) and VFIIX against the rest of my portfolio as indicators of risk. These two funds help me identify positive and negative momentum in comparison to the equity funds I hold or I am considering holding. Finally, they act as indicators for when I want to buy or sell shares of other funds. Below I chart VTI, as a indicator for the equity market, over the last three years against VFIIX and PONDX.
For me a series of actions (buy / sell signals) emerge. Here's how I would attempt to manage things:
i use RPHYX as a cash substitute due to its very limited duration. GNMA would be in a conservative fixed income bracket, never cash. its sensitivity to interest rates is too high to ignore. PONDX is a different animal; it's a credit play. Dan can go into different credit instruments at different times, but he has recently preferred non-agency mortgages. this fund has significant credit risk and is much different from GNMA (agencies) and RPHYX - tiny duration high yield and special situations (no interest rate risk, negligent credit risk - high yielding cash supplement). there is probably place for all 3 in one's portfolio as long as each fund's risks are clearly understood.
Howdy bee, Thank you for the hard work and efforts to help make our lives easier. As to Pimco.....no problem at this house with their funds. One must understand the tools that are being used by the funds; and balance that risk against your own. I don't know of any benchmark to use against many of the Pimco funds.
Comments
Regards,
Ted
I recently have been charting PONDX (any similar type fund would work) as well as any GNMA fund (VFIIX) with the rest of my portfolio of funds. One of the first things I want to point out is how these two funds fared over the last 5 years and especially how they reacted during the 2009 downturn. A GNMA funds in general fared very well during this market collapse. It also exihibits low volatility over long periods of time. In this low interest rate environment I consider these GNMA funds as a cash substitute in my portfolio. Here are the two funds charted over the last 5 years:
David S. has mentioned RPHYX as a cash vehicle in his portfolio... I like to use GNMA funds...what do you find works for your cash position?
A multisector bond fund like PONDX allows me to move some of my portfolio further out on the risk spectrum in the hope that slightly more risk will provide slightly more return compared to VFIIX. I also chart PONDX (or any other multisector fund) and VFIIX against the rest of my portfolio as indicators of risk. These two funds help me identify positive and negative momentum in comparison to the equity funds I hold or I am considering holding. Finally, they act as indicators for when I want to buy or sell shares of other funds. Below I chart VTI, as a indicator for the equity market, over the last three years against VFIIX and PONDX.
For me a series of actions (buy / sell signals) emerge. Here's how I would attempt to manage things:
Thank you for the hard work and efforts to help make our lives easier.
As to Pimco.....no problem at this house with their funds. One must understand the tools that are being used by the funds; and balance that risk against your own. I don't know of any benchmark to use against many of the Pimco funds.
Psuedo Pimco video explaining the risk proposition to other wanna-be funds
Gotta go run the roads,
Catch
I've been reviewing this Pimco entry that just had birth a few months ago. Perhaps this house will throw some money its way.
PMZDX
I'm sure this fund has a full complement of magic tools, too.
Take care,
Catch