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Wealthtrack - Weekly Investment Show - with Consuelo Mack
2/12/21 Episode Topics: Diversification works well...when you don't need it.
- Stay invested for the long term. - Diversify for the upside, not the downside. - How do treasuries and bonds help investors stay invested on the downside? - Risk Manage Equity Portfolio (Is PRWCX be such a strategy?)
@bee, thank you for posting. This WealthTrack is particularly informative.
You asked a few questions. 1. Treasury. Low bond yields prevent treasuries to rally on the upside. He suggested holding some longer term treasury since they have lesser correlation to stocks comparing to other bond asset classes.
2. PRWCX is not a risk managed equity fund since all stock and bond positions are long. It is, however, a highly flexible asset allocation fund. Risk managed equity typically have several components within the portfolio to short the market as part of the downside protection. Some examples are listed in Calamos funds below. https://calamos.com/blogs/investment-ideas/calamos-risk-managed-funds-show-resilience-in-march-madness/
Although Pimco bond funds are not considered hedge funds, they use swaps and other instruments routinely to reduce the drawdowns.
I've lately seen the assertion from David Moran that almost half of holdings in PRWCX are short? I've read remarks from several of us on MFO about it, and they are contradictory regarding David's assertion. What is really the case with PRWCX?
If in doubt, it would be the best to go direct to the source - T. Rowe Price. I confirmed its profile at T. Rowe Price, M*, and Fidelity, and there is NO short positions that are listed as negative % under the composition tab in three different sources. In addition the annual reports did not mention short positions in the portfolio. Tend to believe there is an error in Davidmoran's source from M*. I used a legacy M* link from msf that differs from the updated one David used.
Beyond Diversification: What Every Investor Needs to Know About Asset Allocation:
On October 28th, Sébastien Page and Chris Dillon discussed principles from Sébastien’s recent book, “Beyond Diversification.” Sébastien combines his 20 years of investing experience; analysis from more than 200 academic articles; insights shared from a cast of expert colleagues at T. Rowe Price; and, perhaps most importantly, practical lessons passed down by his father, a renowned finance professor.
@bee, thank you for posting of the 2nd Sebastien Page interview. Very informative on the 2021 investment situation and beyond. Bank loan funds or floating rate funds are an attractive asset class in bonds.
@bee, thank you for the timely posting of this interview. I have rotated my allocation to more value oriented funds and ETFs late last year. This interview explains the global recovery and investment opportunities you listed above.
At the conclusion of this show, the host mentioned the next one will interviewing Matt McLennan who manages First Eagle Global fund. He will be talking about buying gold. Why now?
April 10th Episode: Time in the market verses timing the market...
Time in the market is the best way to reduce risk and insure success for the average investor, not day trading.
Valuation of markets (stocks/bonds) matters. Earnings need to keep pace with stock price. The market often prices (values) stocks ahead of earnings. Pay attention to earnings of stocks.
Select out of favor stocks with good fundamentals. Emerging market stock & EM bonds fit this criteria right now. Small Cap US Value stocks are a great long term investment.
With respect to SCV, I like CSB and AVUV. The latter I bought thanks to a great tip from MFOer @MikeW. I’m hanging with ARTYX in EM equity, despite a rough patch.
Comments
Stay safe, Derf
P.S. Thanks bee
RYSEX is ranked #58th by US NEWS (Vanguard Funds are ranked #1,2,&3):
https://money.usnews.com/funds/search?category=small-value
Topics:
Diversification works well...when you don't need it.
- Stay invested for the long term.
- Diversify for the upside, not the downside.
- How do treasuries and bonds help investors stay invested on the downside?
- Risk Manage Equity Portfolio (Is PRWCX be such a strategy?)
You asked a few questions.
1. Treasury. Low bond yields prevent treasuries to rally on the upside. He suggested holding some longer term treasury since they have lesser correlation to stocks comparing to other bond asset classes.
2. PRWCX is not a risk managed equity fund since all stock and bond positions are long. It is, however, a highly flexible asset allocation fund. Risk managed equity typically have several components within the portfolio to short the market as part of the downside protection. Some examples are listed in Calamos funds below.
https://calamos.com/blogs/investment-ideas/calamos-risk-managed-funds-show-resilience-in-march-madness/
Although Pimco bond funds are not considered hedge funds, they use swaps and other instruments routinely to reduce the drawdowns.
T. Rowe Price does have an alternative fund, Multi-strategy total return fund, TMSRX
quotes.morningstar.com/chart/fund/chart?t=tmsrx
@David Snowball also profiled this fund last year in great details.
https://mutualfundobserver.com/2020/07/t-rowe-price-multi-strategy-total-return-tmsrx/#more-14321
In addition, @Charles Bolin contributed a very nice article in MFO's commentary last year. Table 2 contains lots of alternative funds/ETFs to consider. Charles obtained these information from the MFO Premium Lipper's database.
https://mutualfundobserver.com/2020/09/alternative-and-global-funds-during-a-global-recession/#more-14509
Beyond Diversification: What Every Investor Needs to Know About Asset Allocation: beyond-diversification-insights-webinar-replay
Against the Wind (CNBC Interview):
Sebastien Page's Bio and Articles:
Sébastien Page, CFA, Head of Global Multi-Asset
Free Issues (Grant's Interest Rate Observer):
https://grantspub.com/subscribe/index.cfm#freeBlock
Weird. Here in DC I got a re-run from last summer with Jim Rosenblatt of Gotham Securities. ;/
Notes:
Cyclical Sectors:
Energy
Industrials
Materials
Commodities
Regional Banks
Small Cap Equities
Emerging Markets
Related articles:
types-of-stocks/cyclical-stocks
jpmorgan-on-cyclical-defensive-and-tech-stocks-amid-inflation-expectations
Search out:
- "Short Duration" Equities (low PE):
- Small Cap Value
Bank the Banks
Rotate away from Growth
Rotate into Value
Emerging Market Value
2019 MFO Review:
emerging-market-value-investing-revisited
At the conclusion of this show, the host mentioned the next one will interviewing Matt McLennan who manages First Eagle Global fund. He will be talking about buying gold. Why now?
Time in the market verses timing the market...
Time in the market is the best way to reduce risk and insure success for the average investor, not day trading.
Valuation of markets (stocks/bonds) matters. Earnings need to keep pace with stock price. The market often prices (values) stocks ahead of earnings. Pay attention to earnings of stocks.
Select out of favor stocks with good fundamentals. Emerging market stock & EM bonds fit this criteria right now. Small Cap US Value stocks are a great long term investment.
Do you have a favorite Small Cap Value Fund/ ETF?
Vanguard has a few highly ranked SV funds:
VSMVX
VRTVX
VISVX
PV Link comparing these three funds
Emerging Market Debt Fund:
VEMBX
PREMX
Emerging Market Stocks Fund:
ARTYX
PRMSX