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Looking at CVSIX (Calamos Market Neutral), the last negative calendar year it had was 2008. The downside is that its 10 year annual return is just over 4%. Maybe a nice Bond fund substitute? It does its job quietly.
@Baseball_Fan I'm mainly a bond fund trader who uses momentum and usually 2-3 funds but several times annually I trade stocks/ETF/whatever for hours-days when I think I have a good chance to make money. I don't invest in alternative funds because most/all don't have long term reliable risk/reward. My goals at retirement are very specific based on a need of just 4% annually including inflation for the next several decades: make 6+% annually + never lose more than 3% from any last top. I did much better since retirement in 2018. Any time I feel risk is elevated I just sell a big % of my portfolio.
ADVNX is doing very well year-to-date (rated at M* in the top 4% for Multi sector funds) but management changed on 2/21/2020 so you can't rely on previous risk/reward.
Despite the past few trading sessions being down, RLSFX has gone up both days. I guess they actually make use of their ability to short when the market turns.
FWIW saying I prefer to stick to cash as a single defensive holding. Yes, it pays nothing, but it's stable, simple, doesn't have an ER (so to speak), and allows me to pounce quickly and buy stuff I want during volatility when stuff goes on sale.
I view cash as a legitimate 'allocation' or 'position' in my accounts .. not just evil portfolio drag like many pundits/analysts say.
@rforno allows me to pounce quickly and buy stuff I want during volatility when stuff goes on sale.
I don't need to hold cash in order to do the above. I sell my bond funds and buy stock funds...or...at Schwab they let me buy a stock/CEF (examples: SPY,VTI,QQQ,PCI) even if I'm fully invested in IRA and after I complete the buy I sell the exact amount from my mutual fund, Fidelity will not let you do it, you must have the cash in the account. I don't see any reason to be in cash and why most times I invest at 99+% even in retirement unless I see elevated risk (such as VIX>35) and sell as part of my portfolio defense. I haven't used cash (besides several thousands) for several decades prior to retiremet and after that. I have credit cards I can pay for almost everything and if I need more I can sell my funds and pay in 2-3 days. The only time you need cash is for illegal drugs and ransom. Of course, most retirees should have more than one bond fund and be invested in high-rated bonds as a ballast for stocks.
But since I use MERFX as a cash substitute, 2%-3% per year is fine with me
The problem is for me a cash substitute fund cannot have sustained a loss greater than 2% in a year, and preferably no loss ever. Why take the risk with such meager returns? My cash subs include, SNGVX (1 off year in 31, so it gets a pass on my 2% rule); BBBMX; GILPX, VNLA (ETF) and even good old BSV (ETF). You can buy with confidence that any loss will be small and temporary. Not so clear with MERFX, which suffered a 5.67% loss in 2002 and 2.26% loss in 2008.
Not picking on anyone here, just remembering the statement that SNGVX had only one losing year out of 31. It's now 2 losing years out of 34, with nearly a 1% loss last year. Not much, but something one hopes not to see with a fund used in lieu of cash.
FWIW, BBBMX stayed in the green, gaining 0.01%. GILPX did not, losing 0.07%. Likewise, MERFX lost 0.19%, VNLA lost 0.18% and BSV lost 0.12%. These five funds, win or lose, came so close to zero that one might as well think of them all as having broken even. SNGVX was a different story.
Meanwhile, RPHYX kept chugging away, gaining 1.8% last year. Only 11 calendar years so far, but not a single loss.
I'm also taking a closer look at VMLTX. Only 1 losing year out of 34; that was just a loss of 0.16% in 2016. It normally maintains a higher than average duration to get higher returns. But it has shortened its duration to bring it in line with its peers, showing that it can be managed conservatively if conditions warrant.
Another fund with a nifty record, as all of its 17 (calendar) years show gains......AVEFX (Ave Maria Bond Fund). It holds a 20% allocation to equities, despite the name.
You know darn well what happens in 2022 if I buy it.
I like CVSIX. It’s only about 4% of my total. But that’s a byproduct of being quite widely spread out. It is what it is - a “Steady Eddy” hybrid income fund with somewhat high fees. I doubt it can continue to crank out that “tepid” 4% - but it might. I was impressed that it managed to gain a bit Monday when bonds were largely hammered. Calamos is a very old house that has extensive experience with convertible bonds - their main tool in running the fund. I count it as a hybrid type income fund - somewhat riskier than a short term bond fund.
The darker shaded bars show the fund’s performance. Lighter shaded ones reflect its peer group per Lipper.
The 5 year TIPS/Treasury breakeven rate was 2.93% as of 01/04/22. The long term average for the 5 year rate is 1.85%. TIPS are "expensive" now. If you believe inflation over the next five years will be greater than 2.93%, you may want to consider purchasing TIPS instead of Treasuries.
At Ave Maria Funds, "Investments are made only in companies that do not violate core teachings of the Catholic Church as set by our distinguished Catholic Advisory Board." https://avemariafunds.com/eB/ammf-f2020-WT.html
These core teachings do not preclude AVEFX from investing in stocks and bonds of Lockheed Martin, the world's largest arms supplier (according to the Stockholm International Peace Research Institute).
Perhaps that falls under the just war doctrine. OTOH,
Pope Francis Says Arms Manufacturers Can't Call Themselves Christian
Pope Francis continued his week of politically charged comments on Sunday [June 21, 2015], saying arms manufacturers who call themselves Christians are hypocrites. ...
His criticism was not limited to the manufacturers, however; Francis also called out investors, saying “duplicity is the currency of today…they say one thing and do another.”
This is a great thread, appreciate everyone's views. Personally I use rolling 36 month stats to gauge a fund because I do not believe a 12 month eval period(even one over many years) is indicative. Bill Miller outperformed S&P each year for 15 or so years I believe in the late 90's and early aughts and I recall he stated something to the effect of the streak being a quirk of the calendar.
For defensive alts I like ARBIX, SFHYX and SVARX. I have positions in the first two.
Glad to see more ideas posted. For 2022 I added REMIX to my portfolio, also added a conservative allocation fund TAIFX to taxable (really like its holdings, muni’s along with strong underlying equity funds). Last fall I reduced my growth global funds a bit, wish I sold more at highs. I tend to make smallish, incremental moves. My defensive holdings now are: SWAN, CTFAX, TMSRX, REMIX, GIBLX, JMST. Shifted some equity fund $$$ to allocation funds to reduce overall volatility: JABAX, TAIFX. Overall AA is less than 50% stocks. Watching GIBLX due to its rate sensitivity, I may swap it for another alt…BAMBX is on my watchlist, along with ARBIX.
My global growth funds are really swooning. They are high conviction funds I’ve held for a long time, BGAFX and MIOPX. If this continues, I may add to rebalance. SCHD is my best performer.
On MFOPremium, my total portfolio reads as 15.5 APR, -8.5 max drawdown, 10.4 sd, 1.48 sharpe, and 2.1 ulcer index. My goal for this year was to shoot for a 10sd. We’ll see.
Thanks again to all who’ve posted, special thanks to Lynn Bolin for his ongoing study and sharing on portfolio construction and risk awareness.
Ave Maria funds were started by Tom Monaghan of Domino Pizza fame. He is a very conservative Catholic who is comfortable with the Dominionist/Integralism belief that religion should be the basis of public law and policy-discussion better suited for the Off-Topic board!
+1 stay calm UDF website bullet-point dated 10/25/21 mentions the allegation that James Dondero siphoned millions from his former company Highland Capital Management. Certainly increases my confidence in HMEZX! Snarky comment well-deserved !
Ave Maria funds were started by Tom Monaghan of Domino Pizza fame. He is a very conservative Catholic who is comfortable with the Dominionist/Integralism belief that religion should be the basis of public law and policy-discussion better suited for the Off-Topic board!
For the most part, I agree. However, when looking at any fund one should know its stated investment approach - I quoted from this fund's material. A fund's approach and how faithfully it executes (e.g. does its style drift) are fair grist for fund discussions.
added a conservative allocation fund TAIFX to taxable (really like its holdings, muni’s along with strong underlying equity funds).
A similar fund (the only similar fund I'm aware of) is VTMFX. Cheaper and has outperformed in almost all calendar years. But, one needs a Vanguard account to invest in it.
A similar fund (the only similar fund I'm aware of) is VTMFX. Cheaper and has outperformed in almost all calendar years. But, one needs a Vanguard account to invest in it.
USBLX would be similar to VTMFX...long term VTMFX has out performed USBLX
Could the .5% extra ER on USBLX (ER is .59%) be the main reason for VTMFX out performance? VTMFX ER is razor thin at .09%
.5% on 10,000 year 1 = $50. From 1995 to 2000 both funds doubled (so USBLX paid out 50+60+70+80+90+100...etc each year more than VTMFX). A better way of putting it is VTMFX "reinvested that extra .5% ER" by not distributing it to management. 26 years later this becomes 10's of thousands of dollars ($85K vs $65K).
I have owned VTMFX for several years and think it is a "file away and forget it" fund, although I am not sure it is really "defensive"
1) it is 50% equities and 14% FAANG and their sibs. A day like today with the Nasdaq down 3% will hit this fund harder than a more broadly based 50% fund.
2) Their 50% bonds are largely Munis, so will likely be less sensitive to interest rates etc. The duration is over 4 so with a rapid rise in interest rates, especially if due to increasing inflation that tanks the stock market, their bond portfolio may not be much help
I compiled all the funds listed on this thread(except two, see my prior comment) into a watch list so that I could run some metrics.
(1)Total of 42 Funds ranging in age from 1.9 to 39 years. Youngest is BLNDX and oldest is PRPFX (2)Top 2 lowest Max DD(life) are RPHIX(1.1%) and BSV(1.4%). Top 2 APR(life) are BLNDX(19.7%) and SWAN(14.4%) (3)Zooming out to 25 years(this period covers the dot com and great recession crashes), Top 2 APR's are PRBLX(11.7 with a Max DD of 35.6) and TRPBX(8 with a Max DD of 38.4) (4)Zooming out to 15 years(this period covers the great recession crash), Top APR's are PRBLX(12.4 with a Max DD of 35.6) and TRPBX(7.6 with DD of 38.4) (5)Zooming into the period of the Super Bull 2(as defined by MFO Screener to be the period 200903 to 202112) the Top APR's are QQQX(17.4) and PRBLX(17.3) (6)Over a 15 year period, the highest 3 Yr Rolling Avg APR is PRBLX(12.3)
PRBLX has a strong showing in the 3 periods(albeit arbitrary) I looked at. I plan to dive deeper into this one.
But since I use MERFX as a cash substitute, 2%-3% per year is fine with me
The problem is for me a cash substitute fund cannot have sustained a loss greater than 2% in a year, and preferably no loss ever. Why take the risk with such meager returns? My cash subs include, SNGVX (1 off year in 31, so it gets a pass on my 2% rule); BBBMX; GILPX, VNLA (ETF) and even good old BSV (ETF). You can buy with confidence that any loss will be small and temporary. Not so clear with MERFX, which suffered a 5.67% loss in 2002 and 2.26% loss in 2008.
Not picking on anyone here, just remembering the statement that SNGVX had only one losing year out of 31. It's now 2 losing years out of 34, with nearly a 1% loss last year. Not much, but something one hopes not to see with a fund used in lieu of cash.
FWIW, BBBMX stayed in the green, gaining 0.01%. GILPX did not, losing 0.07%. Likewise, MERFX lost 0.19%, VNLA lost 0.18% and BSV lost 0.12%. These five funds, win or lose, came so close to zero that one might as well think of them all as having broken even. SNGVX was a different story.
Meanwhile, RPHYX kept chugging away, gaining 1.8% last year. Only 11 calendar years so far, but not a single loss.
I'm also taking a closer look at VMLTX. Only 1 losing year out of 34; that was just a loss of 0.16% in 2016. It normally maintains a higher than average duration to get higher returns. But it has shortened its duration to bring it in line with its peers, showing that it can be managed conservatively if conditions warrant.
It was a tough year in this space, but your numbers seem off based on my personal data and MS. BSV was down 1.09 but BBBMX was up 1.18%. For the year as a whole in 2021, my "near cash" holdings were down .04%. Not great but I can live with it. Wish there were better options but I've yet to find one's I'm comfortable with. Hard to argue about RPHYX, which I hold, but would be reluctant to put big dollars into (or most of these vehicles). While things like SNGVX had a bad year I'm OK with that (based on rising rates) rather then risking a serious loss on defaults as is a bit more likely with most of the others. It happened with ZEOIX, which recovered, but stung when it happened.
@wxman123 -- Bank MM funds yield around 0.4 to 0.5%. FDIC insured so 100% risk free. Are you expecting your near cash holdings to provide a higher return?
Amex mmf yields 0.50 APY with up to 9 withdrawals/transfers per month. I already have a Schwab amex card-maybe I should just kick back and accept the 50 basis point return for my cash!
Comments
I'm mainly a bond fund trader who uses momentum and usually 2-3 funds but several times annually I trade stocks/ETF/whatever for hours-days when I think I have a good chance to make money. I don't invest in alternative funds because most/all don't have long term reliable risk/reward. My goals at retirement are very specific based on a need of just 4% annually including inflation for the next several decades: make 6+% annually + never lose more than 3% from any last top. I did much better since retirement in 2018. Any time I feel risk is elevated I just sell a big % of my portfolio.
ADVNX is doing very well year-to-date (rated at M* in the top 4% for Multi sector funds) but management changed on 2/21/2020 so you can't rely on previous risk/reward.
I view cash as a legitimate 'allocation' or 'position' in my accounts .. not just evil portfolio drag like many pundits/analysts say.
I don't see any reason to be in cash and why most times I invest at 99+% even in retirement unless I see elevated risk (such as VIX>35) and sell as part of my portfolio defense.
I haven't used cash (besides several thousands) for several decades prior to retiremet and after that. I have credit cards I can pay for almost everything and if I need more I can sell my funds and pay in 2-3 days. The only time you need cash is for illegal drugs and ransom. Of course, most retirees should have more than one bond fund and be invested in high-rated bonds as a ballast for stocks.
FWIW, BBBMX stayed in the green, gaining 0.01%.
GILPX did not, losing 0.07%. Likewise, MERFX lost 0.19%, VNLA lost 0.18% and BSV lost 0.12%.
These five funds, win or lose, came so close to zero that one might as well think of them all as having broken even. SNGVX was a different story.
Meanwhile, RPHYX kept chugging away, gaining 1.8% last year. Only 11 calendar years so far, but not a single loss.
I'm also taking a closer look at VMLTX. Only 1 losing year out of 34; that was just a loss of 0.16% in 2016. It normally maintains a higher than average duration to get higher returns. But it has shortened its duration to bring it in line with its peers, showing that it can be managed conservatively if conditions warrant.
My parents used this fund in retirement. Yes, this is still your father's VMLTX.
You know darn well what happens in 2022 if I buy it.
The darker shaded bars show the fund’s performance. Lighter shaded ones reflect its peer group per Lipper.
CVSIX - from Lipper / MarketWatch
The long term average for the 5 year rate is 1.85%.
TIPS are "expensive" now.
If you believe inflation over the next five years will be greater than 2.93%,
you may want to consider purchasing TIPS instead of Treasuries.
https://fred.stlouisfed.org/graph/?g=KwQo
https://advisorperspectives.com/commentaries/2021/12/08/treasury-inflation-protected-securities-faqs-about-tips
At Ave Maria Funds, "Investments are made only in companies that do not violate core teachings of the Catholic Church as set by our distinguished Catholic Advisory Board."
https://avemariafunds.com/eB/ammf-f2020-WT.html
These core teachings do not preclude AVEFX from investing in stocks and bonds of Lockheed Martin, the world's largest arms supplier (according to the Stockholm International Peace Research Institute).
Perhaps that falls under the just war doctrine. OTOH,https://time.com/3930178/pope-francis-weapons-manufacturers-christian/
For defensive alts I like ARBIX, SFHYX and SVARX. I have positions in the first two.
I like your list. NexPoint is not on my list due to its legal fight with UDF.
My global growth funds are really swooning. They are high conviction funds I’ve held for a long time, BGAFX and MIOPX. If this continues, I may add to rebalance. SCHD is my best performer.
On MFOPremium, my total portfolio reads as 15.5 APR, -8.5 max drawdown, 10.4 sd, 1.48 sharpe, and 2.1 ulcer index. My goal for this year was to shoot for a 10sd. We’ll see.
Thanks again to all who’ve posted, special thanks to Lynn Bolin for his ongoing study and sharing on portfolio construction and risk awareness.
Rick
A similar fund (the only similar fund I'm aware of) is VTMFX. Cheaper and has outperformed in almost all calendar years. But, one needs a Vanguard account to invest in it.
Could the .5% extra ER on USBLX (ER is .59%) be the main reason for VTMFX out performance?
VTMFX ER is razor thin at .09%
.5% on 10,000 year 1 = $50. From 1995 to 2000 both funds doubled (so USBLX paid out 50+60+70+80+90+100...etc each year more than VTMFX). A better way of putting it is VTMFX "reinvested that extra .5% ER" by not distributing it to management. 26 years later this becomes 10's of thousands of dollars ($85K vs $65K).
Is there a calculator for this @msf?
1) it is 50% equities and 14% FAANG and their sibs. A day like today with the Nasdaq down 3% will hit this fund harder than a more broadly based 50% fund.
2) Their 50% bonds are largely Munis, so will likely be less sensitive to interest rates etc. The duration is over 4 so with a rapid rise in interest rates, especially if due to increasing inflation that tanks the stock market, their bond portfolio may not be much help
https://www.infinityqfundliquidation.com/
@Sven -- I was not able to find TMSDX. Is that a typo?
(1)Total of 42 Funds ranging in age from 1.9 to 39 years. Youngest is BLNDX and oldest is PRPFX
(2)Top 2 lowest Max DD(life) are RPHIX(1.1%) and BSV(1.4%). Top 2 APR(life) are BLNDX(19.7%) and SWAN(14.4%)
(3)Zooming out to 25 years(this period covers the dot com and great recession crashes), Top 2 APR's are PRBLX(11.7 with a Max DD of 35.6) and TRPBX(8 with a Max DD of 38.4)
(4)Zooming out to 15 years(this period covers the great recession crash), Top APR's are PRBLX(12.4 with a Max DD of 35.6) and TRPBX(7.6 with DD of 38.4)
(5)Zooming into the period of the Super Bull 2(as defined by MFO Screener to be the period 200903 to 202112) the Top APR's are QQQX(17.4) and PRBLX(17.3)
(6)Over a 15 year period, the highest 3 Yr Rolling Avg APR is PRBLX(12.3)
PRBLX has a strong showing in the 3 periods(albeit arbitrary) I looked at. I plan to dive deeper into this one.