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Massive drop on big up day (12/7)...MS shows the fund gained but the price drop was shocking (like 20%). Seems like this has to be some type of distribution but I can't find anything saying so. Any ideas?
It uses derivatives for equity exposure. So, much of the capital gain shows up as realized CG. Check its history. This is the same issue with many Pimco equity funds. It is best to hold such funds in tax-deferred/free accounts.
It uses derivatives for equity exposure. So, much of the capital gain shows up as realized CG. Check its history. This is the same issue with many Pimco equity funds. It is best to hold such funds in tax-deferred/free accounts.
Yes, I'm aware of the Pimco issue (long time holder of PSLDX) but I don't recall this issue with DSEEX, at least not to this extent, I don't think I've ever seen a Pimco distribution this large either.
The huge distribution this year would have taken me by surprise. In addition to the December payout, shareholders of DSEEX also pay taxes on the monthly distributions. When I owned this strategy I had a portion in the ETN (CAPE) which paid out nothing at year end. CAPE has outperformed its MF Doubleline brethren since it debuted in 2012, but ETNs carry the risk of being dissolved by the issuer with little notice and the risk of the issuer (Barclays in this case) failing. Trading CAPE shares requires a certain amount of time and effort; this fund trades in low volumes, so getting a good purchase or sale price can be frustrating, somewhat like trading a jumpy small cap stock. I think CAPE has proven its mettle, but it’s not for most fund investors.
Investopedia has articles comparing etfs and etns ETNS are unsecured debt notes issued by an institution and are subject to the credit rating of the underwriter. I admit I don't really understand etns, which is why I stick to etfs , oefs and individual stocks.
>> ETNs carry the risk of being dissolved by the issuer with little notice and the risk of the issuer (Barclays in this case) failing.
What would that mean here? What could one lose? What are you saying?
ETN's are underwritten by banks and can and have gone belly up. Not the same as an ETF. In other words, aside from the assets held by the ETN faltering, the ETN itself has risks, major ones, and I have not and never will touch one.
ETNs are IOUs or liabilities of sponsors. They promise to pay according to performance of related indexes. But no assets are held. Sponsors do some hedging but otherwise are free to use the money raised as they wish. If index is down sharply, and you may want to hang on, sponsor may just shut the ETN. It it does too well, sponsor may stop/restrict issuance of new ETN shares. So what sponsors can do is an added complication.
Is owning DSEEX not worrisome? (Aside from 'price drop was shocking .... Seems like this has to be some type of distribution but I can't find anything saying so. Any ideas?')
@davidmoran: DSEEX being a mutual fund, I suppose the sponsor could shut it down, but the shareholders would get back what their holdings are worth. IDNK what happens to the holders of an ETN if the issuer decides to fold it. In the case of CAPE, Barclays is not seemingly a bank likely to suddenly fail (nor was Lehman Brothers…).
Thanks to all for the useful information you’ve added.
As one who has had quite a bit of money in both CAPE and DSEEX I was curious (a little) about the OP and then the followup about utter failure yada yada, but now thinking I were better not to have queried, as it all seems uninformed.
@yogibearbull: thanks for that link to the DoubleLine filing. The derivative and options strategies described in the filing sound very complicated, but maybe the same sort of thing has been going on in DSEEX and CAPE all along. ("I would be shocked to learn that gambling has been going on in our funds," said the unflappable spokesperson.) On top of those complications is the CEF format, one which usually favors the issuer of a new fund, but not the early shareholders. As the vast majority of CEFs invest in fixed income and seek yield, it is not surprising that this prospectus for the DoubleLine Shiller Cape Enhanced Income Fund lists generation of income as its first mentioned purpose. Capital appreciation appears to take up the rear as a goal.
Is owning DSEEX not worrisome? (Aside from 'price drop was shocking .... Seems like this has to be some type of distribution but I can't find anything saying so. Any ideas?')
I've owned DSEEX since inception, and held on even when it underperformed and some bailed. Very happy with this one, it's no PSLDX (same concept) but I'm not willing to put all my eggs in that basket! (Also like that DSEEX throws off some monthly juice, best to hold in tax free account...but I actually have some in taxable as well.)
You still have not gone into your reconciliation of these two opposing statements of faith, have you? Since the mfund sorta is / sorta is not half (+/-) composed of the dreaded, could-totally-fail ETN.
You still have not gone into your reconciliation of these two opposing statements of faith, have you? Since the mfund sorta is / sorta is not half (+/-) composed of the dreaded, could-totally-fail ETN.
I do not and would not own an ETN. If a mutual fund owns an ETN it may or may not be an issue for me, but I am unaware that DSEEX is half ETN as you imply, or if the ETNS are a basket as contrasted with only one. For comparison, while I am willing to buy a HY bond fund, I would not put sizable assets into a single HY bond. Generally speaking, there is little reason to risk issuer failure for an ETN when similar products are available in an ETF or CEF wrapper (if you want leverage) with no such risk.
Comments
This is the same issue with many Pimco equity funds. It is best to hold such funds in tax-deferred/free accounts.
2017 $1.06
2018 $1.53
2019 $0.39
2020 $0
2021 $4.79
Drops for 2017, 2018, 2021 are noticeable in Stockcharts with the start date of 1/1/17 (reset if defaults to 1 yr), https://stockcharts.com/h-perf/ui?s=DSEEX&compare=_DSEEX&id=p74276459757
What would that mean here? What could one lose? What are you saying?
Is owning DSEEX not worrisome? (Aside from 'price drop was shocking .... Seems like this has to be some type of distribution but I can't find anything saying so. Any ideas?')
Thanks to all for the useful information you’ve added.
https://fundresearch.fidelity.com/mutual-funds/composition/258620822
As one who has had quite a bit of money in both CAPE and DSEEX I was curious (a little) about the OP and then the followup about utter failure yada yada, but now thinking I were better not to have queried, as it all seems uninformed.
Kudos to @wxman123 for hanging tough with the strategy. I chickened out.
https://doc.morningstar.com/docdetail.aspx?clientid=schwab&key=84b36f1bf3830e07&cusip=258620822
vs
https://www.finra.org/investors/alerts/exchange-traded-notes-avoid-unpleasant-surprises
and maybe the fund does have risk 'advantages'.