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RCTIX - Manager Change

edited March 26 in Fund Discussions
FYI, the Supplement to the RCTIX Prospectus, dated 3/25/2022, states the following:

"The following changes are being made to the Prospectus and Statement of Additional Information (“SAI”) of the
River Canyon Total Return Bond Fund (the “Fund”).

The information identifying the Fund’s portfolio manager on page 4 of the prospectus in the subsection entitled
“Portfolio Management” is deleted in its entirety and replaced with the following:

Portfolio Managers

Todd Lemkin
Portfolio Manager
Length of Service: Since March 2022

Sam Reid
Portfolio Manager
Length of Service: Since March 2022"



George Jikovski, the manager since the inception of the fund in 2014, has apparently been replaced. Hopefully, yesterday's fund performance is not a sign of things to come under the new managers.

Fred
«1

Comments

  • Wow. No explanation?
  • edited March 26
    I browsed the River Canyon Funds (RCF) website yesterday evening and noticed that Todd Lemkin was listed as the RCTIX manager. I didn't check the prospectus since it was late.
    I wonder what transpired? RCTIX key-man risk was a concern of mine.

    I asked RCF the following questions in September 2019:
    The prospectus states that the fund is managed using a team-based approach.
    Besides Mr. Jikovski, who else is on the team and what is their tenure with Canyon Partners?
    Is there a current succession plan for the portfolio manager?

    RCF response (slightly edited):
    There are three designated members of the RCTIX team. George, Alex Siroky and Guillermo Serrano.
    Alex has been a senior analyst on the team and we expect to add him as a Co-PM at the end of the year.
    Alex has been at Canyon for one year, but spent the prior 10 years at Athene asset management.
    During Alex’s tenure at Athene it grew from managing a few hundred million to over $100B in structured credit.
    Guillermo has worked with George at TCW and at Canyon for almost 20 years.
    He joined Canyon shortly after George did in 2004.
    He is a research analyst and builds many of our models to evaluate these securities.
    The River team leverage’s the other 49 investment professionals at Canyon.
    For example, once we hit $100mm in AUM we will begin to invest in CLO tranches.
    We have an 8 person CLO team managing over $4.5B in AUM.
    George will work closely with them to analyze the CLO structures and the underlying collateral of bank loans.

    George has been at Canyon for 15 years and is in his early 40s.
    We don’t anticipate him leaving anytime soon, but we are constantly looking to develop our talent in the event someone leaves. At this time there is no designated successor.




  • Weird.
  • edited March 28
    A CityWire article was posted several hours ago regarding former PM George Jikovski.
    You may need to sign in or sign up to read the article in its entirety.
    Excerpts below.

    "‘After 15 years at Canyon Partners, George Jikovski, partner and manager of our River Canyon Total Return fund, is leaving the firm. We’re actively recruiting his replacement, and in the interim the fund will be managed by Todd Lemkin, our CIO, and Sam Reid, our top debt trader,’ the spokesperson said."

    "Jikovski had run the fund since late December 2014, investing almost exclusively in securitized assets and posting a 5.6% annualized return through Friday. The Bloomberg US Aggregate, by contrast, delivered a 1.9% annualized return over that time."

    "The fund under Jikovski also delivered some extra volatility, posting a 4.4% standard deviation of returns compared to 3.3% for the index, but its returns were so far ahead of the index that its Sharpe Ratio of 1.13 more than doubled the 0.51 reading of the index."

    "More than half of the fund is in floating rate securities. The popularity of these assets for both their higher yield and their inflation protection has led to their being securitized in collateralized loan obligations (CLOs) in recent years."

  • Good grief. Not a firm with a succession plan.
  • The better question is where George is going.
  • I think the question is why did he leave.

    Probably time to sell
  • sma3 said:

    I think the question is why did he leave.

    Probably time to sell

    That is what I am wondering about too....but not quite ready to hit the sell button.
  • The mortgage funds have been trading like they are broken for a couple months now. It began with SEMPX and BDKAX. It was only inevitable this weakness would filter down to their sister funds IOFIX, DPFNX, and RCTIX. Very illiquid holdings. EIXIX and RCTRX have held the best in this sector. Ominous that these funds have performed so poorly in light of a strong undercurrent recently in junk bonds. Not sure what can turn these around other than strength in the 10 year.
  • sma3 said:

    I think the question is why did he leave.

    Probably time to sell

    Very fair and a lot smarter than my question. Guess I'm an optimist. On the other hand the fund's performance while good does not scream Madoff... I'll probably hold until further news... one would THINK that if George left because of an accounting issue the issue would need to be reported.
  • Decided to sell almost all shares of this multi-year position after reviewing the situation some more yesterday. Will watch on the sidelines until there is more clarity. (Retained a few shares as Fido now has a 100K minimum for opening a new position vs. 10K for subsequent share purchase.)
  • If you're buying it in an IRA, the min appears to be $0.00. Still, holding an open position means that you can add to it for $5 instead of having to pay $49.95 to reopen one.
  • @davfor, don’t let me or anyone sway you on this fund. I didn’t realize you were a multi year investor in this fund. Thought you might have been like so many where the hot money momentum bond traders gravitated to this fund because it was up YTD earlier this year. This current downswing pretty much had them all selling. May revert back to a steadier course now that momentum traders are gone. It’s not even down 2% for the year. Albeit the entire sector looks pretty weak especially IOFIX and SEMPX.
  • @Junkster That didn't happen. I have been watching the bond world shift during Q1 of 2022 (including in the mortgages area you mentioned yesterday) and expect that trend to continue for a few more months or longer. What tipped the scales on RCTIX were the circumstances surrounding the manager departure and the uncertainties created by that event. RCTIX has been a successful holding for me. But, with everything considered, it doesn't presently belong in my portfolio's OEF ballast sleeve. I also sold PEGAX in that sleeve recently. CBLDX and HMEZX are the two chosen replacements. (The ballast sleeve is the only OEF sleeve modified since the start of the year.)
  • msf said:

    If you're buying it in an IRA, the min appears to be $0.00. Still, holding an open position means that you can add to it for $5 instead of having to pay $49.95 to reopen one.

    I thought all subsequent purchases were $49.95 in transaction fee funds at FIDO. Is that $5 some type of dollar cost averaging program?
  • @wxman123 - You have to set up an "automatic investment" schedule into the fund of choice once you've made your initial purchase at the $49.95 cost. The suggested schedule is along the lines of $X/quarter on a day of your choice but can be customized. Once selected it appears as though you need to make three such automatic investment purchases at $5 each but you can cancel the order after one additional investment has been made. I do this often after the market has taken a dump on my favored funds.
  • edited March 30
    I have not kept up with changes at Fido in 2022 but RCTIX did not used to participate and was not available in their auto reinvest program. So, when I sold, I did not retain any shares.
  • edited March 31
    BaluBalu said:

    I have not kept up with changes at Fido in 2022 but RCTIX did not used to participate and was not available in their auto reinvest program. So, when I sold, I did not retain any shares.

    That was my experience too, about a year ago; the fund managers didn't make it available for automatic investment. I asked if they would consider changing their decision, and the response was that they wouldn't. I also sold my position and haven't checked back on it.
  • Mark said:

    @wxman123 - You have to set up an "automatic investment" schedule into the fund of choice once you've made your initial purchase at the $49.95 cost. The suggested schedule is along the lines of $X/quarter on a day of your choice but can be customized. Once selected it appears as though you need to make three such automatic investment purchases at $5 each but you can cancel the order after one additional investment has been made. I do this often after the market has taken a dump on my favored funds.

    Thanks! I hold my RCTIX at Firstrade but good to know about FIDO. I think I'm going to dump all but a foothold until this situation clarifies.
  • Thanks for that information. Unfortunately, there are a couple of features at Fidelity that one can't be sure work without either trying them out or asking. One is buying a fund with a reduced min in an IRA, and then there's this one - automatic investing.

    Automatic investing is the more obscure one. You don't need to already have money in a fund to check out the IRA min. But you do need to have money in a fund to test whether an automatic investment is accepted. Of course one can call and ask.

    I have a fund there (in an IRA) that used to have a lower IRA min. If I sold it off now I could not get in again. And over the years, sometimes automatic investment worked, sometimes not. Things change and it can be hard to find out.
  • edited March 31
    Right, you can't find out about auto-invest without either buying/trying or asking. I call Fido now if in any doubt at all. It can be crucial to decide whether to invest at all, especially for TF funds.

    My last call was two days ago for the absolute return fund FARIX, and no, it's not available to auto-invest either. The info is readily available to the CSR; it took the fellow I talked to this time about 5 seconds to find it. Seems like it wouldn't be a big deal for Fido to add that info to the fund pages.
  • With Fido customer service, they have hired thousands of new Reps, many of them are green. One has to sense within the first 15 seconds if the Rep answering the phone is competent and drop the call and dial back in the hope one would get a seasoned Rep.
  • Schwab still lists RCTIX as $2500 minimum but with $50 fee if anybody is interested.

    But I think I am out as well, when the manger disappears

    But there are so few alternatives that are not under lots of water.

    Anybody else a bit concerned that RPHIX seems to be one of few bond funds even treading water?

  • edited March 31
    sma3 said:

    Schwab still lists RCTIX as $2500 minimum but with $50 fee if anybody is interested.

    But I think I am out as well, when the manger disappears

    But there are so few alternatives that are not under lots of water.

    Anybody else a bit concerned that RPHIX seems to be one of few bond funds even treading water?

    Bank loan (bond) funds have been on a run the past couple weeks and some now positive for the year.
  • @BaluBalu
    Fido hiring, a growth sign, eh? The times I've called over many years, if the CSR couldn't readily help; the proper person was sought. No problem with that. 'Course, the caller must have a properly framed question in the first place, to expect a proper answer.

    Fidelity hiring
  • edited March 31
    @davfor, I also watch HMEZX, looks really interesting, but I am confused by mixed record of its manager James D. Dondero, e.g. at HSZAX, HHCZX, etc., see also https://www.institutionalinvestor.com/article/b1l0wrph2lc0j6/Nothing-Can-Stop-This-Hedge-Fund-Soap-Opera

    Did you check it?
  • I'm also confused by the bankruptcy status of Dondero and its possible effect on the funds. I've capped my investment at $1,000 at Vanguard and Schwab in HMEZX because I have this irrational fear that my investments could be confiscated or locked up due to this bankruptcy fiasco !
  • finder said:

    @davfor, I also watch HMEZX, looks really interesting, but I am confused by mixed record of its manager James D. Dondero, e.g. at HSZAX, HHCZX, etc., see also https://www.institutionalinvestor.com/article/b1l0wrph2lc0j6/Nothing-Can-Stop-This-Hedge-Fund-Soap-Opera

    Did you check it?

    I was aware of the issues with Dondero and reviewed articles about them in the past as well as concerns raised by board members at this discussion site. But, NexPoint Advisors' real estate/REIT and BDC focus were a plus in my mind given the small cap focus of HMEZX. In the end, the 5 1/2 year performance record of HMEZX outweighed the concerns raised about the Highland Capital issues. So, I was comfortable to invest 3.2% of my invest portfolio in this fund.....but will remain on the watch for new developments related to Dondero's problems.
  • edited March 31
    catch22 said:

    @BaluBalu
    Fido hiring, a growth sign, eh? The times I've called over many years, if the CSR couldn't readily help; the proper person was sought. No problem with that. 'Course, the caller must have a properly framed question in the first place, to expect a proper answer.

    Fidelity hiring

    The intent of my post was to be helpful to this forum members and not to take shots at Fidelity or any other brokerage.

    Re customer competence, in the past 3 yrs, I have lost count the number of times I had to educate Fidelity CSRs about investment products available on their platform and the services they offered; while in the prior 10 yrs, I had consistently received outstanding service. Now, I hardly transact at Fidelity just to avoid having to deal with their CSR. I just leave most of my cash allocation at Fidelity. I expected Fidelity to assign less trained (and sometimes unprofessional?) reps to smaller accounts before elevating them to their highest level accounts but it is possible Fidelity lost too many employees at every level. l shall let other devoted customers train Fidelity CSRs before I check back with Fidelity.
  • I dont think it is unique to Fido. Vanguard is awful most of the time, made worse by incompetent backroom technology. While Schwab assigns me to a (usually) long tenured ep, who is a nice guy, he frequently turfs questions like those to the general number. Cant be bothered to look it up I guess.
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