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AOK Ain’t OK

edited April 19 in Other Investing
This formerly stellar conservative ETF was off 8.61% YTD before today. With a slight .11% gain today, it’s still down 8.5% YTD. I’ve long watched it; owned it briefly earlier this year before discarding it. The fund allocates 30% to equities and 70% to fixed income. For comparison, after today the Dow Jones is down only about 3.5% YTD and the S&P about 6.4%.

What’s the point here? Only to demonstrate the remarkable degree of carnage the bond avalanche has wrought upon previously fine funds with a reputation for “preserving capital”. - Yeah.

Question? What does the future hold for AOK and a whole legion of formerly considered “safe” funds with similarly heavy fixed income / bond holdings? Do you ever expect them to recover their former safe haven status? Get back to “break-even”? When might that be? I haven’t looked at target date funds, but must assume that those structured for capital preservation (late in life investors) have probably lost more this year than their more aggressive brethren.

Comments

  • AOK's losses approximate those of intermediate bond funds. Its performance is at least 250 basis points worse than VWINX AONIX FASIX and matches VASIX. A bear market in bonds means there are no more safe haven funds.
  • I tried using AOK as my personal benchmark based on my 31% equity allocation. I am down .87% YTD as of today. I must be a (timid) genius. LOL. Another 30% er,,,, VTINX is also failing to provide protection. It seems obvious that a giant slug of bonds is doomed for the near future. As for providing ballast, as a certain cult advocates, a jar in my closet does it better.
  • edited April 20
    Yup, AOK tracks very closely to AGG (iShares Core U.S. Aggregate Bond ETF). Even a closer tracking bonds fund is CTFAX, which many here, including myself, jumped on the band wagon with as a conservative alternative type fund. Low and behold CTFAX is just another bond fund right now - and will stay given it's equity valuation algorithms'.
  • edited April 20
    larryB said:

    I tried using AOK as my personal benchmark based on my 31% equity allocation. I am down .87% YTD as of today. I must be a (timid) genius. LOL. Another 30% er,,,, VTINX is also failing to provide protection. It seems obvious that a giant slug of bonds is doomed for the near future. As for providing ballast, as a certain cult advocates, a jar in my closet does it better.

    @larryB - To me a benchmark / tracker serves as a combination road map and sobriety meter. It helps point you in the direction you intend to go and helps confirm that’s where you’re headed and that you’re staying in the proper lane. Low volatility is important to me and so the benchmark makes for a nice comparison tool. Whether one owns anything in the benchmark ISTM is not important.

    I use a tri-fund tracker equally weighted among AOK, PRSIX and ABRZX. The only one I own is ABRZX which has significant commodity exposure. Beating the tri-fund tracker has been easy this year. But RIO, which I own, has turned south lately. So if commodities roll over and bonds recover some earlier losses, than the tracker should outperform.
  • edited April 20
    I have suggested in past the Fidelity Asset Manager series for benchmarking. This series has equity allocations of 20%, 30%, 40%, 50%, 60%, 70%, 85%. https://www.fidelity.com/mutual-funds/fidelity-fund-portfolios/asset-manager-funds

    5 members of this Series are shown YTD (reset if defaults to 1 year) in Stockcharts and note the sharp mid-March dip, https://stockcharts.com/h-perf/ui?s=FASIX&compare=FAMRX,FASGX,FASMX,FTANX&id=p08325402070
  • I think your Fidelity suggestion is a great one @yogibearbull. I've always used the TRP retirement fund(s) that correspond to the equity % I hold in my portfolio. But the drawback to the TRP funds is they adjust equity exposure over time. I may switch my allegiance from the TRP funds to the Fidelity asset manager funds you listed.
  • Point taken @MikeM

    The TRP funds I’ve sometimes used (PRSIX, TRRIX) don't adjust holdings - other than maybe some subtle market calls on TRP’s part.

    I like yogi’s suggestion. On the other hand, there’s something to be said for using funds you have owned before or which are run by a manager you’ve had a lot of experience with.
  • I have recency and confirmation bias. So I only pay attention to a benchmark when and if I am beating it handily. While I take my portfolio seriously,,,,,,not so much myself. Thanks for all your comments.
  • My benchmark is VWIAX. Rarely beat it, though this year I am mainly due to holding sizable cash and some opportunistic plays.
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