Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
A little complicated but appreciate you not dumbing it down for your investors. So bonds will be issued to be paid for leveraged loans that are out there.
I'm sure it'll be addressed in 2Q RPHYX commentary but it is right to assume the portfolio is yielding almost 9% currently?
Thanks @davidsherman. It was a little "wonky" for me. Lots of acronyms. But as long as you understand the environment, that's good for me. I hold RPHYX and SPC in my safe-withdrawal bucket, along with a bunch of treasuries. Keep up the good work!
Thanks, David, for sharing your thought process and the current state of the Loan (and CMBS) market. Given not so dire reports about the non-office RE sector, I was expecting the funds to own more CMBS than shown in the table. Do you mind elaborating why the funds are currently so light on non-office CMBS?
Disclosure: I currently have zero fixed income exposure outside Treasuries.
From the article: "As discussed in our 1Q23 letter, capital flows favor assets with the highest risk-adjusted returns. Investors that have been large buyers of investment grade CLO debt are now able to earn significantly better yields in newly issued commercial mortgage-backed securities (CMBS)15 debt of comparable quality. In the AAA tranche, CMBS debt offers slightly less spread for much higher credit quality based on loan-to-value (LTV). For tranches below the AAA tranche, CMBS yields are, on average, significantly higher with better LTV" "At the same time, we are selectively nibbling in the CMBS market. Based on our expectation of increasing volatility, the portfolios are likely to continue experiencing above normal turnover as we adapt to reflect the changing environment"
Commercial Real Estate bond fund OEF - RCRIX/FX. YTD 6.10%. Not exactly the Armageddon the pundits have been predicting for CRE. Albeit the fund holds 0% in office buildings.
Recent commentary on this fund. I spoke with the manager early in the year. He feels there are tremendous opportunities in CRE. He seemed a bit discouraged that his AUM were so much smaller than pre Covid as he wished to take advantage of such opportunities. I should add that River Park is by far the most stringent when it comes to short term trading of their funds. As I mentioned previously, they will send you a ban notice even before your sell order is processed. Meaning, if you have an early morning order in there to sell, they will ban you before close of day.
Hi folks. I encourage you reaching out directly of Mr. Snowball can arrange an MFO call. Regardless, let me take this moment to quickly respond.
Bobby: Not sure when RiverPark Short Term High Yield (RPHIX, RPHYX) commentary will some out as it is in the RiverPark hands. That said, the basic commentary will remain. As for your yield question - not 9%! I don't believe yield-to-worst or yield-to-maturity are figures readily provided as they can be very misleading since a significant portion of the the Fund rolls into cash every 30 days so a price can make a big yield impact with so little time remaining on the life of the holdings that a position(s) can impact the yield calculation. Below are some figures for June 30th (unaudited): 38% portfolio rolling off in 30 days or less 62% portfolio rolling off greater than 30 days 57% portfolio rolling off within 90 days 7.32% yield-to-worst on holdings greater than 30 days Weighted average yield on purchases during the month was 5.88% with 2.2 month maturity. Feel free to reach out to me directly if you need a further xplanation.
BaluBalu: Patience is a virtue. We don't like chasing the market. CMBS started to run (a little bit) post our 1Q letter. We will add as opportunity arises but price matters. Also, the opportunity should be around for some time. We expect the portfolios will continue to add,
Junkster: Ed Shagrue is a seasoned veteran and thoughtful in the CMBS space. Although I do not own his Fund, I respect him. You should reach out to him.
I want to reiterate a comment in the 2Q commentary: With respect to the portfolio, we remain nimble. At the end of 2Q23, we had elevated levels of “dry powder”. If high yield spreads tighten and the market rallies, we may increase our level of dry powder to take advantage of what we believe will be a correction thereafter. We had a healthy position in leveraged loans and are looking to add. At the same time, we are selectively nibbling in the CMBS market. Based on our expectation of increasing volatility, the portfolios are likely to continue experiencing above normal turnover as we adapt to reflect the changing environment.
CBUDX and RPHIX are different animals investing in the ultra short duration. CBUDX is purposefully meant to compete in the Morningstar ultra short duration category. A requirement of the category is that 65% or more of the portfolio be invested in investment grade debt. At June 30th, CBUDX was 74% invested in cash and investment grade bonds. Where as, RPHIX has a mandate to be substantially invested in high yield/below investment grade debt (generally, 80% or more). Further, RPHIX generally has a significantly larger holdings that are expected to roll-off into cash over 90 days. Typically, RPHIX also has a greater focus in debt that has been called/redeemed or subject to corporate action in comparison to CBUDX. Lastly, CBUDX in most circumstances will have a longer duration albiet still targeting 1 or lower.
Thanks, @davidsherman, for the additional information. I prefer the called / redeemed high yield bonds of RPHIX over investment grade bonds of CBUDX. I guess I will wait for RPHIX to reopen.
Sales of Retail and Institutional Class Shares of the Fund are closed to new investors except as noted below. Existing shareholders of the Fund (including clients of any financial adviser or planner who has client assets invested in the Fund) and certain eligible investors may purchase additional shares of the Fund through existing or new accounts and may reinvest dividends and capital gains distributions. New shareholders may open Fund accounts and purchase shares directly from the Fund (i.e., not through a financial intermediary). Further, any trustee of RiverPark Funds Trust, or employee of RiverPark Advisors, LLC or Cohanzick Management, LLC, or an investor who is an immediate family member of any of these individuals may also open new accounts and purchase shares of the Fund. The Fund reserves the right, in its sole discretion, to determine the criteria for qualification as an eligible investor and to reject or accept any purchase order. Sales of shares of the Fund may be further restricted or reopened in the future.
Comments
I'm sure it'll be addressed in 2Q RPHYX commentary but it is right to assume the portfolio is yielding almost 9% currently?
Disclosure: I currently have zero fixed income exposure outside Treasuries.
Apart from PRWCX, I'm all in junk. 33% of portfolio at the moment.
"As discussed in our 1Q23 letter, capital flows favor assets with the highest risk-adjusted returns. Investors that have been large buyers of investment grade CLO debt are now able to earn significantly better yields in newly issued commercial mortgage-backed securities (CMBS)15 debt of comparable quality. In the AAA tranche, CMBS debt offers slightly less spread for much higher credit quality based on loan-to-value (LTV). For tranches below the AAA tranche, CMBS yields are, on average, significantly higher with better LTV"
"At the same time, we are selectively nibbling in the CMBS market. Based on our expectation of increasing volatility, the portfolios are likely to continue experiencing above normal turnover as we adapt to reflect the changing environment"
Music to my years.
Edit: https://www.riverparkfunds.com/assets/pdfs/rpfrcf/commentary/RiverPark_Floating_Rate_CMBS_Fund_2Q23_Investor_Letter.pdf
Recent commentary on this fund. I spoke with the manager early in the year. He feels there are tremendous opportunities in CRE. He seemed a bit discouraged that his AUM were so much smaller than pre Covid as he wished to take advantage of such opportunities. I should add that River Park is by far the most stringent when it comes to short term trading of their funds. As I mentioned previously, they will send you a ban notice even before your sell order is processed. Meaning, if you have an early morning order in there to sell, they will ban you before close of day.
Bobby: Not sure when RiverPark Short Term High Yield (RPHIX, RPHYX) commentary will some out as it is in the RiverPark hands. That said, the basic commentary will remain. As for your yield question - not 9%! I don't believe yield-to-worst or yield-to-maturity are figures readily provided as they can be very misleading since a significant portion of the the Fund rolls into cash every 30 days so a price can make a big yield impact with so little time remaining on the life of the holdings that a position(s) can impact the yield calculation. Below are some figures for June 30th (unaudited):
38% portfolio rolling off in 30 days or less
62% portfolio rolling off greater than 30 days
57% portfolio rolling off within 90 days
7.32% yield-to-worst on holdings greater than 30 days
Weighted average yield on purchases during the month was 5.88% with 2.2 month maturity.
Feel free to reach out to me directly if you need a further xplanation.
BaluBalu: Patience is a virtue. We don't like chasing the market. CMBS started to run (a little bit) post our 1Q letter. We will add as opportunity arises but price matters. Also, the opportunity should be around for some time. We expect the portfolios will continue to add,
Junkster:
Ed Shagrue is a seasoned veteran and thoughtful in the CMBS space. Although I do not own his Fund, I respect him. You should reach out to him.
I want to reiterate a comment in the 2Q commentary:
With respect to the portfolio, we remain nimble. At the end of 2Q23, we had elevated levels of “dry powder”. If high yield spreads tighten and the market rallies, we may increase our level of dry powder to take advantage of what we believe will be a correction thereafter. We had a healthy position in leveraged loans and are looking to add. At the same time, we are selectively nibbling in the CMBS market. Based on our expectation of increasing volatility, the portfolios are likely to continue experiencing above normal turnover as we adapt to reflect the changing environment.
Is it fair to say CBUDX is the house version / equivalent of RPHYX?
From January 31, 2023:
https://www.sec.gov/Archives/edgar/data/1494928/000139834423001516/fp0081525-7_497k.htm
Excerpt:
Purchase and Sale of Fund Shares
Sales of Retail and Institutional Class Shares of the Fund are closed to new investors except as noted below. Existing shareholders of the Fund (including clients of any financial adviser or planner who has client assets invested in the Fund) and certain eligible investors may purchase additional shares of the Fund through existing or new accounts and may reinvest dividends and capital gains distributions. New shareholders may open Fund accounts and purchase shares directly from the Fund (i.e., not through a financial intermediary). Further, any trustee of RiverPark Funds Trust, or employee of RiverPark Advisors, LLC or Cohanzick Management, LLC, or an investor who is an immediate family member of any of these individuals may also open new accounts and purchase shares of the Fund. The Fund reserves the right, in its sole discretion, to determine the criteria for qualification as an eligible investor and to reject or accept any purchase order. Sales of shares of the Fund may be further restricted or reopened in the future.