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Partly in consequence, they posted top 6% returns in July (up 3.7%) and top 21% returns over the past four weeks (-0.3%). I know they're a bit tame, perhaps a bit wonky in a small Minnesota shop way, for some investors but they have top tier performance over the trailing 1-, 3- 5-, 10- and 15-year periods with relative returns ranging from top 12% (3-year) to top 31% (15 year) against their Morningstar peers. They've comfortably outperformed their Lipper peers since inception (1995) on both upside and downside measures.While our tactical portfolios almost exclusively hedge equities using our proprietary short-selling strategy, last month we upped the hedge by shorting the NASDAQ 100 via the QQQ ETF. One of the driving factors is that July’s broadening action was much more of a NYSE phenomenon than a NASDAQ one—the latter market still looks highly bifurcated and triggered a “maximum-negative” reading on the HLLI in early August.
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Shorting the QQQ would seem, to me anyways, a “no brainer.” Yet, shorting anything is fraught with peril for the average Mom & Pop investor. Best left to the pros. Kudos to Leuthhold. As a (not unbiased) owner of LCORX, I believe it will over longer periods do a bit better than LCR. However, your point about fee disparity is well taken and may prove prophetic.
- CAGR: 7% v 7%
- Max DD: 37% v 32%
- Sortino: 0.78 v 0.84
- 1/3/5 Yr Retuns: 14/5/8 v 15/4/9
- Rolling 1/3/5 Returns: 8/7/7 v 7/7/8
Based on above stats, about the same risk and returns for both. So LCORX is not for me but I'm happy to learn from others on why LCORX.
I don’t use the types of comparisons you reference in selecting a fund. What do I care about? I look very hard at the holdings in a fund’s portfolio, including bond duration & credit quality and also any short positions. To a lesser extent I rely on literature about process from the manager. I also look at what M* sees as a fund’s overweight and underweight concentrations. Where possible I view the fund’s 2008 performance. Fortunately, it is available for LCORX, unlike many funds. Of course fees matter. Some of the high ER is attributable to the fund’s short positions.
In all cases, to be included in my portfolio a holding must be viewed as complementing all the other parts of the portfolio - the desired effect being lower overall volatility. I don’t claim to own the best fund in every category or even pay it much heed to that.
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Re: “Why LCORX?” - The credit quality in the bond portion is very high (about 80% investment grade). While David referenced their recent shorting of QQQ, the fund has long held some short positions (SPDN). The fund discourages frequent trading and the $10,000 minimum should discourage a lot of retail level churn. I value a stable investor base. The firm is long-established and known for its research capabilities. Their recent commentary reflects a cautious disposition toward equity markets. The fund’s largely domestic orientation serves to balance out some significant foreign exposure elsewhere in my portfolio.
Link to David’s November 1, 2023 Commentary in which he profiles Leuthold.
Thank you, very helpful detail on your assessment criteria. To your point, everyone has different buy criteria(makes a market). By no means was my comment intended to ask anybody to defend a holding of LCORX, it was intended to learn from others.
And likewise, I make no claim to owning the "best" funds or having a crystal ball around whether my existing holdings will go forward beat my chosen benchmark even if they may have done so in the past.
My selection criteria are mostly quantitative and intended to address the basic question (for me) -- if I can't beat VBIAX with all the effort(I enjoy it but that is a different matter) that goes into being an active investor then why bother.
As I grow older (and hopefully wiser but will leave that for others to judge!) I'm moving more and more in the direction of "The incremental effort that goes into being an active investor is not worth the incremental returns over a VBIAX or VWELX"
I haven't yet abandoned active investing but certainly leaning towards getting less active. There's also a point in life(I don't know if I'm there but certainly close) where it isn't necessary to blow the investment lights out, preservation starts becoming more important.
If two out of five instances produced a specific result, is that a large enough probability to count as a signal?
Looking at the past five years' stock style in M* portfolio, it looks like the fund had been in large blend category in each of those years.
It would be great if some one can compare LCORX against a (or a group of) good value fund(s) for the entire year 2022.
Is this a buy and forget fund, as I am looking for one? If this is not a buy and forget fund, what purpose does this fund serve in a portfolio. I shall read the fund profile @hank posted the link to.
I echo the last two paras in @staycalm last post.
Thanks @stayCalm
You are correct that we all have different needs and assessment criteria. Often something I own makes sense only when put in the context of overall portfolio. I quick-scanned VBIAX. With 100% now at Fidelity it would not easily be available to me.
For the sake of discussion, VIBAX’s bond quality is at least as high as LCORX (80-90% investment grade). Duration is slightly longer. Both bond portfolios might be termed of intermediate duration. Both funds hold about 60+% equity exposure (net of short positions). Interestingly, LCORX’s fixed income allocation is about half in cash. (Sounds like they’re expecting a buying opportunity.) VBIAX’s fixed income appears to be all in bonds with 0 cash.
Unlike LCORX which has
10%+13%+ in short positions as a market hedge, M* lists VBIAX as holding none. I’m of the Marty Zweig era and so I’m always “… nervous Lou … ” Shorting equities is expensive, but (correctly applied) can dampen volatility & limit losses in down markets. Another slight difference is that LCORX has about 5% more allocated to basic materials. ISTM those haven’t done very well lately. (Give ‘em time.) My impression is that the guys running LCORX are very much “hands-on” managers. They seem to be moving the chips around a lot more than typical managers in an effort to protect capital and find promising investments in a challenging environment.Yep. Steve Leuthold (1937-2023) headed off to his cabin in Maine then, as Alzheimer's took its toll, to Carlsbad, California, to be with family. We've written a bit about the changes that followed. My general sense is that the team thought Steve's approach was getting a bit ahead of the data in his latter years, which is a problem for a group of quant investors. In his absence, they recalibrated a bit but maintained the core discipline that they'd been following since the 1990s.
For what that's worth, David
In looking at a go anywhere fund, does it make sense to look at its innards at any particular time?
From a quick review, PRFPX @JD_co mentioned in the BSW thread seems to have done better over the past five years, its long term track record notwithstanding. PRPFX stock style in M* changed over the years. Someone with an intimate knowledge of these funds could probably provide a better / scientific comparison. M* does not say PRPFX is a tactical allocation fund and as such i am not sure it is a good comparison.
Is a MFO profile for PRPFX available?
May be someone who owns both funds would be kind enough to do a compare and contrast - they would pick up on nuances others could easily miss. Hopefully, they would also include a sentence or two about the role of the fund(s) play (s) in their portfolio, which would give us additional context.
I was using VBIAX as an example of a passive 60/40 because it can be bought vs. an abstract index. I have a brokerage account at Vanguard but with no holdings because I abandoned Vanguard many years back. VBIAX is available at Fidelity (for a fee, not NTF). Fidelity equivalents of VBIAX appear to be FBALX, FPURX.
I don't do the fundamental and strategy analysis you do because I don't feel qualified to do so. I rely heavily on Sortino and R-Squared metrics and tilt towards investments with high Sortino and low R-Squared.
LCR YTD performance at 5.82% does not jump out at me in view of the below YTD performances
Kinetics Global: 41%
Calamos Global: 31%
SPE: 21%
QSPRX: 20%
CPIEX: 26%
COAGX: 21%
QLEIX: 20%
Luthold as a money manager has a great long term record. I believe they were primarily engaged in research / analysis for various big players (and well respected) before launching their own mutual funds. But nothing is guaranteed. The manager turnover is the main reason M* recently downgraded its rating of LCORX to silver from gold. Interestingly, LCOR retains their gold rating.
To tread a bit further out onto the thin ice … The fund replaces DODBX in my 10-segment (equal weight) portfolio. I believe DODBX to be a better moderate risk long term hold. They’ve refined their process in recent years to reduce the potential for losses in bear markets and their fees are much more compelling. Not to argue the merits of each. Just perhaps to address BaluBalu’s question of where it might fit in a portfolio.
Why did I get out of DODBX after a couple decades? I decided about a year ago to consolidate all holdings at Fidelity. While DODBX transferred in OK, it became awkward, to say the least, to rebalance it or increase its weighting without getting hit with a fee. Wasn’t worth the aggravation for me.
I believe funds to an extent are captive to the economic environment of the day. No manager can prepare for every eventuality. While I loath the P-word infiltrating the investment part of the board, I think in about 84 days the economic / financial / social / political backdrop that now seems normal will transition to a much
riskiermore difficult environment.My last comment in this thread. Got a couple bucks riding on tonight’s Dodgers / Brewers game.
Hope you win your bet, Derf
That is consistent with the Semi-Annual Report with March 31 holdings. It has a pie chart showing 62.5% in traded US equities, 7.9% short US traded equities, short equity funds (1.8% + 0.7%), and noise. The Schedule of Investments reports 69.5% in common stocks and separately reports 9% short in common stocks.
LCORX seems to have held a pretty consistent 60%+ in equities this year, net.
I was placing a LCR buy order this AM (teeny position just to have it on my radar) but I noticed the bid size to be 12. This combined with the small AUM makes it too illiquid for me.
Ancora imparo, dude!
"Yet," in this context, might be read as "to this very day."
The romantic version is that this is a scribble in the margin of one of Michelangelo's notebooks, written when he was 87. Which is true enough.
The slightly less romantic version is this is the sort of aphorism that educated people of the age were supposed to adhere to, so bunchs of them scribbled this in the margins of their work to show that they were all self-aware and humble and all.
As surely I is.
(In tracking LCORX at M* the “short equity” position appeared to jump from 10% to 15% overnight sometime last week.)
The short positions increased twice in July, I know, in response to a sharp deterioration of techniques in QQQ. Those shorts helped explain the fact that the fund made money that month while its peers didn't. One month isn't a reason to do anything - buy or sell, usually - but the shift was dramatic enough that Leuthold wanted to share with me, and I wanted to share with you.
David