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"We think equities have a lot of tail winds," says Wolle. "We believe that they're still reasonably valued, that the likelihood of recession is quite low, and that financial conditions and price trends are supportive."
I think Mr. Scott Wolle has this part right.
But, despite the article's praise, he did not have it right in May, like the other leveraged bond allocation funds, namely AQRIX and PAUIX. Maybe a bit less severe, but all trail a simple fixed allocation fund, like VBINX, badly this year.
Here is M* comparison, YTD:
I'm not sure what "full cycle" means for these funds. Is it 30 plus years? The length of the last bond run? And, with the bond vehicle deteriorating, can they still use leverage as effectively as they did through May of this year?
Nor does the article call attention to the front-load Invesco charges for most of this fund's share classes.
BTW, I sold my AQRIX holding in mid-August. Disappointed with AQR's lack of transparency and their untimely commentaries, given their terrible performance in 2Q. They still only show commentary for 1Q. If they ever do post an update, I'll attempt a postmortem. In any case, I sure got that one wrong.
1) You make your sell decisions by the quarter, or two quarters? 2) Aren't these all very different? Bond mix, international bond mix, cash-heavy, and finally being 'beaten' by a fund that is nearly 60% equities? I mean, how could the last *not* triumph?
Reply to @davidrmoran: Ha! Sometimes, yes. I should have sold AQRIX back in April/May when it dropped below 10-month SMA. But I resisted because the risk-parity strategy appealed to me and because it was in the house that Cliff Asness built.
I owned the fund since Sept '12, so a little less than a year. Disappointed really...wanted it to be a long term core holding, but at the end of the day it behaved differently than I expected or even advertised (eg., drawdown control). We've actually posted quite a bit about this fund on the board. I believe Investor saw the "unexpected behavior" early and avoided it.
Will study more after I see AQR's explanation of what went wrong. I suspect it will be along the lines of "100-year storm" not reflected in their model or back testing (eg., LTCM saga). With all the risk-parity bravado, the fund seemed to behave simply like a leveraged bond fund. And if that's the case, not sure the strategy will be as successful going forward, which is another reason I dumped it. I sold my other bond funds on June 11th.
Here is sad performance plot from AQR website:
ABRZX and AQRIX both tout themselves as providing balanced-like returns with less volatility. All three tout allocation authority across asset classes and investment vehicles. All three use leverage to enhance returns. Probably less fair to lump PAUIX in with the other two. That said, I think all three grew their AUM after 2008 disaster in fixed allocation balanced funds. So, I tend to think of them in similar light.
Reply to @Charles: Thanks for your honest explanation. I might suggest you hold things for three years min, hardly an original thought with me, but I don't think I can say I have never done the same. I am using ARLSX (along with ICMBX and JABAX, as well as cash, which annoys me) currently to try to achieve some of the same ends in my shorter-term accounts.
Comments
But, despite the article's praise, he did not have it right in May, like the other leveraged bond allocation funds, namely AQRIX and PAUIX. Maybe a bit less severe, but all trail a simple fixed allocation fund, like VBINX, badly this year.
Here is M* comparison, YTD:
I'm not sure what "full cycle" means for these funds. Is it 30 plus years? The length of the last bond run? And, with the bond vehicle deteriorating, can they still use leverage as effectively as they did through May of this year?
Nor does the article call attention to the front-load Invesco charges for most of this fund's share classes.
BTW, I sold my AQRIX holding in mid-August. Disappointed with AQR's lack of transparency and their untimely commentaries, given their terrible performance in 2Q. They still only show commentary for 1Q. If they ever do post an update, I'll attempt a postmortem. In any case, I sure got that one wrong.
1) You make your sell decisions by the quarter, or two quarters?
2) Aren't these all very different? Bond mix, international bond mix, cash-heavy, and finally being 'beaten' by a fund that is nearly 60% equities? I mean, how could the last *not* triumph?
I owned the fund since Sept '12, so a little less than a year. Disappointed really...wanted it to be a long term core holding, but at the end of the day it behaved differently than I expected or even advertised (eg., drawdown control). We've actually posted quite a bit about this fund on the board. I believe Investor saw the "unexpected behavior" early and avoided it.
Will study more after I see AQR's explanation of what went wrong. I suspect it will be along the lines of "100-year storm" not reflected in their model or back testing (eg., LTCM saga). With all the risk-parity bravado, the fund seemed to behave simply like a leveraged bond fund. And if that's the case, not sure the strategy will be as successful going forward, which is another reason I dumped it. I sold my other bond funds on June 11th.
Here is sad performance plot from AQR website:
ABRZX and AQRIX both tout themselves as providing balanced-like returns with less volatility. All three tout allocation authority across asset classes and investment vehicles. All three use leverage to enhance returns. Probably less fair to lump PAUIX in with the other two. That said, I think all three grew their AUM after 2008 disaster in fixed allocation balanced funds. So, I tend to think of them in similar light.