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All, This fund IRONX is managed by Rudy Aguilera, a Rick Ferri disciple. It's strategy is based on the put write index. Launched in 2010. It offers equity like returns with reduced volatility. Has anyone researched this fund? Looks very interesting to me.
Not available at brokerage, but then no 12b-1 fee and manager does own shares. Is 100% cash right now which is interesting as is the "objective" which lists income over growth.
I just wish people stopped using "risk" in fund name. After AQR it has become 4-letter word for me. Especially because intuitively selling a covered call seems to be less risky for me because asset reserves don't have to be maintained if market moves against you.
I think it is simply selling puts and therefore making money when they don't have to deliver the stock. So it will always stay cash. Even when they are forced to buy at higher price, they will seek to get out of the position ASAP offsetting loss with premium collected.
Because it will sometimes have to hold the stocks it has to purchase, M* classifying it as "Conservative Allocation" I presume. At least they didn't put this in "L/S" category.
Frankly it seems to me this was excellent strategy for income in 2009. With volatility not so high I wonder how much premium these guys are collecting on the puts they are writing. This fund can give a false sense of security in a falling market invariably accompanies by rising volatility. They can collect higher premium but are more likely to have to purchase the stock when puts do get called. Of course, they are doing it every month, still...
An options fund, playing indexes, yes. Interesting to see how M* and Lipper differently parse the holdings (the latter says 83% other, 15% bonds, 2% cash ).
Actually for all the noise made about diversifying portfolios, everyone is so fickle in their category assignments. One brokerage is telling me 35% of my portfolio is "Other". Funds like ICMAX, ICMBX, ICMCX, GPGOX, WASYX, LCORX, OAKBX, OAKGX, OAKWX, TSELX are getting classified as 'Other'. And of course, everything is "Powered by Morningstar". Clearly they are getting data from M*, but then doing their own "due diligence" when it comes to categorizing funds, because I know M* will not classify these as "other".
HTF am I supposed to do asset allocation with this?
Comments
Doesn't seem to be widely available at large brokerage platforms (Vanguard, Fido, etc).
I just wish people stopped using "risk" in fund name. After AQR it has become 4-letter word for me. Especially because intuitively selling a covered call seems to be less risky for me because asset reserves don't have to be maintained if market moves against you.
Regards,
Ted
Because it will sometimes have to hold the stocks it has to purchase, M* classifying it as "Conservative Allocation" I presume. At least they didn't put this in "L/S" category.
Frankly it seems to me this was excellent strategy for income in 2009. With volatility not so high I wonder how much premium these guys are collecting on the puts they are writing. This fund can give a false sense of security in a falling market invariably accompanies by rising volatility. They can collect higher premium but are more likely to have to purchase the stock when puts do get called. Of course, they are doing it every month, still...
HTF am I supposed to do asset allocation with this?